Bob's Gutsy Leadership Blog

Beware of Family/Friends!

A recent article discussed Martha Steward Living Omnimedia and cited the fact that the company lost $185 million over the last eight years when Martha herself was the CEO.  In only one of those eight years was the company profitable.  It went on to explain that the core problem seemed to be that she surrounded herself with family members and “yes-men.”

So what is wrong with family and friends?  In general, they will sugarcoat bad news and exaggerate good news… just like “yes-men”!  They are putting the health of their personal relationship with you over the health of the organization.  That’s not surprising.

Fiat, the Italian automaker, had the same kind of problem.  The company was started over 100 years ago by Giovonni  Agnelli, and up until 2004, when the company was at the brink of bankruptcy, every CEO was an Agnelli family member or a very close friend of the family.  Finally, in 2004, they hired a hard-charging outsider named Sergio Marchionne.  He quickly cleaned house and put Fiat on a positive path that continues today.

So what did we learn from all of this?  Here are some key points to consider:

1.) Be very apprehensive about working with family and friends.  Think hard beforehand about the fact that business requires that tough decisions be made and that this would at times jeopardize relationships.

2.) You need to hire people who will “tell it like it is.”  Sometimes these people appear a bit rude, but believe me; they are doing you a favor.

3.) Don’t be defensive when an employee seeks you out to describe a problem and the need for action.  It’s great news that they feel comfortable enough to give you the bad news.

Do you have your own family/friends business story to share?

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