Hiring friends for your business: Boon or bust?

Ilya Pozin is a serial entrepreneur, writer and investor. He is the founder of online video entertainment platform Pluto.TV, social greeting card company Open Me, and digital marketing agency Ciplex.

For startup founders and entrepreneurs, the hiring question can be especially dicey. After all, everyone knows great talent forms the building blocks of your organization.

Overworked and overwhelmed, the idea of having a familiar face in the trenches might sound like the perfect solution. But should you hire friends and family, or take a wide berth?

The case for hiring friends

While you look around for the best and brightest employees for your company, your best buds can suddenly start to look like your best options. You know your friends and you know what they’re capable of, especially if you share the same industry.

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Instead of searching high and low for talent, you can poach talent from your friendship circles.

Your friends want you to succeed, after all, so they might also be more motivated than an outside hire. Working in a startup, you’ll be working closely alongside employees and burning the midnight oil. You need employees who are as dedicated and passionate as you are, but you also need people who won’t drive you crazy during the long hours and stressful times.

Considering 46 percent of small business new hires fail within 18 months and, in 89 percent of the cases it’s due to company culture mismatch, finding someone you know will fit the company culture might be your best defense against a costly bad hire.

The case against recruiting those you know

Of course, workplace stress and real world drama can also combine to become a potent nightmare for some startup founders. The best bud you hired on day one might not be such a dream employee down the line. This bad hiring decision can not only impact your company, it can also impact your friendship and after-work relationships.

In a startup setting, you need employees who are willing to roll up their sleeves and do whatever it takes to get the work done. You need people who are comfortable wearing as many hats as it takes to eventually achieve success.

If a friend messes up or slacks off, you need to be able to reprimand him or her and, if necessary, let them go. This could cause irreparable harm to your friendship, not to even mention the average cost of a bad hire can set your company back $50,000 or more.

Another uncomfortable situation is monetary discussions. Unless your company adopts a totally transparent culture, talking about compensation can become extremely awkward.

Things to consider before making the offer

Like everything, there are serious pros and cons to hiring friends aboard your company. The best way to determine this is to consider your friend like any other potential job candidate.

Here are a few aspects to consider before extending the offer:

Company culture fit

Before hiring your friend, think about the kind of company culture you want to create. If you’re hiring several employees, it’s important to ensure your friend won’t be treated any differently than the rest of your workforce. The last thing you want is the appearance of cronyism, and playing favorites is the fastest way to turn your positive company culture into a toxic office environment.

When interviewing your friend for the position, ask company culture fit questions and think critically about the answers you receive. If you friend doesn’t seem like a good fit for the culture you’re creating, listen to your gut and walk away.

Skills test

In the startup world, skills are king. The skills gap continues to grow wider, with 38 percent of employers sitting around with open positions they just can’t fill.

Without an unlimited budget, you need to be sure every one of your hires has what it takes to succeed and brings important skills to the table. You just cannot afford to hire a pal because they’d love to work at your company if they don’t have the requisite skills.

Before hiring, utilize a skills test to ensure your friend has the right stuff. Skills tests can be great hiring tools, so you don’t onboard someone good at touting their qualifications but not as good at actually completing work.

Trial basis

You might not want to commit to hiring your friend full-time, especially if you think it might become a problem down the line. If you want to give your friend the benefit of the doubt, bring them into the company on a trial basis.

As a contract or freelance worker, you can judge and evaluate their concrete skills and see if they would actually be a good fit for the company. If it doesn’t work out, you can part ways more amicably than if you have to say the words, “You’re fired.”

If your friend makes the cut

Remember to lay down some ground rules. Work together to set goals and culture requirements to ensure professionalism at the workplace so you don’t get too comfortable being friends instead of coworkers or business partners.

Hiring friends might seem like a great idea to make the work day fly by and have some additional fun in the office. But for startups and small businesses, one bad hire can be the difference between success and failure. Before taking a chance on a friend, make sure your potential hire has the skills and cultural fit to make a positive addition to your company.

Do you think you should hire friends? Why or why not? Share in the comments!

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