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Early this month, another CEO bit the dust. The forced departure of Commerce Bancorp Vernon Hill were the business arrangements between various members of the Hill family and the company. Bank regulators caught up with those various interests and decided that enough was enough. If you think that these considerations are valid only at such high levels, think again.
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Hill founded Commerce Bank in 1973 in New Jersey and over the next 34 transformed it into a powerful entity in the region by creating top notch customer service and engaging in smart marketing moves.
The related party arrangement can be tricky to pull off. Perhaps Shirley Hill was the best architectural design and facilities management choice, yet the fact that she is Mr. Hill’s wife has cast doubt on the deal. Were timelines stretched and costs incurred because of the familiarity between parties? That may have been one of the deliberations that stuck in the regulators’ craw.
If you think that these considerations are valid only at such high levels, think again. Over the years, I had a couple of instances in which hiring a third party to do a job who was also a friend bit me in the tail.
In the past I shared a project with a trusted company, one that served me well numerous times. The objective was to complete the simple assignment within a set time period. We discussed the time line, the budget and the scope quite openly. Yet it was not delivered on time, and there was some discussion of the budget not quite covering the work.
What went wrong? Our friendship got in the way of the project. After having done all the leg work with the client, and delivering on the first stage of the project I released it to my friend. Our conversation about expectations was quite clear to both yet it failed in the details.
Lesson number one: the devil is in the details.
The lead designer was not able to being work immediately due to personal circumstances. I learned that one week after I was expecting the design draft to share with the client. One other detail I had not considered was that yet another provider had to be involved to complete the project as the company did not have the capability in house. By now, with the timeline expanded, the budget agreed upon at the start was also getting stretched.
Through no exact fault of anyone, I was able to present a version of the deliverable to the client two weeks behind schedule. What was supposed to be the work of one week, plus another for revisions and completion, had become now four weeks. At that point, the company was starting to look for payment while the client had not yet seen any of the completed work. Not a good place to be. In the spirit of complete disclosure, I have also known the client for a number of years through work.
Lesson number two: the same people may behave differently in different circumstances, including you.
We all worked through the final comments and tweaks as a team. However, everyone was now occupied by other commitments; not to mention the tough discussions we had to broach so we could get past the challenges. I stand behind my promises and the additional funds for the company came out of my cut. That was no problem at all.
What happened was a classic case of familiarity breeding a false sense of security --because we have known each other and worked together for so long, we all made assumptions about where the project was. We talked at every single stage, yet we didn’t communicate right.
Lesson number three: don’t assume that because you’re talking, the right message is coming through.
Along with the lessons, here are some takeaways:
1. Even if the project is a small one, request a firm quote in writing of what the agreed budget covers. The document will stabilize the details you both agree on and will serve as a reference later.
2. Keep a close contact with all parties involved and insist that the project lead on the other side knows what is going on. In our case, the designer had taken the initiative to interpret the charter one way and took too much time down that road.
3. If you need to outsource a big portion of your project to a third party, select one that has the capability to do the rest. In my case, it would have been better to have everything under the same roof as a third relationship and pricing structure impacted the cost considerably.
We grow most when we learn, and all parties involved in my story are professionals who will deliver the best outcome – we are now in problem solving mode. I am sharing the story with you so you can share yours, I’m sure you have at least one.
C’mon, do tell and stay constructive. What other advice would you give me and others on hiring friends? This is important – we spend a lot of time networking and building relationships, we don’t want all that energy to go to waste when the time finally comes to do great work together.
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Comments
Valeria,
This post awakened me this Tuesday morning. My first thought is "How we you define friends?" I work with a variety of people--clients and freelancers--who I have known for years. But I think of only one or two of them as friends. So I'm not sure I have experiences that mimic yours.
On the other hand, I disagree with hiring only those companies that have the inhouse capability of doing every piece of every job. Many businesses today are virtual companies, including mine. This means that only a few of us work full-time under our banner. Everyone else is a work-for-hire employee. Our clients pay less not more because our overhead is so low. And we almost always beat deadlines by a week or two.
Good post and thanks for sharing.
Posted by: Lewis Green | 08.07.07
Well, in my specific example, involving another provider did inflate costs and time lines -- especially since they were under the direct supervision of another company and not mine.
As for definitions, see what you think when I swap the word 'friend' with person I am familiar with.
Posted by: Valeria Maltoni | 08.07.07
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Posted by: Ethan Wiener | 08.07.07
The line between friendship and business is indeed a tricky one to cross. The three lessons you give are valid whether or not the person you're working with is a friend. Clear discussion of details coupled with clear explanation of responsibilities and expectations are essential when any assignment is given to anyone.
The trick is, as you say, not to let familiarity cause you to bypass the discussions and clear delineation of expectations.
Working on a project with a friend can be a real challenge and it can lead to wrecked friendships. If anything, when I consider a friend for a project, I probably impose even tougher standards on him or her than I would for a stranger.
Posted by: David Reich | 08.07.07
David:
It's interesting to note (for me) that we do spend a lot of time building relationships to get to the point where possibly work is generated... and yet by our own admission, it is really hard to work with people we are familiar with.
So how do we keep from crossing the line?
____
And to the spammer above you (Ethan): just because you can, it does not mean you should.
Posted by: Valeria Maltoni | 08.07.07
How do we keep from crossing the line? I wish I knew. It's probably just a combination of instinct and luck.
Posted by: David Reich | 08.08.07
I hear you, David. I do wonder if it's also a skill of keeping the ability to stay professional and on the issues vs. getting personal and distracted.
Does anyone have an opinion about that?
Posted by: Valeria Maltoni | 08.08.07
I think if we try and keep it professional from the get go, the chance of veering off is greatly reduced. Once we get cozy and the lines become a little blurred, it's a lot more difficult to stay focused. Sure, it's discipline. But projects and work have certain deliverables which everyone has to understand and agree to. If those aspects, and especially deadlines, are blurry...it can put a lot of strain on the friendship. That's just my opinion.
Posted by: Mario Vellandi | 08.09.07
I'm very careful about how I define "friends" versus "acquaintances" in business (i.e. neither is casual), and take care never to involve the former in anything more than referrals, and the latter in projects according to needs and capacity along the two-way street of trust, ability, thorough documentation and continual communication.
Only within a very narrowly-defined scope. Never big scale, never long range, always with a fixed goal and a definite end point.
Posted by: Ryan Turner | 08.10.07
I'm very careful about how I define "friends" versus "acquaintances" in business (i.e. neither is casual), and take care never to involve the former in anything more than referrals, and the latter in projects according to needs and capacity along the two-way street of trust, ability, thorough documentation and continual communication.
Only within a very narrowly-defined scope. Never big scale, never long range, always with a fixed goal and a definite end point.
Posted by: Ryan Turner | 08.10.07
Mario -- absolutely true, let's stay professional. When the lines get blurred, it is much harder to go back to strict deadlines and deliverables.
Ryan -- welcome to the conversation. Sometimes friendships develop from business relationships. Yes, the definite end point is key.
I got here late and saw these only now. They inspire me to ask everyone: do you then stay away from doing business with a friend? It would seem much easier to operate that way from the comments here...
Posted by: Valeria Maltoni | 08.12.07
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Posted by: File storage | 08.14.07