How To Fire Friends

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GEORGETTE BLAU HIRED A FRIEND TO help her growing business. It was easy. A few years into her building On Location Tours, a sightseeing business with brands including the Sopranos Tour, it was still a relatively small operation in New York City, with four full-time employees and about 16 part-time guides. As the company expanded, Blau decided to bring on someone to help with operations. “She had a great personality and a lot of energy and worked in tourism, and she understood a lot about operations,” she says.

Blau soon realized she’d made the wrong decision. The friend began making unauthorized charges on the company credit card—not for herself, but not budgeted either. There was dissension in the staff. But Blau delayed firing her. “Because I was a new business owner, the actual firing not only took me longer, but I was also second-guessing myself that I hadn’t seen the signs,” she says. “I was angry at myself.” The friendship terminated immediately too.

She shouldn’t be so hard on herself. It’s perfectly natural and common, especially in launch phase, to hire buddies for crucial roles. After all, these are people you know and trust; they’ve seen your passion. But if they aren’t measuring up as employees, they can also take a professional and emotional toll, not to mention damage your business.

Having to fire a friend is a critical test, according to Robert Bruner of the University of Virginia’s Darden School of Business. “It is often remembered as one of the pivotal events in the development of a leader,” he says, “because it crystallizes the question: For whom or what do you lead?” Prepare to step up to this leadership challenge, just in case. —STEVE GOLDBERG

IT HAPPENS TO OWNERS, TOO