All too often, the following conversation happens in businesses everywhere:
“We need to find someone to help us make this widget.”
– “I have a friend/relative/golf buddy who does that. Let’s go with them!”
Doing business with someone you know through personal connections is a common practice. It has its benefits: you think you know what to expect and your buddy may give you a “friends and family” discount. If your business gets what it needs, then you have a win-win situation where all parties get some business and the working relationship is positive.
Back when I was an engineer, some colleagues and I dubbed this practice the “Brother-In-Law Network” after a few too many of these conversations:
“Ugh! We got the wrong parts and/or they missed the deadline again! Why are we (still) working with this supplier?”
– “I don’t know. Maybe because the guy who decided it has a brother-in-law working there.”
We came up with this name long before I had brothers-in-law, so I should note that I love my brothers-in-law and I would do business with them. However, my decision would be based on an evaluation on how they stacked up against their competitors. They would have to be at least as good as their competitors on product or service factors that are important to me. If it was for my company, though, I would just make the referral and let the subject matter experts decide. Since I am in a position of influence, I must go out of my way to make sure the decision makers did not go with my referral just because of my relationship with them.
When choosing a supplier or outsourcing partner, always do your due diligence and select the partner with the best product, service and performance that meets your budget. Even when you are moving at breakneck speed, take a bit of time to determine what is important to your business and evaluate quotes from multiple sources. While your buddy may be familiar, he or she may not be the best on which to spend your money, even when it is the lowest quote.
If a personal relationship is involved, be aware that things will get complicated when something inevitably goes wrong. Can you play hard ball with your buddy when business pressures force you to negotiate drastically lower prices? Are you willing to cause a rift in the family by switching to a competitor when your brother-in-law repeatedly misses deadlines or is not capable of scaling with your needs? Because of these relationships, businesses often stay with sub-par suppliers and partners. This is not only expensive to the company, but it frustrates employees who have to deal with the problems. They will feel powerless to correct the situation because it may affect the relationship with someone of influence on their careers.
Since the “Brother-In-Law Network” is such a common business practice, I am sure there are a lot of stories out there of when it worked fabulously or when it went horribly wrong. When you did business with a friend or relative, did you worry about the potential risk to your relationship? Please share on the comments and let’s discuss.