Image courtesy of David Castillo Dominici/ FreeDigitalPhotos.net
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.
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January 26, 2011 at 9:31 am
I’m not sure to understand all the meaning but why to place brother-in-law partnership at the same level as a simple ressource or provider? the world is actually in a mentallity of competition and sometime I hear “ohh I can have a better deal in that place” it’s really frustrating when you do your best and more if it’s someone of you family telling that. sometime you cannot have the same deal because your compagny is yinier because you have not the “contacts” or just because you have not a part of your employees in asia…
for me if you are not in danger and your buisiness will not suffer a lot of that deal why don’t give a chance to the brother-in-law? if he’s not abusing of that link of course. Sometime I hear “oh that compagny can offer me that and that and that in add” and you ask “ok how they are doing?” and it seems it’s a big secret like if answering is killing the golden eggs chicken.. it’s like to say oh that cake is better than yours but I won’t tell you why I will just buy it too bad for you…
Actually I see a lot of compagnies making a lot of money and at the same time firing a lot of employees. I see a lot of stress in compagnies with people saying “your colleagues are doing better” and I fell no humanity in that
I just wanted to say that competition is not the good way and make money is good but in my mind I prefer to make buisiness with people that I trust and help them to involve in their offers rather than just assimilate them to a simple provider for any reason
I don’t want to say stupidity but the fact to deal with cold blood with brothers-in-law is more a fear to be abused cause of the link or to feel attached by mercy feeling. we don’t want to have to deal with more problems and we say ok I deal with my compagny, you deal with yours and I don’t want to undesrtand what’s the cause of.. I just want better …
it’s like in the life with friends or in couple sometime we are agree, sometime we are not but we don’t break the link just because someone else at a moment looks like a better deal..
My meaning of the day :^)
January 26, 2011 at 8:08 pm
Doing business with friends and family is great, when it works well. I agree with one of your points. New and/or small businesses can especially benefit from personal connections when things go great and they can be more tolerant of issues when they come up. There is nothing wrong with doing business with friends and family if everything goes well, but there are risks of hurting the relationship if things don’t. These things should at least be considered before doing business.
For larger businesses, it does get more complicated because employees will have to deal with the problems and won’t complain to the boss that his friend/relative is the problem. For larger businesses competition is a big deal and frustrations with suppliers wastes time, money and energy.
I would never recommend switching suppliers on a whim because there appears to be a better deal somewhere else. All business decisions should be done with certain amount of critical evaluation.
January 26, 2011 at 11:11 pm
In all families there is tensions, the same if you don’t have to work with, if you refuse to make business it can also create tensions if the person is not open mind, she will think you snob her but I understand the preoccupation.
about the second point, true if there is a problem with colleagues they will feel bad to have to report it but it’s also a problem of communication from the colleagues, personally in my studies I learned that I have to assume what I think and there is way to says the things objectively without to make the other feel bad
if I have to deal with that kind of situation I just make sure that other colleagues feel the same and I can speak in their name and I ask 5 minutes to the boss asking him what we have to after exposing the issue quietly .
it’s not the first time I read that type of news exposing the difficult to deal with family/friends in business
I just regret that people see that as a potential issue. When I look at some communities with strong links making a lot of money I think that perhaps we miss the core of the problem in dealing with “brothers-in-law” I often think to celtics in france fighting between themselves when roman are taking the place…
the truth is out there
I just have a dream where people are able to think a long time before to speak a little as an Ant and just take pleasure to smoke pipe-weed together
but I have to admit I’m far of that wisdom himself and human links are complicated :^)
January 27, 2011 at 9:00 pm
Interesting – this is something people are kind of aware of, but they probably don’t take it seriously until they run into trouble themselves.
I don’t know if culture has anything to do with this, but I’m from Burma/Myanmar and Burmese people are very family-oriented. So, it’s very common to hear something like, “Yeah.. I’ll let my nephew run this business instead of hiring a stranger, because blood-relatedness means trustworthiness.” Just a thought.
January 27, 2011 at 9:41 pm
Yes, culture is definitely a factor and family-run businesses are a fine tradition. If the nephew is reasonably competent, or you’re willing to train him, then the trustworthiness that comes with family is a bonus, particularly with small businesses. My caution is that people think about what could go wrong in advance. We used the “Brother-In-Law Network” reference for those business relationships that were not working so well.