Don’t Hire Your Friends… and Don’t Make Friends With Your Employees

In 1966, when, at age 16, I started my first “real” business, I hired two of my closest friends to work for me. And it was fine. Between then and 1983, I started and ran a half-dozen other businesses and always hired friends to work for me – with no problems that I can remember.

I began to change my egalitarian view of business relationships in 1983, when, for the first time, I ran a business with more than 100 employees. I hired friends (and even family members) to fill certain job openings. These were hardworking people that for the most part did a very good job. But because of the size of this business, I couldn’t be involved in everything they did.

Unlike my earlier businesses, I wasn’t working shoulder to shoulder with my worker/friends. I wasn’t able to settle disputes before they began. Nor was I able to resolve personal problems because there were protocols I had to respect.

As a result, I got dragged into some uncomfortable situations. And because I always put my friendships above my loyalty to the business, the outcome was invariably problematic. Feelings were hurt. Productivity was sacrificed. And in two cases (that I’ll never forget), putting friendship first cost me (and my partner) more than a million dollars.

After suffering stubbornly for several years, I made it a rule: I promised my partner – and myself – that I wouldn’t hire friends or family members ever again. It was a relatively easy rule to follow, and I’ve obeyed it. But I’ve had trouble with the flip side: not allowing myself to befriend employees.

Since I work mostly in publishing and marketing, I have the good fortune to employ lots of very smart and engaging people. Every week, I meet some new employee that has the qualities I seek in a friend: intelligence, good character, and wit. I can’t stop myself from wanting to be friends with these people, even though I know I shouldn’t.

What I do to resist the temptation is tell myself, very consciously, that the desire I have to make friends with them is a sort of mental illness.

I’m serious. I tell myself it’s a morbid combination of narcissism and self-loathing.

And I think, at the root, it is. I want to “be there” for these good and interesting people. I want to help them achieve their potential at work. But I also want to help them in every aspect of their lives. In my rational mind, I believe that’s all I want. But in the arrested development of my emotional brain, I want something in return. I want their admiration and everlasting devotion.

It feels to me, as I’m sure it does to you, creepy when I put it that way. And that feeling generally dissuades me.

The Friendship Imperative

Friendship is a necessary component of a well-lived life.

You can have everything else – wealth, stature, fame, and even power. But if you don’t have friends – true friends – you have a life that is barely worth living.

Yes, friendship matters a great deal. But boss-employee friendships pose problems, all sorts of sticky problems that get stickier as those friendships grow.

Not all of my business partners agree with me on this. Some actually promote work friendships. They say it makes for good company morale and a better work experience for one and all.

Just this morning, I read a loony article in an online business magazine that supported this view. (I will protect the publication and its author out of compassion.)

“Today’s workforce suffers from a lack of work friends,” the writer proclaimed.

“Employees need friends to satisfy [their] need for companionship, love, and safety.”

And just in case you didn’t see this coming, he continued with this doozy: “Employees need friendships in dealing with the stress, politics, and hostility that exists in the workplace. They need friends they can turn to when issues arise around sexual harassment, bullying, layoffs, and poor management.”

Really?

I believe it’s impossible to have an opinion like this unless (a) you are an academic specializing in business management, or (b) you’ve never actually employed more than a dozen people.

I am also aware that some CEOs of large businesses promote the idea that “employees matter first” and that if you focus on making your employees happy, everything else will take care of itself and you’ll have lots of happy customers.

This is an equally bad idea. But it’s actually another issue. (We can get to that in another essay.)

A Self-Imposed Dilemma

I believe in caring about employees.

I believe employers should care about the productivity and potential of their employees and make sure they have the resources to excel at their jobs.

I believe employers should provide their employees with safe and humane working environments.

I believe, too, that employers should care about company morale.

But when business leaders confuse caring about these things with caring about the personal problems or personal happiness of their employees, they put themselves on a slippery, downhill path that eventually involves compromise, favoritism, and all sorts of ancillary problems.

If this philosophy of employer-employee friendship becomes commonplace in the company, the workplace degenerates. The work ethic and, more importantly, the purpose for working become inwardly focused – toward internal relationships and their needs and away from the outwardly focused customer relationships that are the foundation of every healthy business.

Think of it this way: As a business leader, your primary job is not to make your employees happy but to make your customers happy. When you befriend your employees, you are wittingly or unwittingly telling them that customers come second. That is a very damaging and debilitating message.

If you don’t agree with what I’ve said so far, you need to know this: Your employees don’t need your friendship. And if they are smart, they don’t want it. They will see your effort to befriend them for what it is to them – a burden that will one day make their business lives heavier and problematic.

What your employees want from you, and deserve from you, is your support and guidance. They want ideas and mentorship. And the best of them will want you to give them the freedom to work on their own. The fact is, however good it might feel, it is difficult, if not impossible, to provide those things within the boundaries of friendship.

My Six Secrets to a Six-Figure Income

Founder’s Note: I’m so excited to bring you this note from Mark Ford… the newest (and perhaps most iconic) member of our team. In my mind, it is the perfect essay for Manward. It reveals the truth about how to get rich – the truth nobody else wants to talk about. Enjoy it… and let me know your thoughts.


I’ve been writing about creating wealth for a dozen years. Before then, I wasn’t writing about it. I was doing it.

My income has actually increased since I stopped actively “creating wealth.” But that’s the thing about getting rich – when you get rich it is just too damn easy to get richer.

It’s not fair, but it’s a fact.

When I decided to get rich, I didn’t know the first thing about the subject. I was an editor. I wanted to be a novelist. I had never taken a course in finance or economics. Plus, I was broke.

But I had a great advantage. I was working for a human wealth machine – a man who, at 43, had already created three hugely profitable businesses. He decided to adopt me as his surrogate son and taught me everything he knew.

I retired 12 years later with a net worth well in excess of $10 million.

Two years later I went to work as a business consultant to Agora. Bill Bonner, Agora’s founder, adopted me as his kid brother. He also taught me everything he knew. In the 15 years that have passed since then, my wealth has multiplied many times over.

Starting at age 50, I wrote about entrepreneurship (under my pen name Michael Masterson) for 10 years. I wrote about close to a dozen books and several thousand essays. I adopted my readers as my surrogate siblings. I told them everything I knew about starting businesses.

Then, at 60, I retired the Michael Masterson pen name. Since then I’ve attempted to tell my readers everything I know about creating wealth – which is a bigger and more complicated subject than entrepreneurship.

Today, I want to briefly introduce you to six basic truths about wealth building that have made me successful.

Some of the secrets you won’t learn anywhere else. I haven’t seen them written in the mainstream financial press. And many of them were learned the hard way – by me.

First, let’s begin with some of the lies about creating wealth. At one time or another in my wealth-building career, I foolishly believed in the following so called “facts”:

  • Wealthy people are stingy for a reason. The secret to becoming wealthy is to scrimp and save.
  • The stock market is the most efficient way to invest. You can’t become wealthy unless you understand and master the stock market.
  • Geopolitics determines investment outcomes. You can’t become wealthy unless you understand politics and economics.
  • The general public is always wrong about economic and financial trends. The fastest way to acquire wealth is to invest as a contrarian – i.e., against market sentiment.
  • Economics is governed by the inverse relationship between risk and reward. If you are not willing to take big risk, you will never enjoy big profits.

Do any of these “truths” sound familiar? Have you been following any gurus that advocate these “facts”?

If so, pay attention. I’m not the only person in the world that went from broke to rich. There are many, many people that have done so and some of these people have written books about it.

I don’t read all the popular books on wealth building because I feel comfortable with the system I’ve developed myself, through my own experience. I don’t follow the advice of others except when it dovetails with my own experience.

But that’s not to say that my system is the only system that works. Nor do I want to argue that it is the right system for you. All I can do is report my own experiences to you as honestly as I possibly can.

You are my surrogate siblings. I want you to succeed. The only way I can help you is to tell you what I know to be true. And this is what I know – from my own experience – to be true about creating wealth:

Truth #1

You’ll never get rich unless you understand some fundamentals about saving, spending and investing.

Truth #2

The single most important factor in avoiding the spending spiral that kills wealth is to stay in the house you have now. Nobody else that I know of has made this simple point. But I can tell you that it is true.

Truth #3

Stock investing (or even stock and bond investing) are inadequate strategies for building wealth. They won’t get you rich or make you wealthy however much you wish they would.

Even Warren Buffett, the world’s most successful investor, knows this. His wealth has come not from being an individual investor but from being the principal of Berkshire Hathaway – a business. Keep that thought in mind every time you hear his name quoted.

Truth #4

The most important single factor in wealth building is the size of your investible income. Investible income is what you have left over each month after you’ve taken care of your lifestyle expenses.

Again, nobody else I ever read had the courage to say this before I did. (Now I see one of my protégés saying this and of course I am flattered to hear him pretending it is his own idea.)

Actually, that’s the second most important factor in building wealth. The No. 1 strategy is acquiring equity in a startup business. There are many ways to do this. The most commonly talked-about ways are downright foolish. But there are smart ways to do this even if you are a novice to business.

Truth #5

Investing in rental real estate is unique – it stands halfway between active income and passive income. Next to entrepreneurship, it provides the highest return you can get from any financial endeavor.

Truth #6

The biggest mistake retirees make is giving up their active income. I know that this is exactly what you hope to do some day. But I’m warning you. It’s a big mistake.

If you are already retired, you are probably hoping you can replace that income with passive investment strategies. I’m here to tell you that they won’t do.

To keep your wealth for a lifetime you need multiple streams of passive income. Your goal should be to build each stream of income to a level that you can live on that and that alone.

In the coming weeks, I’m going to continue sharing my wealth-building secrets with you. I’ve been so fortunate to have had mentors who have helped me, and I hope my success will inspire and motivate you to take steps to building your own wealth and living rich.

BROUGHT TO YOU BY MANWARD PRESS