FOR entrepreneur R. Ananthan, friendship is something best left outside of the office.

The managing director of local water company MattenPlant says he always puts his business first and it is difficult to stick to that stance when friends are added to that mix.

In the past, he had hired a former colleague whom he was friendly with.

“But over time, that friendship took a beating and now it’s become more of a professional relationship.

“At some point, you will have to make some tough decisions for the business, and that might be telling a friend that he’s not really doing a good job.

“A friend will see it more as a letdown of the relationship that both of you share. But as their boss, your concern is on moving the business ahead,” says Mr Ananthan.

His story highlights some of the perils of hiring friends as employees.

Assistant Professor Trevor Yu, who specialises in strategy, management and organisation at Nanyang Technological University’s business faculty, highlights some other concerns.

“If you are hiring friends, chances are they will share some of your outlooks. This may result in a shortage of fresh ideas coming into a company or team.

“This similarity also means that friends will not be critical towards each other and that could lead to groupthink, which is an unwillingness to question or criticise each other’s ideas.

“In the long term, that could have an impact on the type of creative ideas and innovative solutions generated.”

Prof Yu adds that when supervisors employ friends, existing employees might feel that the hiring decision was biased or unfair.

“This is especially so if the friend is hired under a method that differs from the company’s standard hiring procedure, or if the new hire is earmarked for special treatment.”

But he says not all situations involving the hiring of friends are negative, adding that friendships can help form more trusting work relationships, especially when members of a team are expected to work closely together.

This is because these friends-cum-colleagues have a better understanding of each other’s work habits and preferences.

He points out that people who are hired by friends tend to come in with more realistic expectations of the job and the office culture.

This article was first run in The Straits Times newspaper on May 27, 2013. For similar stories, go to You will not be able to access the Premium section of The Straits Times website unless you are already a subscriber.