Do you still believe you can manage and be personal friends with some of your employees? Do you still believe you'll be able to make considered and fair business decisions without taking into account your friendships? Well, it's time to get real. What if a member of your staff, who is also a close personal friend, comes up for a promotion and is competing against another one of your employees, who is not a close friend? You don't believe the friendship factor will affect your decision in any way?

Scenario One: You select your friend based, of course, on the merits. You conclude he is the right man for the new job. Is the runner-up, not your friend, going to accept your decision at face value? Right or wrong, it's going to be perceived as favoritism.

Scenario Two: You tap your employee, not your friend, for the job. You base your decision again on strictly the merits. Your employee and friend is going to feel betrayed, even if he says he accepts your decision. How could a friend not “look out” for a friend and give him the upper hand? And then there's the possible perception that the promotion was given to the non-friend employee precisely to avoid the perception of favoritism to the friend employee. In other words, you are in a no-win situation.

Need more convincing? Let's venture into the ultimate and most difficult managerial decision, terminating an employee, and how that would prove very problematic for a coach and a friend. Think about this one.

Say you have an employee who's your personal friend, but who's not doing her job, what do you do? Keep her on board at the expense of performance, positive results, and a strong bottom line? How do you think the rest of your team will feel if they know a rotting piece of deadwood is languishing in their midst, simply because she's the boss's buddy? They'll be disgruntled. The aura of trust will be shot. The work atmosphere will turn sour. And you will never again be respected.

For argument's sake, let's say that you went ahead and did the right thing. You terminated this employee who wasn't doing her job, even though she was your friend. You made the right decision, but in the wrong circumstances. That is, you shouldn't be firing your friends, because you shouldn't be friends with your employees in the first place. Plus, you'll probably lose a friend. Friendship is bad for business — and very bad for friendship, too.