Scenario: Phil Schiller has been good friends with Tom Johnson for years. They go fishing together, play poker occasionally, and their families get together for backyard barbecues and football games. Not only is Tom a good buddy, but he is also Phil’s cabinet supplier.
Phil is president of Schiller Homes, a high-end custom home builder in a small town, and Tom is the owner of Quality Cabinets. There is only one other cabinet supplier in town, and Phil had stopped using them years ago. Tom carried a nice line of cabinets at reasonable prices, and he had an excellent kitchen designer on staff. Clients were happy with the results and so was Phil. Then six months ago, Tom’s designer quit and started working for his competitor. The new kitchen designer Tom hired wasn’t nearly as experienced or talented as the previous one, and that’s where the problems began.
On their last project together, the kitchen design had been disappointing. Plans took longer than needed to be completed, and serious mistakes had to be corrected. Even though the client had specified a professional stove requiring a high-capacity range hood, the designer had ordered a normal-capacity hood that had to be replaced. Quality Cabinets then charged the client for the initial hood, on the grounds that it was custom ordered and couldn’t be returned. Phil had to remind Tom that the mistake had been his designer’s fault, not the fault of the client.
Phil is about to begin construction with a new client, and he knows that the kitchen is going to be a critical part of the design. He doesn’t want to go through an experience like the last one, but Tom is Phil’s friend, and if he sends the business to Tom’s competitor it will inevitably affect their relationship. What should Phil do?
Solution: Friendship in business is always a sticky situation. As a builder you have a duty to your client and your own business that is often in conflict with your obligations to subcontractors and suppliers. Taking care of the client requires that you give them good service at a reasonable price, and your commitment to your own company requires that you eliminate unnecessary costs and maintain reasonable profits.
Whenever one loyalty conflicts with another, you have to decide which is more important. In this case, the loyalty to the client and the company supersedes that of the subcontractor. Phil can’t afford to weaken the reputation of his own company in order to support his friend, and doing so would not only be an injustice to his clients and his profits, but also ultimately to Tom himself.
Phil’s friendship with Tom requires him to sit down with his friend and level with him. Tell him to his face that he won’t be using him on his next few jobs and why. If Tom can solve his internal problems not only can he save his relationship with Phil, but he also will be better off all around. His other clients will appreciate him, his business will again thrive, and he will have earned the respect and continued allegiance of his friends and colleagues.
While conflicts of loyalty are commonplace in business, the important concept here is that the right way to solve this situation isn’t to choose between one or the other, but to confront the situation and address the underlying issues. In reality, Phil’s conflict is not with Tom. Phil wants to support his friend and make his clients happy. Tom is the one with the conflict, a conflict between dealing with his employee and keeping his customers satisfied. Until Tom can resolve that situation, other problems will inevitably arise.
