Why workplace friendship can boost business performance

For many professionals, workplace friendships can quietly transform the experience of coming to work each day, making a difference between work that feels energising and work that feels isolating.

According to a survey on workplace friendships 57 per cent of respondents report that having a friend at work made their job more enjoyable. Dr Jason Walker, a psychology professor at Adler University in Chicago, explains that people with friends at work are happier and more productive.

As an added bonus, "it decreases employee turnover,” he says. “Employees with friends are less likely to leave a job.”

This marks a shift in the popular understanding of the role of friendship in the workplace, as the idea that coworkers are competitors rather than companions has become increasingly outdated.

A KPMG survey identified genuine friendships between coworkers as “the secret sauce” to establishing a culture defined by collaboration, teamwork and a highly engaged workforce.

“Workplace friendship is often misunderstood as a ‘social extra’ when, in reality, it is a performance enabler,” says Lainie Cassidy, director of people and culture at KPMG Australia. “Most people try to keep work and friendship in separate boxes, but that division can sometimes be counterproductive.”

Far from being an impediment to productivity, she says, “strong personal ties at work are directly linked to trust, learning, creativity and performance”.

Good for business

The impact of workplace friendship became more pronounced during the pandemic, when many organisations shifted to remote and hybrid models.

According to a Gallup survey, workplace satisfaction among employees who did not have a close friend at work fell from 23 per cent to 15 per cent between 2019 and 2022. As the pandemic progressed, employees with a close friend at work became more likely to recommend their organisation to others and less likely to actively look for a role elsewhere.

Social scientist and author Dr Michael Arena says workplace friendship has a range of benefits that includes increased engagement and retention, “but even more than that, we have seen a statistically positive impact on performance and even upward mobility”.

Workplace friendships — also known in the research as “multiplex friendships” — can help prevent problems such as burnout by providing both emotional support and professional guidance.

A workplace where employees form friendships is also more likely to score higher on factors such as psychological safety, agility and adaptability.

“People who have friendships at work are more likely to embrace change,” Walker says, noting that they can more easily adapt because of the space and connection that a friendly ally creates.

The friendship "sweet spot"

In some circumstances, workplace friendship can come with drawbacks.

A psychological study found that the boost to job performance caused by strong connections with colleagues was offset in some instances by the emotional cost of maintaining these relationships. According to the study’s authors, “having a large number of multiplex friendships at work is a mixed blessing”.

Arena says the “sweet spot” when it comes to multiplex friendships — people with whom you work closely and share an emotional bond — is four or five. “Not having any is detrimental on things like retention, but having too many slows down progress,” he says.

Cassidy acknowledges that while workplace friendship is generally a positive, some may do more harm than good.

“Friendship at work is not a distraction; it is infrastructure for engagement, productivity and retention,” she says. “However, relationships can become problematic when they compromise fairness, inclusion or accountability.

If friendship leads to perceived favouritism, exclusion of others or the avoidance of difficult conversations, then that can erode trust rather than build it.

“The real risk is not friendship itself, but when boundaries blur between personal loyalty and professional responsibility.”

A culture of connection

In modern working life where hybrid and remote work is common, Cassidy believes organisations can intentionally invest in in-person connection, allowing potential friendships to grow naturally.

“Organisations should design work environments where connection can happen organically by creating psychological safety, encouraging collaboration over unhealthy competition, and designing spaces and rituals that bring people together,” she says. “In a hybrid world, connection no longer happens by accident, so culture must be intentional.

When organisations invest in that in-person connection, they certainly see returns in engagement, innovation and resilience, particularly during change.”

Cassidy describes how employee connection is fostered through leadership, culture and a range of structured initiatives at KPMG Australia.

“We have collaborative teaming models that encourage cross-functional work and learning, as well as very detailed inclusion and wellbeing programs that prioritise psychological safety and belonging,” she says.

“Some of those programs, as an example, are our employee networks and communities that really create space for shared identity, peer connection and support.”

Cassidy believes that the approach to collaboration and connection should be strategic rather than ad hoc. “The focus is not on socialising for its own sake at work. It is about building trust, inclusion and high-performing teams.”