Cal McAllister is founder and creative director, with Ian Cohen (also founder, also creative director), of Wexley School for Girls, a very nontraditional advertising agency based in Seattle.

Ian is one of my best friends, and 85 percent of the time, I know what he's thinking, and he knows what I'm thinking. But there's that weird 15 percent where it's like, How can this person I know so well think something like that? Those are times we need to talk, and in the past we didn't. We're both conflict avoiders. We don't want to hurt each other's feelings.

It came to a head in the middle of the recession, when I went down to Atlanta after some new business. The job was an event, like a trade show. It wasn't the kind of thing most of our people wanted to work on. It wasn't the kind of thing we started Wexley to do. But at that point, we needed jobs. Some employees didn't see that. They asked Ian about it, and because we hadn't been communicating, he told them, "I don't know where Cal is or what he's doing." What they took from that was, "Cal is down there money grubbing, and Ian is up here with us fighting the good fight." If Ian and I had talked about it, we would have been on the same page, because we both wanted to keep the company going. As it was, I came back all bent out of shape because of these rumblings. I had a 1-year-old at home, and I'm trying to keep 22 people employed. It made me want to say, "You know what? Maybe I won't go get the business. I'll just go and have picnics every day with my kid, like I want. Let's see how that goes."

We thought we were giving the employees clear direction. But one too many times we heard someone say, "I can't do my job because Cal wants one thing and Ian wants another." Like we were this two-headed monster. We knew we had to stop avoiding conversations. But we were afraid if we tried to talk on our own, we wouldn't say anything. We would end up talking about Ohio State football. The only way we were going to talk about difficult things was if someone made us. So we contacted a business consulting firm. Their first question for us was, "Do you guys really want to make this work?" We did, very much. So they put together a package for us. It was expensive: half the cost of a junior employee.

Over the course of a month, the consultants interviewed 20 of our 22 staff people and did one-on-ones with the senior leadership and a triple-blind survey of the whole agency. They were very good at getting generally quiet, happy people to talk about the things that bothered them in the slightest. They did 360 reviews of Ian and me and our managing director. Some of the results were disturbing. People were picking sides. They would say Cal knows what we need to do to keep this place in business, but Ian is less in touch. Or Ian understands what people are feeling, and Cal is this guy who works with the door closed and is so focused on the business that he doesn't know what is happening right under his nose with the staff.

We had a ton of Millennials—people for whom this was their first job—paired with what could be perceived as erratic bosses. It was not a good mix. The employees were bitching, and the consultants told us, "They have no right to bitch. But they don't know that, because you've never set boundaries or expectations." We were like the cool parents who let the kids drink beer in the basement.

The consultants helped us define the roles for our senior leadership team. Everything's not on me and Ian anymore. We also have a system for choosing new business, so there are no more gray areas. Now when we have something to say to the agency, it always comes from both of us together. And we set expectations for employees, many of whom are new and more seasoned. We've turned over about 40 percent of the staff.

Our friendship never suffered. Even at the worst of it, we were like, Let's dump this agency and freelance for $10,000 a day, because we work well together when it's just us. It's managing everybody else that causes the problems.