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On Purpose Enterprises Blog

Wrath, Greed, Sloth, Pride, Lust, Envy and Gluttony…and other common problems of family-owned and privately-held businesses

We’ve all heard of the ‘Seven Deadly Sins.’  They’re a laundry list of ‘no-no’s’ for people; behaviors that are sure to lead to trouble.  In every business, we deal with people; and with people, we can have all kinds of problems.  In family-owned or privately-held businesses, however, we deal with some especially sensitive and unique complications and ‘people problems.’      

 As an advisor to a number of family-owned or privately-held business clients, I’ve seen the following unusually tough and difficult problems.  Do you recognize any of these situations at your company?

  1. The company founder was competent when he first started the company.  It has grown and become successful and complicated, and he now lacks the skills or abilities necessary to lead the company, but he either can’t see it or is unwilling to admit it.  Every one of his employees can see it.  He knows there’s a problem but is afraid to ask for help.  None of his employees is willing to risk discussing with him what is obvious to everyone.  Both communication and growth at this company are at a stand-still.   
  2.  The company founder was a competent entrepreneur and ‘people person’ who loved people and created fierce loyalty among her employees as she grew a successful company.  She is planning to retire and turn control of the firm over to a son who has been working at the firm.  The son lacks experience and is widely disliked by the employees.  No one has the heart to tell her.  Many key managers are making plans to leave…right after the founder leaves.  Some of her most loyal customers are entertaining proposals from competitors, in anticipation of her exit.    
  3. The founder continues to do business the same way he always has, in a rapidly changing marketplace.  He refuses to change, persists in his ways and the business is failing.  He has surrounded himself with a management team which is subservient rather than competent.  He has become angry, abusive and manipulative, blaming everyone except himself for the company’s poor performance.  He is unable to recruit and hire top talent for key positions at the company, losing them to competitors.  Key employees have left the company, taking other employees, customers and intellectual property with them.
  4. The company owner expects high performance from all employees, except for a family member (spouse, sibling, child, relative), who holds a position at the company but consistently ‘slacks’ and under-performs.  The owner overlooks the under-performance and keeps the family member on the payroll, while expecting high performance from every other employee.  Resentment is building, productivity is lagging, turnover is increasing and key employees are leaving. 
  5. The company owner/founder created a unique product that became very popular and became a leader in its market space.  In order to grow the business, the owner hired talented people in key positions.  The company has experienced aggressive growth and profits for the last several years.  Despite the key employees’ stake in the company’s success, the founder will not give credit to them, reward them for performance, or delegate important decisions or duties to them.  Lately, the company’s results are becoming stagnant, and productivity is lagging.  Key employees are leaving for positions with competitors or to start their own companies to compete against their former employer. 
  6. The founder/owner takes lavish compensation, lives in a beautiful home, drives expensive cars and is frequently absent from the business; while compensating their management team and employees at very modest or below market levels.  This owner thinks that ‘just having a job’ is a good deal for anyone who works at their company.  The company owner believes they should be able to take any compensation and perks they wish, despite the needs of employees or local/economic market conditions.  Turnover is high at the company and several senior managers have left.
  7. Family members of this 3rd generation company owner feel entitled to jobs, promotions and compensation.  They are waiting for the day when the President hands over control of the company to the next generation.  The President plans to retire but has not officially named or trained a successor.  In-fighting, rumor-mongering, ‘turf wars’, personal conflicts and jockeying for position are taking place at the management/leadership level of the company.  Rifts in family relationships and long-time friendships have begun.  The negative activity is increasing as the imminent retirement of the President approaches.  Word is on the street, competitors are beginning to poach their best employees and some of the top managers are considering leaving, rather than dealing with the continuing drama. 
  8. The founder has family members in many key leadership or management positions in the company.  A few of these family members are either 1) qualified only by genetics rather than experience, skills or competencies for the position, or 2) delivering poor results when compared to another non-family employee who would be more qualified in their position.  The founder refuses to acknowledge or deal with the problem.  Turnover and productivity issues are occurring.  No employee is willing to confront the family member, or to discuss the problem with the founder, fearing for their job security or repercussions from other family members employed at the company.  Key employees are leaving, because they see the lack of opportunity and upward mobility for those who are not family members or friends of the family.
  9. The company owner is a sales pro who has created a sales culture and aggressively grown the company.  She wants her daughter who has graduated from college with a Marketing degree to also succeed in a sales career, to ‘follow in her footsteps.’  She has placed her daughter in the Sales department and despite her nice personality, she struggles and is unable to perform in the Sales position.  The young lady complains to her parent (the owner) about the high expectations (performance to goals) of the Sales Manager.  The Sales Manager tries to coach and develop the owner’s daughter, but is unsuccessful.  The owner incorrectly blames the Sales Manager for her daughter’s under-performance, rather than recognizing her own mistake of placing her daughter in the wrong position in the company.  The Sales Manager has no criteria by which to determine and prove the daughter’s basic unsuitability for the Sales position to the owner.  The Sales Manager is in a ‘no-win’ position and leaves to take a position with a competitor.  The daughter cannot meet expectations and is also considering leaving the company.       
  10. The company founder has a key employee (C-Suite, Sales Exec, etc.) whose performance has become horribly unsatisfactory, far below expectations.  The company’s bottom line is suffering as a result.  To compound their under-performance, the employee arrives late, treats their fellow employees with disrespect, disregards company policies, has mishandled vendor relationships and shows open disrespect for the founder.  Every employee sees the problem and so does the boss.  By any reasonable standard, the employee should be terminated for under-performance.  The problem: the employee is the founder’s son, who was hand-picked and groomed’ to take control of the company upon the founder’s retirement.  The founder lacks the emotional strength and courage necessary to make the decision and terminate their son.  Key employees are leaving and the company’s reputation is suffering.      
  11. The company owner is a hands-on, competent, hard-charging leader who purchasing the company from the founder.  They’ve been successful through hard work, perseverance, good decisions and leading by example.  They have hired good, hard-working people who have performed well in their positions.  But now, the owner is getting tired – due to age and some health issues.  The owner wants to either sell the business or turn day-to-day management duties over to key employees or family members and work a little less.  The problem: no one except the owner knows ‘the big picture,’ or has command of what is necessary to run the company.  The owner has not delegated any of their key duties, nor trained, nor shared any of the key information with any employees or family members.  The owner is stuck in place; no one with whom to share the load of leadership, no time to rest and no one prepared to take their place.  It is truly lonely at the top of this company.        

Do any of these situations sound familiar?  If so, all is not lost.  They are common problems which can happen in any family-owned or privately-held business. 

PLEASE NOTE: doing nothing is not a good thing.  If left ‘untreated,’ they are like an infection and can lead to very bad things sooner or later.  And, they seldom go away by themselves. 

Now, the good news: every one of these problems is a ‘people ‘problem’ which can be solved by making the right decisions and putting the right (or different) people in the right places. 

It won’t be easy, but there are solutions to every one of these problems for the business owner who is willing to solve them.  And most of these problems are avoidable, or can be dealt with in a manner that will

  • allow the business owner to overcome their challenges;
  • have more productive, lower-maintenance employees;
  • succeed in business and be more profitable;
  • enjoy coming to work every day (again);
  • and (perhaps) retire or sell their business. 

 Those are the objectives that most founders and owners whom I’ve met have in mind.  How about you?    

Whether you’re just starting your business, considering retirement, thinking about a successor or contemplating the sale of your business – now is a good time to create an action plan and make some moves.  A wise man once shared what he referred to as ‘The Great Statistic’ with me: “One out of every one people dies.”  In other words, as a company founder or owner, YOU WILL eventually retire or leave the business…one way or another.  I promise.  Even Methuselah and Sons has closed its doors.  And they had a really long run. 

Why not get ahead of the curve?  On Purpose provides information to executives and business owners which enables them to:

  • make more intelligent and informed decisions about their people and their business;
  • put a “people strategy” in place that works to attract the best talent and keep employees engaged, motivated and productive;
  • build a strong brand which attracts customers and talent; and creates high visibility in their marketplace for increased sales.

 One final thought: the time to fix the leaking roof is a few days before it rains.  Have you noticed any ‘drips’ in your company?

On Purpose Enterprises is a talent management consulting firm dedicated to helping you make the most of your most important asset: your people.  If you’re struggling with any of the situations described above, we can help.   Contact us today for a free 30 minute phone consultation.

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