I’ve often commented about profitability and how what’s between our ears affects the profits of our business. But profits are affected by our eyes as well. That’s right- the things you focus on in your businesses also contribute to the profitability of your company. Here’s one example…
People. Do you have an “unhealthy focus” on the people in your business? If so, you will make business decisions based ONLY on the impact those decisions will have on your employees. I submit you must ALSO consider how your actions will affect your bottom line.
Too often in my own career I’ve compromised the fiscal health of my businesses by falling victim to this sad scenario. I’d overlook an employee’s marginal or even poor performance by telling myself, “At least they’re trying.” Or I would drag my feet confronting an employee’s disruptive or counterproductive behavior by saying, “At least they show up every day on time.”
Yes, I found myself continually re-learning these same two essential business truths: 1) These situations never resolve themselves and 2) they rarely work out long term!
So now I want you to reflect. Do you keep people on the payroll out of a sense of misplaced loyalty? (Or guilt?) But what about all your other employees whose wages, pay raises, bonuses and/or job security will be affected by this financial drain? For example…
Imagine telling a brand new employee that we’ll call Charlie: “The reason your starting salary isn’t higher is because I have people on board who aren’t carrying their own weight but I’m keeping them around anyway. Yep, Charlie, I’d love to fire these non-performers and pay you what you deserve but these people have been here for years and I don’t know where they could find another job making the same good money. Charlie, I just can’t look them in the eye and tell them they’re fired. I’m sure you understand…”
So how do you think Charlie will respond? Or what will your long term and capable employees do? Yet business owners basically say this by their inability to take tough actions all the time!
Now imagine how this scenario gets muddied up when the non-performer is a family member! Parents award jobs and overly generous compensation to children who are simply not qualified to perform their jobs. Children support parents by giving them token jobs and awarding them perks the company can’t afford.
Now, before you drive to Ohio to burn down my house because you think I’m anti-family, please hear me out. I’m all in favor of using your business to provide opportunities to family members. Done correctly, this can be very rewarding both emotionally and financially for all parties concerned.
But nobody wins long term when you drain the company treasury to support non-performing people- no matter who they are. (But it certainly can be a subconscious way to continue to live out the money lessons we learned as children—especially when those money lessons were delivered with a hefty dose of guilt.)
So, how is it at your company? Are there employees on board who really shouldn’t be? Look deep inside yourself. Could one of the reasons you continue to keep these marginal people around is that it’s easier for you to complain about their poor performance and low profitability of the company than it is to confront the situation?
Are the decisions you make in your business made with the best interest of the entire company in mind? Or are they driven by the interests of just a few long-term but non-performing employees or family members?