Too Important to Fire

We brought in our first non-family senior executive to help professionalize and grow the business.  The senior manager performed his job well and was eager to take on more responsibility. Eager to keep him satisfied, and retain him, we continued to give him increased responsibility across other functional areas.

In a few years, we realized that he wasn’t as competent in the newer areas, as he was in his core responsibility for which he had been hired.  It’s easy to fall into the thinking that someone who comes from a larger scale business is an expert in all areas. This proved wrong for us and we found the newer areas under his responsibility were hurting the business.  We stopped adding responsibility and discussed ways to move him back to his core strength expertise area. This caused him to threaten leaving with his management staff, unless he continued to receive increased responsibility and compensation.

We decided to terminate the employee.  But it was too late. This senior manager had assumed so much increased control and responsibility that they had become too important to fire.  If he left, it would leave a big void of responsibility and would likely bring staff with him. We weren’t sure we could survive this situation. We finally terminated the employee and prepared ourselves for the fallout.

Surprisingly, the situation turned out well. No other staff left with him and we replaced him with three medium level people. We spread his responsibility among them, rather than have it concentrated with one single person.  Even better, it also gave our family the opportunity to get more hands-on and work closer with the employees in the functional areas during the transition time. It brought us closer to the employees and helped us better understand some of the issues in these areas more directly.

Bringing in non-family talent can be one of the most important things your family business can do to professionalize and grow your business to the next level.  Just be aware of individuals who may be overly ambitious and need to be constantly challenged through increased responsibility and compensation.  Although high ambition is a good trait in a larger fast track business, it may be too unwieldy in a small family business.

5 Takeaways: Working with Non-Family Executives

  1. Ambition is great, but keep it in check
  2. Resist the temptation to cede management in other non-related areas
  3. Identify other challenges to retain these highly ambitious individuals. Special projects, etc.
  4. Diversify responsibility among several non-family managers
  5. Ask yourself the question: Where will they be in three years?