In my last years of professional experience, I was able to verify, in small and medium-sized organizations, especially after the tenth year of life, a progressive atrophy of the management's ability to effectively run the company.
By driving, I am obviously referring to setting an objective, and ensuring that the company as a whole designs and executes the actions to achieve it effectively, in an economically efficient manner.
I would like to summarize a small example, (somewhat modified, but basically supported by a query they made to me) but very clear of this loss of control…
“Ten years ago I hired a salesperson, quite active and awake. I also fulfilled my (few) indications at the bottom of the letter, without arguing too much and contributing some interesting ideas.
In the first two years, he got a good number of clients through an intense work of visits, about which he was not accountable, because month after month, this first seller brought more orders.
Therefore I was not very interested in how he worked.
In the third year, I recruited two more vendors (one of them, a personal friend of his) and appointed him head of sales.
He continued taking care of his clients, but he practically stopped capturing new ones, a task that he left in the newly incorporated ones.
I also noticed that when I gave him directives, he began to argue, and no longer executed them with the same alacrity.
But I did not give it much importance because the sales were good.
I even considered that I should listen to the opinions and concerns of my sales manager.
In the fifth year, with six salespeople, he began to claim because, after so much effort, he wanted a fairer remuneration.
I decided to give him the raise and a car for leasing, because I realized that he had a very good knowledge of the client portfolio, and I was worried about the idea of him going to the competition. Furthermore, the company had grown and could pay for it.
A few months later, I appointed him manager, so as not to distort the internal remuneration scales and make him hierarchical.
In the seventh year, seeing that new management technologies were incorporated into the market (both direct competitors and other companies), I decided to hire a consultant and a trainer to incorporate those tools (which included taking orders online, for example).
On the other hand, other areas had developed enormously (such as systems) and there were no innovations in the commercial area.
He raised all kinds of resistance to participate, and I practically had to ask him please to attend.
He boycotted the training task, wasting the company time and money, arguing that it was not necessary.
Of course, sales were still good (although every time I invested more in promotion and advertising, and the sales area, it was limited to attending to what promotion and advertising generated, which was quite a lot).
I was finding it harder and harder to get my directives implemented, without enormous political cost.
Meanwhile, he wove a good relationship with the vendors, whom he called his "chickens."
At the eighth year, I decided that it was imperative to talk to him in depth, and bring him back to the original good performance.
He argued, surprisingly, that the effort he had made was not recognized, that he knew very well how to do things, that he did not need anyone to teach or tell him anything, and that I was mistreating him.
In the ninth year, the controversies were more frequent, and my commercial manager gave his opinion on everything and especially, speaking ill of the company and of course of the other sectors: that management was ineffective, that it produced a failure and that not to mention systems.
I told myself that I should be patient, and that perhaps I was wrong and that I should be more tolerant.
At the tenth year, after a strong discussion, I consulted with the accountant and the Human Resources manager.
The accountant told me that the compensation, in principle, should be $ 450,000.
The Human Resources manager told me that the vendors in the area were not trained to fill the vacant management, and that recruiting a new, external manager would take at least 6 months of search and selection, plus a year to have effective control of the area.
In addition, my manager had all the critical business information, and had earned the personal loyalty of the new sellers, with whom he exchanged favors, conceals, awards and punishments.
Given the tremendous real and potential cost, I decided to go ahead with it, although every decision I make must be "negotiated" and I make more and more concessions so that it executes what I want. I got him an assistant and a secretary. Still, I don't always get things done, but I have no other way out… »
No further description is needed, my client fell into the syndrome of " progressive business paralysis ", with a clear loss of decision-making power. Or rather, it retains the power of abstract decision-making, but it does not achieve the effective execution of these directives without enormous personal effort.
How do you get to this?
I think that if we read all the mail it comes because of a terrible accumulation of errors in the address.
a) The good initial seller was promoted to sales manager, but without verifying his technical capacity in this regard. If we wanted to promote him we should have trained him properly.
b) we overlooked methodological and procedural errors, because "sales were good". We let the results cover everything.
c) we allowed the discipline to relax, by not keeping track of their tasks, and accepting the first replies and discussions without proper marking. Any member of the organization must be very clear about the limits that we are going to tolerate.
d) we did not demand, when hierarchizing it, to train its second line, nor did we train it externally. But still, we accept that he himself stopped acquiring knowledge. In this way we open the space for competitive backwardness.
e) We left room for him to build his own space of power, instead of delimiting it, within a reasonable organic development plan. We allow the creation of informal communication channels.
f) We do not compel the bosses, managers, or middle managers to make a transparent management, in the sense of keeping the management informed of each step. Attention: this should not mean preventing you from doing, but knowing what you are doing, in real time.
g) we incorporate people on his recommendation into the company, instead of following a regular selection process. Thus we facilitate cronyism, which normally leads to the formation of cliques.
h) above all, we let it remain in the management, without bringing innovations or changes (own and in its team) at a reasonable rate.
i) As if that were not enough, we did not create in the company a reserve fund for layoffs, at the level of the labor liabilities that were accumulating (and that we normally ignore). Somehow we misrepresent the notion of profit.
These would be the most obvious own errors and endogenous causes.
Now let's add the exogenous ones, on which the legislators should reflect and that are beyond our scope:
- the very high compensation amounts.
- lack of salary and functional flexibility (little chance of variable awards or punishments)
- a culture of cronyism, fostered by all of society.
- shortage of competent human resources (difficulty in recruiting)
As a side effect, which every entrepreneur should take into account, the company loses value.
Many times, as an operator in mergers and acquisitions, I found that the buyer wants to deduct the total amount of contingent labor liabilities from the intended price…
It is obviously an exaggerated and predatory attitude, but… as we saw… in certain cases some logical foundation has, and on which we must reflect.
