The biggest mistake most business owners make

Small businesses are a tricky thing – there are lots of mistakes that business owners can make.  Not paying attention to their customers, not keeping up with technology, constantly trying to be a hero, not understanding cash flow!  All of these will eventually kill or cripple your business, but the biggest impact, the mistake that most business owners make is not addressing their ‘People’ problems.

Because of their size and the need to be part of a community, a small business is driven (good and bad) by the quality of the people and with only a few employees (relative to big corporations) there’s no where to hide!

Let’s say you’ve got a small company with 10 employees…and 2 of them are problems.  That’s 20% of your work force!  But it’s actually worse than that – typically people problems bring everyone else down as well – so those 2 issues might have you at 50% effectiveness.  It’s doubtful you’ll be around long at that pace in this economy.

What exactly are people problems?  Let me know if you’ve heard of any of the following issues in a small business:

• A salesperson who doesn’t actually bring in any new business
• The employee who brings lots of extra personal ‘drama’ to work every day
• Slackers who do as little as they can possibly get away with
• Someone who lies, cheats or steals
• The me-first politician, positioning themselves ahead of the team
• The second cousin to the owner of the business who just doesn’t get it
• The stubborn critic who really doesn’t like change
• The employee who everyone likes, but who doesn’t actually get anything done
• The strong performer who’s had a bad year…3 years in a row!

I imagine you can add to that list from your own experiences – it’s safe to say there are a lot of  potential ‘people’ issues.  However here are the questions to ask:

“Do we have any of these kinds of people issues at our business?”

If you’re like most business owners, the answer is ‘Yes’, which leads to the next question:

“What am I doing about it?”

Again – if you’re like most business owners, the true answer is probably ‘not much’ or even ‘absolutely nothing’.  You’ve accepted it, and that is the biggest mistake that business owners make! If that sounds like your situation – read on!

What’s the impact of these People problems?

We’ve established that most businesses have some sort of people problems, but what does that actually mean – what are the impacts?  Here are just a few of the things that are likely happening at your company because of your people problems:

• It’s costing your company money
• Your best employees are tired of picking up the slack and thinking of leaving
• Your customers are being impacted negatively (poor service, poor products, mistakes, no communication…the list is endless)
• You can’t grow because of the dead weight
• Your stress and frustration is high due to poor performers and the impacts
• The poor performers are trapped in a bad situation (most people don’t like to fail)

Can you think of other impacts?  In short, your small business is headed in the wrong direction because poor performance and people issues impacts everything and everyone around them.

Why do People problems continue?

Obviously these people problems are serious, but in most cases they continue indefinitely.  Why?  Let’s look at some possibilities:

• No time or the energy to really address the issue
• I’m hoping they will just quit and save me from having to do anything
• I don’t like conflict and they will be offended if I bring it up
• I really like this person, I’m sure they’ll start doing better
• I believe in loyalty
• I’m not perfect…how can I expect more out of someone else?
• They’re family, I’m stuck with them
• They might sue if I fire them

Do any of these reasons sound familiar?  If this line of thinking is making you uncomfortable, then you seriously need to take some time on this issue because:

If you aren’t addressing the people problems in your company, then YOU are a people-problem!

It might be hard to hear, but if you really want the successful business you’ve worked so hard to build, you have to address the people problems in your business.  They won’t go away on their own and without a proactive purposeful plan the people problems will persist and eventually bring you down!

What to do about the people problems?

The first step in solving a problem is admitting you have one, so if you can acknowledge that you have a poor performer (or several), then you’re on your way.

The next step is to be very clear on what’s needed from that person in that position.  Analyze to see if it’s possibly the right person but in the wrong seat.  If it’s generally a great employee that’s well liked but just not performing in this job, is there a role where they could shine?  If so, figure out a way to move them.  If you can’t move them then you’ll likely need to start the conversation and process of letting them go (see below).

Once you have documented expectations of what they should be doing, how they should be acting and how you’ll measure success, then you need to schedule time to meet with them.  Start out the meeting by being very clear that there is an issue and you need to have a constructive discussion on what it will take to improve things.

Your ideal goal is to help them find ways to improve and become a productive, strong performer on the team.  You’ll cover several points:

• They need to understand the problem and the impacts (it’s not a debate)
• Be straight with them and as unemotional about it as you can be
• Be specific about what’s not working and what you need to see going forward (have very clear and measurable outcomes that you’re looking for)
• Take as much time as you need – you both need to be on the same page
• Be clear on expectations and the measurable outcomes that they will need to reach
• Be clear on what happens if they don’t meet expectations
• Make sure there’s a specific action plan for all parties
• Have a signed and written commitment on the action plan

I would suggest a 30 day period for improvement with a follow-up meeting to see if they’ve turned things around and met your requirements.

Here’s the key to this – you have to follow up and follow through! If they haven’t shown enough improvement, you MUST follow through – that likely means firing them or offering them a different position.  Whatever the impact, you will make things much, much worse if you don’t live up to what you said needed to happen.

People issues are never easy to deal with, but they don’t get better with time.  Take action and do what you can to help them turn things around…and if they can’t, won’t

or don’t turn things around, you have to cut your losses and move on without them!  And you have to do it NOW!  Just like taking that band-aid off quickly, it will hurt initially but it’s soon over.

The reality is that you and your other employees will see a huge lift in energy when the people problems go away!  Your people can either make or break your company!  Replacing a bad employee with a great employee is a huge shift for the better.  Even if you just drop a bad employee, you’ll improve the company (addition by subtraction).  Adding a great employee on top of that will really make a difference!

Do you have any people problems?  What’s keeping you from addressing them?  What could you do this week to address the issue?  I’d love to hear your thoughts on this topic – did I miss anything?  What people problem parables do you have?  Share them in the comments below!

Shawn Kinkade  Kansas City Business Coach