Posts Tagged ‘business culture’

A Good Business A Great Life #7: Hiring is like Crack!

by Jack Hayhow on August 22, 2011

Yesterday I heard that my friend Stan (not his real name) had just hired two new employees.  With those two hires, the head count in Stan’s company has doubled in just a few months.  The business press is writing about Stan’s growth and everywhere I go I hear, “How about Stan?  He’s really rocking.”

And yet I am deeply concerned about the very survival of Stan’s business.

You see, there’s a culture in the business community that equates success with a large number of employees.  That culture often leads small business owners down the primrose path of profligate hiring because as employment surges, recognition abounds.  If you own a small business, that recognition, often after years of anonymity and sacrifice, can be intoxicating.  In fact, hiring can be much like crack cocaine – an intense high followed by devastating consequences.

Well-meaning civic organizations often encourage this addictive hiring behavior.  In my hometown, the Greater Kansas City Chamber of Commerce sponsors a wonderful small business celebration each year.  As a part of that celebration, the Top Ten Small Businesses of Kansas City are recognized.  The top business receives the Mr. K Award, named after the legendary Kansas City entrepreneur, Ewing Kauffman.  One of the key qualifiers for this recognition is an increase in head count.  In fact, it’s more or less impossible to receive Top Ten recognition without dramatic increases in the number of people the company employs.  But as I look back on the list of recognized companies, I’m shocked by how many of those companies have failed or been reduced to a fraction of their previous glory.

For many businesses (and for virtually all service businesses) payroll is the company’s single biggest expense.  And while hiring is easy (requiring only optimism or delusion) firing is brutally difficult.  We like the people who work for us.  We worry about what will happen to them if we let them go.  We think we can fix the people – we tell ourselves they’ll get up to speed if we just give them a little more time.  We have a million reasons not to get rid of people who really need to go.  We hang on to people who are incompetent or who we don’t really need to operate the business.  And every day we do, we take a step closer to catastrophic business failure.

All because the culture and our egos tell us that success is having a lot of employees.

But that is complete and utter nonsense.  Success is about a business lean enough to survive the inevitable tough times.  Success is a business with sustainable operating cash flow.  Success is a business where the employees are fully engaged and secure in their positions as long as they continue to produce and to grow.  Success is a business that customers can’t imagine living without.  Success is a business that gives back to the community in a significant way.  Success is a business that provides the owner with the time and money to do what he or she wants to do.  That’s success!