Pam Holloway, Lovas' business partner, counts the ways dependence on one key employee can be disastrous: "They could leave for another job, [or be the victim of an] accident, illness or death. Most companies don't think about this, but it happens all the time. We worked with a paper company where a critical employee in accounts receivable had a heart attack. The entire receivable process shut down because so much of the critical knowledge was in his head."
Of course, if you're suddenly realizing that you do rely too much on a key employee, you're probably wondering, "How do I fix that?"
Holloway asks, "Do you reward key employees for sharing knowledge and helping others? Or do you reward them for getting things done?" She points out, however, that your staff might see sharing techniques with colleagues as a way of taking themselves out of contention for a future corner office. She also adds that it takes time for one employee to teach another without their own performance suffering, so you have to make it as easy as possible for them.
Jim Crystal, chairman and CEO of Frank Crystal & Co., a prominent insurance company in New York City, recommends getting key person insurance, which protects businesses against the financial devastation that could occur if a crucial employee is suddenly put out of commission. As Crystal argues, "Corporations should view key person insurance as an investment in employees, as well as in the company's future business success and endeavors."
Not being on top of your numbers
Phil Wilkins, a Lexington, Kentucky, consultant and author of Own Your Business, Own Your Life: 21 Strategies for Becoming a Wealthy Entrepreneur, has a number of suggestions for staying on top of your financial performance. Most of them revolve around the unfortunate fact that if you aren't financially minded, you need to become financially minded--or at least hire someone to be your CFO.
But if you're willing to crunch the numbers yourself, Wilkins recommends holding regular meetings to review sales figures and expenditures. Wilkins, who owns three businesses, including Diverse Wealth Systems, a training and consulting firm, conducts weekly manager meetings and personally reviews sales figures daily.
He suggests investing in a large personal planning calendar and placing major bills on the calendar each month, from payroll and supplier payments to sales taxes and rent or mortgage. Continually work with your bank or financial institution to get the best loan rates possible.
"Negotiate everything," Wilkins urges. "A business owner is a very valuable client to a financial institution, [and] you can leverage that to your advantage by demanding things such as private banking, estate planning and reduced mortgages for your home and business, all while improving the cash flow in your business."
See, it's all connected: Learn not to spend money in the wrong places, and you'll be more on top of your numbers. Micromanage less, and you may wind up with many knowledgeable employees instead of one or two. Stop chasing after every customer, and you won't be spending money in at least some of the wrong places. The bottom line? Improve thyself, improve thy business.
Sometimes, the very thing destroying your company may be the simple fact that you're not a people person, observes Terry Bacon, business coach and author of What People Want: A Manager's Guide to Building Relationships That Work. "I've seen it a number of times," he says.
Mostly, he sees micromanagers. In surveying 500 employees for his book, he found that 87 percent wanted their boss, more than anything, to trust them, "and being a micromanager absolutely violates that." But there are other personality traits to avoid: the "my way or the highway" persona, investing no emotion or warmth when dealing with employees and colleagues, and being an egomaniac.
The first step in changing is awareness, says Bacon. "You have to be aware that you are the problem." Bacon recommends using a business coach when trying to fix a personality flaw, but he says any sort of mentor or confidant will do, provided this person can be truthful "and help you hold the mirror up to really see yourself and what's going on."
Bacon suggests casually sitting down with every employee, or at least the core ones, and discussing your relationship. You need to ask: How are we doing? What's working and what's not? "What you're trying to establish is an open dialogue, where your employee feels free to give feedback and knows you're not going to lash out at them," he explains. "That's one of the best ways to really understand how people see you."
Geoff Williams is a writer in Loveland, Ohio.
Geoff Williams has written for numerous publications, including Entrepreneur, Consumer Reports, LIFE and Entertainment Weekly. He also is the author of Living Well with Bad Credit.