Managing employees who are used to being the boss.
THE PROBLEM: Managing a large number of former CEOs THE PRACTICE: Balancing autonomy with systems and controls THE PAYOFF: A groundswell of collective entrepreneurial expertise
Conventional wisdom holds that entrepreneurs make lousy employees. Of course, there's an exception to every rule, and ePartners (#36) may be the one here. With headquarters in Irving, Tex., the company provides IT services and consulting to small- and middle-market companies. Over a three-year period ending in early 2000, ePartners acquired about two dozen businesses, as well as the entrepreneurs who ran them. During the same period, the company also hired about 20 staffers who had previously headed up their own businesses.
Of the 40-some entrepreneurs who joined ePartners, all but a handful are still with the company, says CEO Stanley Strifler. Nevertheless, "trying to create a flock of eagles is difficult," Strifler acknowledges. Eagles, like entrepreneurs, tend to fly solo. However, for ePartners to achieve its goal of offering customers a full range of technology services, the company had to be more than just an assortment of businesses, each focused on its own applications.
At the same time, Strifler didn't want to quash the former entrepreneurs' energy and initiative. Providing them with equity in the business was a good starting point. Collectively, the group holds about a 35% stake in ePartners, says Strifler.
To further facilitate the entrepreneurs' transition into the salaried world, Strifler initially took a hands-off approach. His new charges would do best, he reasoned, if they retained a sense of autonomy in their new roles at ePartners. Many even physically stayed where they had been prior to their companies' being acquired, running what became 22 ePartners branch offices. They retained profit-and-loss responsibility and decided such things as whom to hire and fire and which software products to sell.
"Trying to create a flock of eagles is difficult."
However, as ePartners grew, it became apparent that Strifler and his executive team needed to rein in the in-house mavericks a bit. Customers started to comment that they felt as if they were dealing with independent individuals rather than with a single unified enterprise. That reaction was understandable, since some of the former entrepreneurs acted as though they were still on their own. Several were still representing only the products they had sold before joining ePartners.
To help get everyone on the same page, Strifler formed policy-making groups that included the entrepreneurs -- for example, a team that standardized and redesigned the corporate Web site. By asking the entrepreneurs for their input, Strifler was able to tap into their collective expertise. As a result, he found it easier to get his staff on board with the new procedures, given that they had helped to create them. Even so, says Strifler, a handful of the former CEOs were not able to "cross the chasm" from entrepreneur to employee. They either left on their own or were asked to leave.
The ones who remained have reason to believe they made the right decision. Last year ePartners had sales of nearly $100 million, up from $57 million in 1999.