Ask Inc: Do I Still Have the Right Stuff?
In six years, my business has grown from a start-up launched in a spare bedroom into a 300-person insurance company with $20 million in sales. When we were small, my gunslinging, play-it-as-you-go CEO style worked fine. But today the issues I face are more complicated, and sometimes I wonder if I'm still the right guy to be at the helm. What can I do to evaluate whether I'm doing a good job as CEO?
Omega Insurance Services
St. Petersburg, Fla.
You're not the first entrepreneur to discover that managing a large company is less like waging a gunfight than mounting a major military operation. The challenge is how to transform yourself from gunslinger to general.
With 300 employees, your company clearly is too complex to communicate everything through casual conversations in the hallways, says Dick Strayer, a Los Gatos, Calif., consultant who has advised growth companies for 21 years. You need to create a formal strategic-planning process with regular departmental meetings and routine status check-ups to ensure managers are meeting their goals.
None of this is easy -- especially for a self-described gunslinger. Enlist a trusted adviser to help you set priorities and evaluate your performance. Ideally, this person should be a CEO who has traversed the same stage of a company's life cycle. And the adviser's primary loyalty must be to you. "You want someone who will see all of your warts but won't use them against you, not someone who has another agenda -- such as a major investor," Strayer says.
Working with your adviser, talk to managers, customers, and board members to identify your company's main challenges. Then, on a quarterly basis, have your adviser reinterview the same people. Are they frustrated? Do they have problems making or implementing decisions? Do your employees lack faith in your company's business plan?
If, after about six months, you continue to get affirmative answers to these questions, it may be time to bring in a strong chief financial officer -- or replace yourself as CEO. That's okay. Not every entrepreneur is cut out to run a large operation. Handing the reins to a more experienced manager may present an opportunity to dust off your six-shooter and find the next gunfight on the frontier.
I have an employee who is a good performer, but his attitude is negative. I'm afraid it will taint customer relationships and rub off on other employees. Should I try to fix him or fire him?
It's time to have an in-depth talk with this party pooper. Be very specific about what's bothering you, then try to find the cause of the problem. Employees often develop bad attitudes when they feel that they're not being treated fairly. Or perhaps this person is having some personal problems.
Whatever the case, explicitly state your expectations with regard to improving job performance. Dave Wood, director of human resources at Terra Firma, a Denver-based human resources firm, suggests giving the employee a specific time frame -- say, 15 to 30 days -- to straighten up or ship out.
Joe Knight, co-owner of Setpoint Systems Inc., a design and manufacturing firm also based in Denver, isn't so generous. "We don't believe in probation," Knight says. "Once we've sat down with the employee, the time frame is immediate." If the employee doesn't change, Knight puts the worker on "decision-making leave" -- a day off with pay to do some soul searching. "You say, 'Tomorrow, let us know if you choose to stay with the company."
But don't be too hasty in wielding the ax, warns Rudy Karsan, CEO of Kenexa, a Pennsylvania staffing firm. Staff turnover can cost plenty in terms of lost productivity. "New studies show that it takes three to six months for new employees to reach proficiency on the job," Karsan says.
My software tools-distribution company grew 700% in its first five years. But our 2003 growth rate looks like 5% or 6%, tops, and I'd like to try to increase revenue at least 10%. Our primary marketing vehicles are a newsletter, which goes out to half a million potential customers, a database of 150,000 existing customers, and a monthly ad in an industry journal. How else can I spur growth?
First, let's put things in perspective. In today's dismal tech market, 5% growth is impressive -- if not heroic. "Many companies would have been ecstatic with five to six percent growth, both last year and this year," says David Cassell, CEO of Consultant's Choice, an IT consulting firm.
That doesn't mean you shouldn't try for more. Consider hiring a call center to contact potential customers. "A call center can easily make a hundred calls an hour," says Ken Hendricks, CEO of ABC Supply Co., the nation's largest distributor of roofing and siding. Keep in mind that people are already overwhelmed with solicitations, so aim for a modest 2% to 3% return. If that doesn't pan out, you can stop immediately -- without having burdened yourself with a slew of new marketing employees on your payroll.
LOOKING FOR ANSWERS?
Stumped by a thorny business problem? Let Inc help. Send your questions to AskInc@inc.com. We'll consult with experienced entrepreneurs and savvy advisers, folks who've been where you are and figured out what works and what doesn't. If you don't like what we have to say -- well, you can tell us that, too.
Please E-mail your comments to email@example.com.