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Topics relating to managing people and relationships

SRBobcat

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I own a 15 year old small business with approximately 4MM in revenue (formerly $5MM just two years ago). We are in the home services and construction subcontracting business. We have approx 25 employees including the two owner partners. We have been in hopes of selling the business in the next 5 years (likely, but not definitely, into and ESOP). In the last year, one of our main revenue generating markets (though lowest margin, difficult to profit) has almost dried up. We're likely to finish this fiscal year a fair bit under $4MM in revenue. Our main problem is not the slowing of our one market... it's actually a few bigger problems:
1. Failure of management: My business partner and I have been almost absentee from a business management standpoint. We both focus much more on sales and are almost never in our office.
2. High overhead: We have 14 people in non income producing overhead positions (2 are parttime)... We are management and administration heavy, yet we have no one driving the ship. Very micro task involved, very little macro level management.
3. High Prices: Directly related to Problem #2, we have very high prices which makes sales and profitability difficult. This should be easy to fix, except for Problem #1.
4. Poor employee performance: See Problem #1. Also, it's very difficult to hire employees at all, much less quality employees. We pay much better than industry average with better than normal benefits, yet still can't hire. We have a full time HR person, though she is not great at hiring/finding employees... Full time HR translates more to "someone who posts job ads when I tell her to". She's very helpful as an assistant, and as with most employees she wears multiple hats... but having a dedicated person does not translate into being good at finding new employees unfortunately. Many of our employees (both field based and management) are simply comfortable in their jobs, not self motivated, not fearful of being replaced and not motivated to improve themselves or the business..."the paychecks just keep coming so why make more effort?" is the general demeanor. This seems a simple thing to fix with some firing and replacement of employees...but the reality of hiring makes it not so simple.

My plans for fixing all of this begins at the top. We need to do one of two things:
1. Owner's re-engage in day to day business management: We both hate it...and are not business managers...but we're better than no-one (which is who we have now). I'm willing to do this, I seriously doubt my partner will be. I can do it without him...but I can't make solo decisions as we don't have a CEO position for either of us...it's been 15 years of joint decisions. I can't make him come in to the office, and it makes me resentful if I have to do it all by myself while we get equal pay. He also is not going to agree to unequal pay. This is the downside to equal partnerships (we're 50/50 of an S-corp).
2. I'm going to propose that we hire a General Manager or CEO from outside. There are multiple difficulties with this...but it may still be the better decision. And... this possibility is the reason for my post here. I know NOTHING about hiring a competent person to take over running this business, nor what it would cost. We are a small business, so we don't have large money (especially right now) to pay a CEO role... if the two owners would take a 50k paycut (we make 150 plus), we could probably pay $125k and then have some incentives (possibly future ownership stake also...though that makes the hopes of ESOP more difficult). The "low" pay for someone capable is why I used both titles, "General Manager" and "CEO"... one title (in my opinion) simply comes with a higher price tag for essentially the same role. We would need someone who can manage all the overhead positions in the company and make the changes/improvements we need.

Does anyone with real experience in this have any thoughts on how (if we choose this route) we would go about hiring someone for this role, where we look, what the realist cost would be in a mid-market area (not an expensive city...but still a city)... or if this is even a reasonable / doable approach to fixing the business.
 
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@Kak @Antifragile are probably two of the better guys here for management/leadership/employee issues.


My business partner and I have been almost absentee from a business management standpoint. We both focus much more on sales and are almost never in our office.

This is where I see the problem.

Leading by example is not a possibility because you are not there.

As I like to say, if you want things done right, do it yourself.

And then train those people to do it like yourself.
 

Kevin88660

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4. Poor employee performance: See Problem #1. Also, it's very difficult to hire employees at all, much less quality employees. We pay much better than industry average with better than normal benefits, yet still can't hire. We have a full time HR person, though she is not great at hiring/finding employees... Full time HR translates more to "someone who posts job ads when I tell her to". She's very helpful as an assistant, and as with most employees she wears multiple hats... but having a dedicated person does not translate into being good at finding new employees unfortunately. Many of our employees (both field based and management) are simply comfortable in their jobs, not self motivated, not fearful of being replaced and not motivated to improve themselves or the business..."the paychecks just keep coming so why make more effort?" is the general demeanor. This seems a simple thing to fix with some firing and replacement of employees...but the reality of hiring makes it not so simple.
What do you mean by poor employee performance?

Do they accomplish task in time or not?

Employees do not generally brainstorm ways to improve the business. It’s not quite expected.

Do your employee work overtime?

A small company cannot afford a 9-6 culture. That’s a luxury of the giant companies.
 

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