Chapter 24: Manage Your Team!

October 16, 1996, Rutherford, Ohio

“I brought my laptop because I don’t have access to a printer.”

“That’s OK. If you don’t mind my looking at the screen, it’ll work just fine.”

“The important files are encrypted with complex passwords.”

“Very wise.”

I opened the file with the things I liked and didn’t like about NIKA, then turned the computer to face Bill. He spent a couple of minutes reading, which told me he read it at least twice. When he finished he turned the computer back to me and nodded.

“So, what are you going to do about that?”

“This morning I had this really odd idea of starting a new company and allowing my sister to run NIKA. The problem I would have doing that is that in order for it to feel right, I’d need the key people from NIKA, which would likely wreck the company, thus doing exactly what I was trying to avoid.”

“If you were going to do something like that, you’d have to start in a completely new industry, and hire friends or colleagues who don’t work for NIKA. It might be an interesting idea, but is there something else you’re both good at and want to do? If not, then that idea won’t work.”

“Not really. I’m a computer programmer and have been since I was fourteen. It’s what makes me happy.”

“What else makes you happy?”

I wanted to say wild sex with teenage girls, but I figured that wasn’t an appropriate answer in a business context!

“Karate.”

“You said you were an instructor. Are you fully licensed?”

I nodded, “6th Dan.”

“That’s impressive. I mean that. That means you’ve been recognized for your contributions, in addition to being a full instructor. That’s no small achievement. Would you consider running a karate dojo?”

“In just over five years or so, I will. Our master is going to retire and a couple of black belts and I are going to take over the dojo. There’s a younger guy already tapped to be the master of the school, and I’ll act as his advisor and right-hand man.”

“There’s a younger guy than you who is 6th Dan?”

“No. He’s 1st Dan. He’s going to Japan next Summer to train for three months. I’m not sure what rank he’ll have when he returns, but even if I outrank him, he’ll be the master of the dojo.”

“And that doesn’t bother you?”

I shook my head, “No. I was ecstatic when I earned my black belt and achieved 1st Dan. I had no designs on a higher Dan.”

“The way to get it is to not want it.”

“Exactly.”

“That would be one option for you.”

“I’d feel as if I was abandoning my child.”

“Kids grow up and need to leave the nest. As parents, we need to let them spread their wings and fly away. How do you parent?”

I smiled and nodded, “My kids run their own lives, and the older ones have since age five or six.”

“Are you saying it’s easier for you to let your biological children go than a corporation?”

“I guess I am.”

Bill shook his head, “Basically the opposite of every other person I counsel - they want to control every aspect of their kids’ lives, but want to find a way to set their company free. I deal with a lot of people who are selling their babies, as it were, and the issues that arise during the transition. You wouldn’t sell, would you?”

“I’d feel as if I was betraying my friends.”

“May I see the other document?”

I nodded, brought up the spreadsheet and turned the computer to him. He spent considerable time reviewing it, and Sue brought our breakfast to the table before he’d finished. He stopped reading, prayed, then we began to eat while he read.

“I’d say from this that a good number of your employees aren’t your friends. Who would you be betraying?”

“Probably about the top half of the list, I guess.”

“And over time that number is going to be a smaller and smaller percentage. And I’m here to tell you there is very little you can do to prevent that from happening unless you divest or otherwise reduce the size of your company. You’re also at one of those ‘critical mass’ points where if you stop expanding, you’re likely to lose momentum, which would give your smaller, more nimble competitors an opening. The question is, can we find a way for you to be happy as you continue to grow?”

“We’re actually pretty nimble,” I replied. “And I think that’s one of my main areas of concern - that we would become too ‘corporate’.”

“You have no plans for making a public offering, do you?”

“No. Everything is in place to do that, but I have no intention of ever going through with it. Our ESOP is based on a valuation set by the board each year, and that allows employees to benefit from company growth. Obviously, if we went public, they could sell on the open market. Right now, they can only sell to me or back to the ESOP.”

“What’s your end game?”

“I’m not sure that I have one.”

“Maybe that’s the best place to start. Do you have succession plans in place for all key employees, including you?”

“Yes, though there is some serious doubt amongst the Board and other key people that the company has a life after me because so much is based on personal loyalty.”

“Something which is going to change if you double in size, don’t you think?”

“Which is, of course, the source of my consternation.”

“How much turnover have you had?”

“Almost none.”

“That’s going to change, too. And that will affect the character of the organization, and present you with new challenges.”

“You’re not filling me with a lot of hope, here,” I said, suppressing a sigh.

“Believe it or not, you’re in an enviable position - half of all small businesses fail in five years, and two-thirds in ten years. You’re in year eleven with an opportunity for explosive growth, and your strongest competitors are much smaller. You’ve diversified your income, so you could weather shocks which your competitors could not without seeking additional capital.”

“I know we’re bouncing all over the place, but let me tell you about an incident which I think sums up my entire discomfort with the future.”

I explained the situation with the personnel files and my extreme discomfort with the situation I was forced into because other business owners and managers had behaved badly. Bill listened and when I was done, stayed quiet for a moment before speaking.

“First,” Bill said thoughtfully, “I highly doubt you would like complete anarchy, even anarcho-capitalism, because your business depends on the system working the way it does. Could you adapt? Perhaps, but you have a vested interest in the system.”

I smiled, “I’d say I’m a small-government constitutionalist, though with the original intent of the Constitution, not the system we currently have which has turned it upside down. That said, I will admit I have worked within the system, but that’s because I have to! Men with guns make sure that’s the case! My issue is that I’m not the bad guy, so I feel hamstrung and straitjacketed, and put in a position where I can’t do the right thing because some other idiot misbehaved in the past!”

“Well, we can sit here and debate political science and political philosophy until we’re blue in the face, but that won’t change anything. So, short of leading the Revolution, you need to continue working within the system. Let me ask you this - do you trust your CFO and Head of HR?”

“Implicitly, though my Head of HR is leaving as of Friday. She’s going to work for a young woman I mentor, with my blessing. We’re looking for her replacement. The problem is, I don’t have anyone close to me to fill that role.”

“And you shouldn’t. Your Head of HR needs to be independent of you, and have freedom to act in a wide range of situations without providing you details, or, in some cases, without you even knowing. Some of that is law, some of that is best practice, and some of it is common sense. As much as you want to be intimately involved in every employee’s life, that’s simply impossible at this stage, and, honestly, seriously problematic. It’s worked for you so far, but you’ve been very lucky to have extremely loyal staff. You’d have run into this issue long ago if you didn’t.”

“Again, you’re not filling me with hope, here.”

“I’m deadly serious about this - if you can’t find a way to adapt, you have to get out. Do you understand what that means?”

“Sure, cashing out and not running the company.”

Bill shook his head, “No, it means you literally disappear from the face of the earth for a couple of years, at least with regard to any employees, customers, or suppliers. The loyalty system you use would pretty much require that. Only a fool would buy NIKA from you without that kind of commitment.

“I suspect, other than the mother to your two boys, you would literally have to cut yourself off. If you didn’t, what happens the first time one of your employees comes to you for advice, and that advice goes counter to the direction the new owner wants to take things? Or an employee comes to you and begs you to intervene? Or a customer asks for your help in getting the new owners to stick with old policies? And so on.”

He was right, of course. I’d seen what had happened at M&M with Dante interfering with Mark and Melissa. I couldn’t see doing that, but then again, what would I do if Penny or Charlie or Kimmy or any one of a number of other people approached me for help after such a sale? I’d be in an impossible situation, or I’d put the new owners in an impossible situation.

“I’ve seen that happen,” I replied. “It wasn’t pretty. So what happens thirty years from now?”

“Thirty years from now, NIKA isn’t you. Most of your senior staff will leave when you do, so you’ll need to work out a transition to new owners, but the average rank and file person will know you from your picture in the employee handbook they receive at orientation. That’s the reality. I suppose you could have been far less successful and barely eked out a living by staying very small. But I don’t think you could have done that any more than you can contemplate selling at this point.”

“Suck it up and deal with it, hmm?”

“That is the short version. The key for you is to make peace with the fact that your success and your leadership has brought you to this place. You can still lead, just not exactly the same way as you do now. May I point out something that is actually causing the problem to become worse?”

“Sure.”

“You interview every single prospective employee. In YOUR mind, that ties them to you and makes them loyal to you and confirms for you that you have a relationship. You need to stop that, with the exception of the most senior people.”

“You do know there is a method to my madness, right?”

“Ensuring ‘fit’. I’ve seen that. But don’t you think you can trust your managers to do that? Certainly in the near term when they’re all still close to you. In the long term, there’s no reason you can’t identify certain people who can serve as a check on hiring. But it can’t be you because YOU can’t handle it.”

“Shit,” I sighed.

“I take it from that response, you don’t completely disagree with my point?”

“I don’t, but we had a bad experience when my gut told me not to hire someone and I deferred to a senior manager’s wishes.”

“That might be confirmation bias, especially with a one-off event. How often have you exercised your veto?”

“Rarely.”

“So your staff has made very few mistakes in hiring and has a good track record?”

“Yes.”

“Then let them do their jobs.”

I chuckled, “‘Manage your team’.”

“What’s that?”

“My constant refrain to managers at all levels.”

“Which you follow EXCEPT when it comes to hiring?”

“Yes,” I said, shaking my head and laughing softly.

“If you trust them to make the big decisions, trust them with hiring. Express your desires, write it up in whatever way your in-house counsel finds acceptable and in line with labor law, and let them do their thing. You have a review system, right?”

“Yes, of course.”

“Then let it work. You can always say the employee doesn’t play nice with the other kids if it comes right down to it. Or that they are a bad cultural fit. Granted, you have to make sure that’s not because they’re a minority or a woman, or some other protected class.”

I grinned, “Did you pay attention to the employee list? All the senior execs are female, and nearly all of the managers and team leads are female. And we have more females than males in technical roles.”

“I didn’t really pay attention to first names when I was reviewing the list. Why do you think that is?”

“I think it has two major components - we prefer our technical staff to have an undergraduate degree with a minor in liberal arts, rather than science or math, and women have a much higher incidence of that. Second, we get our pick of the cream of the crop because we have very family-friendly and female-friendly policies.”

“Which fits what I’ll call your paternalistic personality, though I don’t mean that in a derogatory sense. What about minorities?”

“That’s been something of a sticky wicket. Our employment rates are higher than other tech firms in Chicago, but don’t reflect the population as a whole. We do reflect effective college graduation rates, so our HR consultants and our attorneys haven’t suggested any ‘affirmative action’ plans, not that I’d accept them. We do make sure we try to recruit from as many colleges as possible, including the few that are majority black.”

“It’s a chicken and egg problem - there are very few role models in the upper levels of business for historical reasons, and that leads to fewer minority kids in those types of careers. There’s also the issue of quality of education for inner city schools versus the suburbs.”

“Problems of which I’m well aware,” I said. “My wife, the doctor, says they have serious difficulty recruiting minorities because there are so few of them and the best ones are highly sought after. But they can only recruit from the pool of potential Residents from medical schools, who can only recruit from the pool of applicants. It’s an insidious problem for which none of us have been able to come up with a solution.”

“Well, you and I aren’t going to solve that today. So long as you can show that you’re recruiting from a wide base and that your hiring is at least in line with the applicant pool, you most likely won’t have any issues. I take it your executive suite is all white?”

I nodded, “White middle- and upper-middle class kids who went to school together. And there’s unlikely to be an opening in the executive suite anytime soon. They’re all women besides me, including our in-house counsel.”

Bill nodded, “Which makes it VERY tough for someone to come after you, because the feminists would be up in arms. Anyway, back to hiring, are you able to set aside your veto and stop seeing anyone who is being hired below the director level?”

“I’ll take it under advisement, but I suspect you’re right. I just need a bit of time to process that kind of change.”

“You do not want to make any radical course corrections - you’re navigating very well and a gentle application of the stick to stay on course is what you need, not jamming the rudder pedal to the floor. I have another thing you need to consider, and that’s no longer trying to keep very close relationships with anyone except in the executive suite and some select directors. Bond with them and let them, as you say, ‘manage their teams’.”

“There do have to be a few exceptions.”

“The young woman you share your office with? You should seriously consider changing that arrangement.”

I shook my head, “Colonel, if you brought your entire battalion, complete with air support and regimental artillery, you wouldn’t survive telling Penny she needed to move out of my office.”

“I take it there is some serious history there.”

“Yes. I taught her to program when she was fourteen and we’ve been programming together ever since, minus when I have to focus on CEO stuff.”

“So with that exception?”

“Possibly. There are a few other considerations, but none of them are as close to me as Penny is.”

“Make it your goal to limit those and not create any new ones.”

I nodded. I hadn’t really created any new ones at that level since John had joined NIKA from Boston Legal Systems. Even the girls I’d slept with who were development team members weren’t close the way John or Andy were. It really wouldn’t be a change in action, but a change in attitude. And that’s what Bill was trying to drive home.

“I can probably do that. I guess it just feels as if I’m withdrawing.”

“You don’t have much choice, really. Most people have a few very close friends, a larger group of what I call ‘regular’ friends, then a vast group of what amount to close acquaintances. You seem like you have a fairly large group of close friends.”

“I do.”

“And that anomaly is probably what caused you to think you could do the same thing in business. You could, when you had a dozen people or so. Well, most people. You seem to have managed it up to about seventy-five, which is very much out of the ordinary. Under normal circumstances, you should have had to deal with this much sooner.”

“There is pretty much nothing ‘normal’ about me!”

“That’s true about a lot of entrepreneurs. They don’t conform to business or social norms and that’s what makes them successful. But at some point, their company becomes too large to continue to be nonconformist. Usually that’s when they bring in the professional managers and stick to engineering or whatever it is they do. Sometimes, they discover they’re very good at managing, and they hire others to do the work. It seems you’ve gone back and forth on that.”

I chuckled, “Everyone says I’m very good at what I do, and I get some level of enjoyment out of it, but honestly, I miss programming. It was my first love and it still is.”

“Which is why you plan to bring your sister in to manage NIKA. She has to have a free hand, too.”

I nodded, “Guided by the Board of Directors, and within the culture I want the company to have.”