When someone starts their first company (especially a technician as defined in my book Hunting in a Farmer’s World) he or she is usually the sole key employee. She (I’ll use one pronoun for readability) does the hands-on work of the business, along with the marketing, sales, administrative and executive functions.
Sometimes that is all the business is — a mechanism for one person to earn a living. That is a job. If, however, the founder is smart and ambitious, she begins adding employees to assume some of those functions on a daily basis. The job becomes a company.
The first leap in a company’s growth comes when the founder finds a key employee; someone who can make decisions and who follows through on tasks without being supervised. That employee frees the owner to concentrate on fewer things, whether they involve development or execution. The owner brings in more business, or manages the delivery of its products and services to more customers.
The relief of having someone who shoulders a part of the load is huge. The key employee is advanced, paid more, and given more responsibility. In some cases, the owner decides that she can’t run the business without this help, and bestows partnership or other equity upon the individual who made this success possible.
But not everyone can sustain growth forever. An owner has (or should have) a vision for where the company is going. The key employee may understand the vision, and may even share it, but that doesn’t mean he can execute it.
What do you do when a key employee has reached his ceiling of capability? As the owner, you want to keep expanding, but the employee is at his limit of performance. He may become comfortable with his income. He may not have the managerial skills to handle more responsibility. You might have graduated to a customer base that is beyond his experience. He might be protective of his status in the company, and sabotage or handcuff others who wish to rise.
Perhaps you have a new, enlarged vision of what your company can do, but he doesn’t share it. Sometimes the pressure of responsibility wears thin, and the key employee begins unilaterally narrowing his job description. He may express his disagreement with your focus on growth. The business is manageable at its current level, and he delays or ignores your initiatives to take it further. When there is ownership involved, he may remind you of his “partner” status, and expect that to encompass shared decision-making regarding the company’s direction.
No employee has the right to tell you that you can only go this far, and no further. Whether it’s by word or action, the key employee is now a hindrance. As an owner, your frustration is not only about performance, but includes the realization that your control over your own business has been curtailed.
You are loyal to the employee, and still have gratitude for the early days when he enabled your growth. Demotion seldom works well. Bringing in a higher level of talent to take over is fraught with dangers of unrest and negative attitude. There is no easy solution, and it is usually made worse by your refusal to address the situation until it has become unbearable.
Parting ways will make you feel like an ingrate. It may be expensive if a buy out is involved. It probably requires that you assume additional responsibilities for a time. Filling the position with another, more skilled manager will probably necessitate a lucrative compensation package. It’s easier to hope the employee will make the leap to the next level, so you wait. And wait. And wait.
There is emotional and economic cost to ending your relationship with a key employee who has gone as far as he can go, but it is nothing compared to the cost of hobbling your company.