But, He Has Worked for Us Forever

One of the hardest decisions facing owners of growing businesses is what to do with the loyal employee who no longer has the right skills for the business. CEOs tell us that this is about the toughest question they face.

Often, that early employee is a scrappy, do-anything-asked, can-do-it-all-myself, make-it-work kind of person that helped you get your business off the ground. But, what do you do with this person when what you now need is an experienced, talented manager. A person who can get the best out of people: delegate, coach, motivate and hold accountable. These are two different skill sets and are often not inherently resident in the same person.

We can all agree that as businesses grow and change, so do the skills needed to operate them. To give you an analogy, the skills needed to successfully drive an automatic passenger car are far different than those needed to drive an 18-wheeler or a stockcar on a NASCAR track. Often the skills that made a person successful when the business was just starting up, do not prepare them to manage a much larger role or people as the business grows.

This leaves you, as the business owner, with four choices:

1. Layer the person. Sometimes it is possible to bring in a manager over the long-term employee. This works best when the employee is able to recognize that the best widget maker is not always the best widget-department manager. You should begin discussions with the incumbent long before the change-over. You may also be able to involve the long-term employee in the selection process as a subject matter expert. If you are going to let the long-term employee compete for the position, you must be willing to terminate them if you choose someone other than the employee. It is a rare breed that can successfully work in a subordinate role after losing a position which they believe should have been theirs. Don't setup your new hire for failure by stacking the deck with powerful disgruntled employees.

2. Move the person to another role. Occasionally, you can move the person to a role where their skill set is more applicable. However, make sure that it is a "real" job and that you are not creating a position only to allow this person to hang on to a job. This behavior is often more about assuaging your guilt rather than what is in the best interest of the employee or the business.

3. Replace the person. While this can be difficult, it is often what is in the best interest of the business and the long-term employee. Employees almost always know when they are not being successful. The stress of working every day, knowing you are over your head is not pleasant for the employee. And, results, or more appropriately the lack of results, are a continual frustration for you, the boss. We have seen several examples of employees who are actually grateful when they are finally terminated from roles where they were not being successful.

4. Grow the person into the new role. While this may seem to be the preferable choice, it can be fraught with difficulties. First, you need to recognize the skill deficit early enough in the process to take action. Often business owners only discover the problem with employee-fit after it affects their company's turnover and bottom line. Second, once you recognize the deficit, it can take a lot of time for the long-term employee to get the experience and knowledge needed in the new role. This will place a drain on your personal time. Third, you, the business owner may not have the skills and knowledge necessary to coach the person. In this case you may need to enlist outside support. This again is time consuming, most likely carries a cost and, as always, there is no guarantee of success. This is especially true when the role change is dramatic. For instance, if you go from a manual to an automated system you may find long-term employees struggling to gain the computer skills necessary to keep up. Or, if you need to ramp-up quickly and the long-term employee will go from managing only him or herself to managing several subordinates it may not be possible to let him or her learn on-the-job. If your business grows, at some point you will face this difficult question - there is no dodging it. However, preparing early, considering your choices carefully and bringing in outside counsel can help to ease the burden.