In business, sentiment is a luxury. While building healthy professional relationships is at the core of every successful company, the number-one criterion that drives (or should drive) business decisions is profitability. Once companies stray from the logic and the numbers and start justifying their emotional decisions with reason, that’s when it all starts going downhill.
And yet, that’s exactly what many companies do. When businesses are founded, it’s usually just 2-3 people doing all the work; the initial employees take on the responsibilities of multiple business departments. As the business grows, these employees are promoted to senior management positions, since they know the company better than the new team members.
Inevitably, however, a point comes where just knowing the company inside out isn’t enough. Business experience and broader knowledge are needed to keep the company growing—levels of experience and knowledge that the current senior staff simply cannot offer. The company’s most loyal team members can become the very thing blocking the company’s development.
The Business Growth Bottleneck
The problem isn’t just with the limited competence and experience of the employees. It’s the fact that that the money needed to hire outside consulting is often taken up by the salaries of the existing employees. Finding funds to hire outside talent means, therefore, reducing the compensation for some of the organization’s most long-tenured staff.
To make matters worse, bringing in external insight and expertise to make up for the inability to offer innovative solutions and growth strategy by the current staff means that some of the company’s top management will fall under the hierarchy of an external department, effectively demoting the company’s oldest, most loyal employees.
Needless to say, all of this can cause emotional disturbance within small-to-medium sized companies. In an environment where everyone knows each other by name and may even spend weekends together, tough business decisions can be viewed as cold-hearted and trust-breaking.
Company leaders go through all sorts of trouble to avoid making such decisions. There have been cases where company’s chief executives decide to lower their personal compensation in order to afford outsourced services, making the company’s biggest limiting factor—the old employees—the highest-paid part of the organization. In some situations, business leaders have decided to forgo projects altogether, just to avoid having to deal with an uncomfortable situation.
Favoritism and Sentiments in the I.T. Departments
The I.T. sector is well known to suffer from the issue. While in other business departments—like sales or operations—it is more common to evaluate the management by their effectiveness and experience, the I.T. departments in many companies are dusty relics from a past age that seem easy enough to just leave where they are—as long as the phone is ringing and the emails leave the outbox.
A big part of this is rooted in the imperfect understanding of what I.T. stands for in 2018, and what kinds of expectations should be set for an I.T. department. While twenty years ago equipping your company with the latest I.T. solutions meant buying a bunch of personal computers and plugging in network cables, today I.T. affects all of a company’s core departments and responsibilities—from sales to HR; from security to project management to communications—and is directly tied to the company’s long-term success.
Without this understanding of technology’s fundamental place in modern business, even “Joe the I.T. specialist”—who has been the go-to guy for when the email doesn’t work for the last two decades—seems like he’s doing a good job. And he probably is.
However, there are things that Joe simply cannot offer—things that are inseparable from further business growth. One of such things is innovative planning on how to leverage the latest technology to cut down business costs and increase profitability. I.T. services today are too broad and too complex for any one person to handle—it takes teams of specialists with strong management systems to tackle the I.T. challenges of today and identify opportunity in a shifting business landscape.
Avoiding Drama and Conflict
On paper, the decision is simple for most companies. If the long-time I.T. staff is unable to contribute to the company’s development, they need to be replaced with people who can. With the human factor at play, however, the decision becomes multi-faceted and extremely difficult.
In many SMBs, Joe the I.T. specialist is someone people know personally, and rely on. Joe has always been there when your computer doesn’t respond, or when a communication system isn’t working. Joe’s been an active member of the community, attending company weekends along with his family. Joe is a friend, a family member, and a mentor—and he relies on this job as much as the company used to rely on him.
It is a mistake to think that letting Joe go is just a personal challenge for the head of the company. With one of the oldest employees gone, other team members might get insecure, too. In addition, the decision to demote or fire Joe might hurt your company’s interpersonal relationships—it’s difficult to imagine the BBQ weekends without Joe’s famous baked beans… or worse, a BBQ weekend with the recently laid-off Joe in attendance because he’s still related to other members of the staff.
This can engender all sorts of drama and politics within the company. Not being able to see the whole picture, other employees might protest the firing, or even threaten to leave themselves, permanently damaging the company’s culture and disturbing inner processes.
The single best way to avoid such collisions is to be up-front about your company’s priorities and goals right from the get-go. The question your team members should be asking is not “Why was such a loyal, long-time employee let go,” but “What was such a low added-value employee still doing here?”
We recognize that most readers of this article are beyond that point, and the above solution would require going back in time. There are other ways to tackle the issue without causing too many ripples.
From a personal perspective, revisit your business goals and priorities. Is it growing the company and maximizing profitability, or is it harboring our friends and family, providing a shelter from the labor market on the other side of the fence?
From the employee’s perspective, remind them that the decision to let them go isn’t just better for the company—it’s probably better for the employee, too. The very fact that their skillset doesn’t match your company’s needs anymore means that their opportunities are limited as the company grows and that they could find a better fit for their expertise. If they can’t—it’s a clear sign that their toolkit needs an upgrade, and they had better tackle this issue sooner than later. It is common for long-time employees to become out of touch with the market demands, and artificially keeping them under your company’s umbrella is doing them a disservice.
As far as your employees are concerned, remind them that letting Joe go isn’t for your personal benefit—it’s for the benefit of every member of the company. The way such decisions are made (or procrastinated) can make or break a company, so make sure to let your team members know that if they want to keep their positions and expect raises, decisions like these are necessary.
Most importantly, use this opportunity to communicate clearly where your company is headed and how it’s planning on getting there. Do not frighten—explain. Take the opportunity to encourage personal development and individual contribution.
JMARK has been helping businesses of all size find greater success through technology for thirty years. In that time, we’ve gone through uncomfortable growth phases ourselves—and learned the accompanying lessons. If you have I.T. needs and want to discuss options for managed services, including the possibility of a hybrid approach where you retain some I.T. services in-house, give us a call at 844-44-JMARK or email JMARKIT@JMARK.com. Or simply use the Contact Us page on this website.