What makes bad companies?
Most companies don’t start out to be bad, so how do some end up that way?
The first thing we have to come to terms with is that modern companies are for profit enterprises. This idealistic expectation that every company should have a purpose driven component is just marketing. More companies than ever are becoming investment vehicles. Your job there is to help the company achieve that goal. Anything that gets in the way could mean your job is in jeopardy. The idea of you getting hired on at a company and working there until you retire died decades ago. Today, companies are performance driven and every role has a metric component. Each employee is specific to the company's revenue goals and is required to produce. Employees of today need to be prepared to job hop their whole career.
“Wow Wes, you’re a monster. Your description of the current state of employment is pretty bleak. Why would anyone want to work in an environment like that?” Well, because we always have. The concept of business hasn’t really changed over the last 100 years of working, except that we are more direct in talking about it. Businesses have to make a profit or they simply will cease to exist. That’s it. The part everyone seems to miss is that every business ever created was created to make a profit. People did it to survive, feed their families and buy items needed to live. That’s why we all get a job, to make money to feed our family and buy items to live. This is how business works.
How good companies become bad companies
Businesses are typically created with very few people. Someone identifies a need and a business is born. The duties are distributed to the founders and that’s how it starts. More customers keep coming through the door and the company grows. They need someone to answer phones, so they hire someone to answer phones. That person is now on the payroll so they get other duties put on their plate. Everyone at the company now does a little bit of everything and fills in to help out wherever they can to keep the business growing and making more money. This process continues over and over, year over year until one day the company is spending more money than they are making and the process of hiring another person every time there was a problem doesn’t work anymore. The new plan is to lay people off to get expenses down and put more burden on the employees that are left.
This usually begins when companies don’t plan well and don’t have defined jobs and duties for the people they are hiring. It leads to overlap and creates gaps where no one really knows whose responsibility that task is, so it just falls through the cracks. Inevitably it builds and creates a situation where every day is a new fire to put out. Employee’s get exhausted with the inefficiency, the stress and lack of productivity. The company will start shrinking by attrition at first, which inevitably creates even less productivity, less income and subsequently more layoffs. This is now officially a bad company.
Can bad companies become good companies?
As you can see, the business described didn’t start out to be bad. In fact, their idea was pretty good. It created jobs for lots of people for many years and they continued to make more money, which means at one time, it was a good business. So what happened? The company got caught up working “in” their business instead of “on” their business and the business got away from them. They didn’t have a well thought out plan or a plan at all. Employees were most likely given vague job descriptions and relied mostly on being told what they should be working on. This all adds up to a recipe for disaster. At this point the future of the company can be dire. Hope is not lost. This can be fixed.
Primarily the company needs to really identify the goals and the direction of the business. Are they going up, down or holding steady? This is important, because understanding the company goals creates the path for the recovery ahead. Next, the company must identify the leadership and staff that are needed to achieve those goals. Do you need more people? Do you need different people? Do you need less people? Finally, you need to define the path ahead. Once you have the goals and team in place creating the roadmap to recovery is extremely important. This will keep the whole group focused with guardrails in place to keep everyone on track.
Great companies, create great employees and make more money. That’s it. Most companies overthink how to create a great company and take unnecessary risk at the wrong time. Sure, it’s exciting to push the envelope and make big moves, but real life isn’t like the movies. If you ask any employee if they’d rather have a stable job or a volatile job, they’ll pick stable every time. Slow and steady always wins the race.
If your company is struggling to become a great company, I can help! Book a free call with me and we can discuss some moves you can make right now to alleviate some of the pain and get back on track. We can fix it together. Book a Call With Me