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Q: We’re a
small software company—250 people—with a growing problem.
After 20 years, some of our long-term employees, even
though they work hard and hold important client and
application knowledge, can’t seem to handle the increased
complexity of our business and are getting expensive
compared with what they’re producing. We don’t want to
counsel them out, but I sense we’re investing more in
coaching them than is warranted. What’s the right way to
handle this? Name withheld, Pasadena, California
A: You say
you have a growing problem; we’d say you have a growth
problem.
Aside from
the layoffs you are trying to avoid and stepping up the
intensity of the coaching that doesn’t seem to be working
particularly well, a rapid and meaningful expansion of
your business is the only solution to the painfully
common—and precarious—situation you face.
Indeed, if
you don’t start growing soon, you and your old-timers
could end up going down with the ship together.
Not to
sound alarmed—but we are in your case. Countless perfectly
healthy companies of every type and size, comfortably
sailing along for years or decades or even more, have been
sunk by the “enemy” you now face: it is the very natural
inclination to try to manage away a competitiveness
problem with a tweak here and a tweak there, a
cost-cutting program here, an efficiency project there.
The
American automotive and telecom industries in the 1980s
are perfect examples. They tried every typical management
tool, device and process. Little worked.
And that’s
because managing your size is not the solution to mounting
competitive pressure. Growth is. It is the magic elixir
that cures almost every business ill. No other kind of fix
comes close to its transformative power.
Think
about it. Right now, you can try to increase the
capabilities of your long-time employees, but that process
is costly, time-consuming and seems to have reaped little
benefit so far.
You could
also let your long-time employees go humanely, with
generous exit packages and extended out-placement
counseling.
But even
with their relatively low productivity, the expensive
people in your ranks appear to have valuable, and perhaps
even irreplaceable, client and application knowledge. When
they walk, who knows what business would walk with them?
Which
leaves just one option, getting bigger in order to
generate new revenues to support your original team and
benefit from their skills and contributions to your
culture.
Now, your
approach to growth can be organic, expanding your product
and service offerings and the markets in which you
operate. But don’t take “organic” to mean evolutionary.
You’re going to have to take some real risks right now,
moving faster and farther afield from your comfort zone
than you might initially like.
Better
yet, don’t dismiss a bolder move, buying your growth.
Small, private companies like yours are often reluctant to
jump into the acquisition game. But with your tight-knit
company’s shared culture and limited product line, you’re
perfectly positioned to buy another small company and
complete a speedy integration.
The
current economic situation may also work in your favor, as
many small and mid-sized companies facing slower growth
could be more receptive than usual to an interested buyer.
We certainly don’t mean to suggest that your problem is
easy. It’s tough, and its solution takes the courage to
change.
But if you
focus on growing out of your problem instead of managing
your size, there’s a strong chance for a very happy
ending. Not just for you, but for your people, old and
new.
Q: As
companies go more global, do you still think it is
possible to give candid performance appraisals and rank
employee in cultures where such practices seem to cause
undesirable reactions? J. Jones, Minneapolis
A: It’s
all a matter of throttle.
Some
foreign cultures, particularly those in Asia, seem to,
well, freak out when American managers arrive and start
practicing differentiation, especially the ranking of
employees into performance categories, such as the top 20
percent, middle 70 and bottom 10.
Then
again, some foreign cultures, also in
Asia, have welcomed the practice enthusiastically. Indeed, we’ve
seen companies in
Chicago
and Atlanta resist differentiation just as often as we’ve
seen companies in China and Europe embrace it.
Our
conclusion: Differentiation works everywhere when managers
introduce it with clarity, communicate its benefits and
practice it with fairness and consistency. Sure, some
cultures have deep traditions of politeness that require
differentiation be throttled in at a slower pace. But,
ultimately, there is no culture in the world in which
people don’t long to know where they stand at work. People
are people everywhere.
When it
comes to accepting change, only their speed limits differ.
*****
Jack
and Suzy Welch are the authors of the international
bestseller Winning (Collins). Their latest book is
Winning: The Answers: Confronting 74 of the Toughest
Questions in Business Today (Collins). They are eager to
hear about your career dilemmas and challenges at work and
look forward to answering your questions in future
columns. You can e-mail them questions at winning@nytimes.com.
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