Ego, Consultants And Risk

In last month’s column, we explored the benefits of allowing employees to contribute and using more of their experience, talents and creativity, even when it is painful to hear their opinions about how management runs the company. This month, we look at other “unmeasurable” factors that can affect the environment, reputation and performance of your electrical contracting business.

Showing appreciation for the ideas and contributions of your employees is one of the most critical factors in retaining human talent, but it will never replace competitive compensation and benefits. I worked for an organization run by a man who excelled at expressing his appreciation for his staff. Each day, we were told how much he valued us and how grateful he was for what we contributed. The work was fulfilling, and the team enjoyed working together. Unfortunately, the starting salaries were below-market, and we quickly discovered that this situation wasn’t likely to change in the foreseeable future. Even though we loved the work and believed that we were making an important contribution to our corner of the industry, we became discouraged by the continual cash-flow problems that plagued our employer. Gradually, we noticed other patterns that eroded our commitment to the company. While there was never enough money for raises or improved benefits, our boss hired several consultants whose work product was clearly mediocre and earned little respect among the staff. Worse, while employees were expected to “brainstorm” to find new ways of increasing revenues and attracting new clients, the consultants always overruled our ideas.

Instead of relying on the internal staff who understood his business and remained committed to his success, this owner barely noticed the resentment building as resources were diverted to the outside consultants. While bemoaning the need to tap his line of credit and cutting staff to reduce overhead costs, he still managed to acquire a new luxury car and remodel his home kitchen. The impact of his personal lifestyle did not go unnoticed by the employees who were working to reduce costs within his office.

I thought back to our own family contracting business and the times my father faced revenue losses due to customer bankruptcies or severe recessions. He paid his employees first, and when necessary, deferred his own salary or bonus until the liquid asset base had been rebuilt. While it is certainly the owner’s right to realize a reward for the risks he or she takes in running the company, exercising that prerogative is also a living example to the entire organization. Your employees are aware of your priorities. If you insist on flaunting your wealth or taking your annual European vacation, but the holiday party is canceled, equipment maintenance delayed, and your support staff is shaking the copier cartridges to squeeze the last bit of toner from them, attitudes will deteriorate and performance will suffer.

You are clearly aware of the risks you take to maintain a successful company. Do you also realize that your employees may consider you a risk to their future employment security? The most respected bosses are careful to lead by example, stepping back to let their employees take the credit for their impact on profits and sharing those profits. They also understand the risk every employee takes by trusting the owner’s implied promise to keep the company going.

Many company owners experience a humbling reality check at some point, when they are hospitalized or take a vacation for a couple of weeks and return to find that the business is running smoothly without them. If several key field employees disappeared suddenly, or your office staff quit tomorrow, the impact on your operations would be evident almost immediately.

The same entrepreneurial panache that creates the foundation for a new business can become an inflated ego that erodes assets and buries owner and employees alike. Although it is impossible to measure the exact impact of the owner’s self-worth on the company’s net worth, you are more likely to avoid being the cause of its demise if you understand three things. First, your employees look to you for reassurance; their employment security depends on your ability to adjust your lifestyle to the fortunes of the business. Be willing to reduce your own impact on cash flow when necessary. Second, balance qualitative and quantitative measures of appreciation; compliments and warm smiles don’t improve efficiency if your employees are exhausted from working other jobs to supplement their incomes. Finally, use your internal talent before spending money on outside consultants; your own people understand your business better, and they deserve the first chance to solve problems.

Next month, this column will look at similarities between the unmeasurable factors that affect your employees’ attitudes and your customer relationships. Stay tuned.

About the Author

Denise Norberg-Johnson

Financial Columnist
Denise Norberg-Johnson is a former subcontractor and past president of two national construction associations. She may be reached at .

Stay Informed Join our Newsletter

Having trouble finding time to sit down with the latest issue of
ELECTRICAL CONTRACTOR? Don't worry, we'll come to you.