Small is not always beautiful

A small business has its plus points, but also look beyond your romantic notions of such work places before you sign on the dotted line, advises Prasenjit Bhattacharya.

A small business has its plus points, but also look beyond your romantic notions of such work places before you sign on the dotted line, advises Prasenjit Bhattacharya.
Joining a small business has its rewards but it also has its own risks. For one, not everyone is suited to join a small and medium business. Here are some aspects of the workplace culture one needs to be aware of:

1. Excessive dependence on the owner or founder.

The loyalty of most employees is often to the founder, rather than to the company or its articulated vision, mission or values. Things happen because the founder is involved in a hands-on manner. People come early if he is there, stay late if he is likely to observe it.

Conversely, it is difficult for other managers to command significant authority. If a new manager tries doing so, before long, the owner´s ears are filled by some of his “loyalists”. The founder tries recruiting senior managers from outside, but soon finds them incompetent; little realising that it is his own style and the culture he has created that is responsible. In frustration, he falls back on the old guard – the trusted loyalists.

Before you join a small organisation, find out how many new managers have survived there, or are you the latest in a long line of managers who join but do not stay long.

2. Lack of robust processes for communication, performance management, rewards and recognition.

The only communication, which is of relevance, is from the owner. All other forums where the owner is not present, become ineffective as tools of communication. “Impression management” becomes important for managers and true bottom up communication is not encouraged. Since the owner is hands-on, formal processes of the above kind do not get developed. While initially the owner knows each individual well enough to assess his/ her performance, with time, he starts relying on his key executives for this, thereby creating power centres which ultimately result in cliques , factions and politicking.

3. Lack of exposure to good practices.

Though the owner is relatively well informed by virtue of his association with customers, suppliers and collaborators, a majority of his managers have seen precious little outside their organisation. The owner represents the organisation at industry forums, fairs and conferences. As a result, his key executives do not get adequate opportunities to upgrade their expertise and there is lack of development of a second line.

4. Lack of development of second line and no work-life balance for the trusted performers

The senior executives who have not had adequate professional exposure have little incentive in growing their second line. Since their own skills are not always marketable, and many have stuck on to the organisation due to location or personal constraints, there is little to be gained by developing a second line.

This is exacerbated in case there is little growth by way of acquisitions or green field projects. Why develop people if there are no roles to grow to? Young professionals who join the company quickly realise the situation and leave. This is a vicious cycle and even if the owner were to acquire a new business, he does not have a talent pipeline to build his new businesses. In fact, the performers among the existing managers are always overloaded with work, and before long there are cases of burnout.
5. Inability or reluctance to pay competitive salaries.

A key aspect of such SMEs is their ability to keep employee costs low. Beyond a point, this strategy yields diminishing returns. While the old timers are willing to work at low salaries, partly because of inadequate market linked qualifications and partly out of their loyalty to the owner, new employees will not come at such low salaries. Rather than create huge internal inequity and heartburn amongst the loyalists, the owner opts to recruit retired people as “consultants” or even as full time employees. While they bring required skills at an affordable price, they seldom have the ability or inclination to rock the boat. For them this is a second extra income and the important thing is to get an extension.

Over years, many of the old timers themselves graduate into “consultant/advisor” roles and even the owner starts feeling helpless in front of this cabal. Gratitude for past services rendered and their knowledge of many secrets about the business and the owner´s family prevents the owner from going beyond this group.

This impacts employee morale. Employees are reluctant to contribute ideas because they are not sure if senior managers will not take all the credit for their ideas. Many employees become deadwoods, who nevertheless stick with the company because of lack of options.

Bottom line, a bad place to work with a good corporate brand may help you to make a better job switch than a bad place to work with no brand.

-Prasenjit Bhattacharya is CEO of The Great Place to Work® Institute, India.