Let’s continue with my letter to the “Successor,” reflecting my frustrations with his recent performance. We pick up where my straight talk begins to focus on “Successor’s” effort to buy affection and respect…

I hope you found our recent Board meeting worthwhile. As I expressed leaving the meeting, I regret the need for my grinding in regard to you establishing and communicating reasonable performance expectations and formal protocols for expenses, 401k match, profit sharing, pets and hiring family members. All these things continue to support my concern about your compulsion to be known as a good-guy and a propensity to attempt to buy respect and favor from family and employees.

Although it may seem bizarre, I assure you that the most effective pathway to respect and admiration is to confirm, communicate and demand compliance to well thought out, reasonable (but sometimes unpopular) policies that are in the best interest of the business, the golden goose that serves the family, managers, employees and community. Unfortunately as a leader and manager, you are required to make decisions that due to the diversity of opinions and perspectives, will sometimes be deemed unfair, bad-guy or wrong. Fundamentally, that’s the role of a leader and manager, to make the difficult decisions that are in the best interest of the business and the organization, not the whims and needs of every employee. The imperative is, “business first.” If the business does not perform above average and provide a stable, long term, predictable, principled, challenging and fair opportunity for everyone involved your business will be vulnerable to the cycles in the economy and ultimately give way to predators and competitors who are more committed and disciplined.

Now, back to the straight talk. As you did not ask our permission when you did this, I want you to understand my feeling that if you offer any form of profit sharing or 401k match for ordinary, mediocre profitability, you are sending a resounding message that just being ordinary is your goal. On that note, William (my fellow Board member) and I feel strongly that if your business continues to slip into mediocrity, it will become road kill and all of your good-guy giveaways will be for naught. Your concern that your employees would take issue with you changing the funding formula to an above-average benchmark reflects that your compulsion to be liked is clouding your judgment. Assuming you are fair and reasonable, your employees will understand that expectations change with time and circumstances. They want to grow and have pride that they have accomplished something, not receive welfare. And it has been my experience that they can only be better if you expect better and demand better. Your employee’s natural instinct is to stay within their comfort zone. All forms of teams are the happiest when they are being pushed out of their comfort zone and challenged to perform at an extra ordinary level. To award them for an ordinary performance is an embarrassment to those who care and a joke to those that don’t. If you don’t demand extra ordinary performance which prepares your business for the inevitable challenges of the future, you are in effect, not fulfilling your responsibility to your employees, managers and family. Another way of looking at this is that if you are not making some unpopular decisions, if you are not being challenged regarding your decisions, if you are not under pressure to validate the direction you have chosen, you are not leading.

Next week I will post the conclusion of the letter, Warning! Why you should Set Performance and Expectation Standards for Family Member Employees, in which I discuss Successor’s ineffective means of dealing with family members working in the business.

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