Arm’s Length Management

Linda LaitalaBusiness, Career, Employees, Leadership, Management, Sales, WorkLeave a Comment

After 20 years building the company he founded, Fred semi-retired. He believed he had put in place the right people to carry on his vision.

For the past five years, Fred’s management style has been arm’s length at best. As long as Curt, the General Manager, kept the company profitable and stayed within budget, he assumed things were fine and didn’t interfere. Big mistake.

Curt recently announced his retirement at the end of the year. Fred decided he should spend more time in the company familiarizing himself with the day-to-day operations. He was in for some surprises.

Here are some of his discoveries:

  • Of the eight engineers with the company when he stepped back, six had left in the past two years.
  • In the past six months two administrative employees have been fired “for cause”. Curt acknowledges that at least one might be filing a claim with the EEOC – but he says it’s “nothing to worry about”.
  • The cost of scrap and rework in the past year has tripled. Turns out production employees are now “leased” through an agency because it’s been hard to find skilled people. Turnover has also been high.
  • Workflow processes Fred developed have been ignored. Training has only occurred if someone was hurt on the job.
  • Control over who writes and signs checks is haphazard. The bookkeeper does it all.

As reality set in Fred knew he needed to take back control of his company. After consulting with his attorney, he accelerated Curt’s retirement. He’s gone Friday. His accountant suggested all checks going forward require two signatures and documentation.

He was dismayed to learn that engineers are also being hired through the leasing company, a practice that will be discontinued as soon as possible.

The work-flow processes have not been located, but Fred is hopeful he will find them in the chaos that Curt called his office.

Once upon a time Fred thought that he would sell the company when Curt retired. He’s kissed that notion good-by. It will take years to rebuild his business to be saleable.

Fred knows that he is mostly to blame for his company’s situation. He trusted too much, didn’t look beyond the numbers and didn’t communicate often enough with Curt. Fred has a big challenge in front of him in trying to rebuild the company he put so much effort into. It’s no fun going from a five-hour-a-month schedule to working 60 hours a week again.

The next time he retires, it will be 100%.

The road is easier together,

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