#3 in a Series of Three Articles on Key Employees
Having the right people in the right positions is the foundation for a cohesive culture, seamless operations and greater success. It’s especially true for those who are considered “key” employees, who are also critical to a successful exit strategy.
My most recent blogs focused on Finding and Hiring Key Employees and Developing and Retaining Key Employees. Now I’d like to share with you the experience of a colleague that clearly illustrates the transformative power of making just one change in terms of putting the right person in the right position.
Immediate Attention Required
Jim’s company, which employs 55 people, provides a service from which we all benefit – maintaining refrigeration equipment for major chains like King Soopers, Sprouts, Whole Foods, and Costco. Loss of refrigerated products can amass huge costs for these companies and affect the availability of food to consumers, so Jim’s company is on call every day of the year.
Even though his operations were well run, Jim didn’t feel as if his company had strong financial processes and financial data management – a common issue for small to medium sized businesses. From its inception, his business had relied on their office manager, who had no accounting background, to handle bookkeeping and billing using QuickBooks. Jim knew he needed a more powerful system that would handle costing, billing and dispatch, all from one platform. After exploring several options, a new platform was chosen. About three weeks after its implementation, their office manager resigned. Suddenly the rest of the company was struggling to hold things together and maintain business as usual.
Finding the Right Employee
A friend referred Jim to a consultant who’d been a CFO and controller. She worked with the company for two months to put the pieces back together. Jim credits her with helping him stay in business. During that time, she suggested that Jim hire a controller and gave him a list of criteria to look for including skills, experience, personality, and whether the individual was a fit for their business culture.
He took her advice, reached out to two staffing companies, and in May 2018 brought Nick on board – a young man who’d excelled in a staff accounting position and was ready to assume the responsibilities of a controller. By the beginning of 2019, Jim’s company had already experienced remarkable change:
- Their archaic accounting system was replaced with a new one.
- It was being implemented correctly and managed in-house by an individual with the right qualifications.
- Billing was being done quickly and interactions with customers had improved.
Now the company was keeping good, solid books that provided data on monthly income and expenses, monthly performance by both department and manager, and accurate month- and year-end results – numbers they’d not had in the past.
In addition, Nick was able to revise the status of vehicle leases to show more profit, and the company’s tax savings in the first year paid for Nick’s salary. Jim was able to look at the profitability of his six revenue-producing departments, which was invaluable for running the business, planning and goal-setting. It is also great information for investors and lenders, which will be critical for potential buyers when Jim eventually exits his business.
Coming Into the 21st Century
Jim credits his key employee, Nick, with helping them look at things they didn’t know to look at before and truly analyzing the company’s finances. In addition, other members of Jim’s team have expanded their skills and capabilities, following Nick’s lead.
Of their old system Jim noted, “If we’d known then what we know now we could have increased profitability by ten percent.” And he adds that, “The value of a key employee is hard to define. If I could have added Nick five or six years ago, we would be light years ahead. We wouldn’t be looking to grow like we are now without him.”
In addition, understanding the difficulty of replacing an individual who is central to the organization, Jim is putting a strategy in place for developing and incentivizing other potential key players, creating a more productive environment, and one that promotes retention.
Jim’s experience illustrates what a profound difference having the right people in the right positions can make. “It’s like flipping a light switch,” Jim shared. We were operating in the dark ages and are just now coming into the 21st century.”