How Employees Really Act When the Owner Isn’t There

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As a follow up to my The Key to Motivating Employees post, I wanted to share an incident I experienced a couple of years ago that highlights the necessity of creating the proper incentives and culture to encourage employees to think more like owners.

My family and I pulled up to a specialty cabinet store about twenty minutes before closing – sufficient time to run in and make a large purchase of around $1,000 for our farmhouse renovation project. Unbeknownst to the employees, we already had been all over their website and we knew exactly what we wanted. As I pulled up, the first thing I noticed was that the security roll-up door was already in the down position. Even though it wasn’t yet closing time, they had evidently decided to lock up early to keep any customers from coming in. Since I could see two vehicles in the parking lot, I held out hope that perhaps we could still get in and make the purchase. Based on our list of specific items, I knew I could be in and out in a matter of minutes. As we sat there in the car waiting (since the security gate was down), we saw two men roll up the door and come out of the store. As it was still before closing time, I sprang out of our car and asked them if I could make a quick purchase before they locked up completely for the night. They stared at me as if I was from a different planet, lamely looked at the watches and mumbled that it was almost quitting time. Without any more preamble, they turned their backs to me, pulled the roll-up door back down, locked it in place, got in their vehicles, and drove away. There I stood: a cash-paying, shopping list-in-hand, ready-to-buy customer twenty minutes prior to closing time. But they just drove away. Incredible!

How disappointed the store owner would be to know that the two trusted employees were in too much of a hurry to make a large sale BEFORE closing time. Two employees making something on the order of $10 per hour each had just caused their boss to lose a $1,000 sale because they were not aligned with the owner’s interests. Not only did they lock up early to keep out those that might inconvenience them, but they also hid in the store until closing time so they could clock out on time (or perhaps a little early), but without the risk of staying even one minute late.

This is a typical problem with employees that don’t share the company’s vision or purpose and that lack the proper incentives. It almost certainly would never happen in a family business where everyone has a vested interest in serving the customer and would happily throw the doors open to make one more sale at the end of the day. This is not to say that we shouldn’t have employees or that we should even mistrust them, but only that it is difficult to gain full alignment between the employee and the owner.

The “stick” solution is to catch employees doing the wrong thing by using monitoring videos, time cards, and other such big brother ploys to keep track of employees when the owner is out. The much better “carrot” approach is to offer incentives such as profit sharing, bonuses, employee recognition programs (the best ones praise employee’s character), etc. The challenge for an entrepreneur is to create incentive and compensation programs, such as “Pay for Performance” programs and bonus programs that create as much alignment as possible and keeps the employee motivated to do the right thing, serve the customer, and maximize profits. For example, had the owner of the store put in place a daily sales bonus program that paid out whenever daily sales were above a certain hurdle rate, it may have been enough for the employees to keep to store open during advertised hours instead of leaving early to go fishing.

And it also really helps if the company culture is rallied around a clear vision and purpose – with a clear set of values – that are real and abiding. The alignment of incentives, culture, and values is often the key to motivated employees that share the goals and passion of the owner to serve customers well.

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About Wade Myers

Wade has founded or co-founded, invested in, and been a director of over 25 companies and has completed 55 financing and M&A transactions. His previous work experience includes the Boston Consulting Group and Mobil Corporation. Wade also served as an Airborne Ranger in the US Army where he was a decorated veteran of the Gulf War. He is a Baker Scholar graduate of Harvard’s MBA program and is married with five children.

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