Occasionally, we deal with an entrepreneur whose story is so surreal that it is hard to believe it is true. This column is about one such situation.
A very good entrepreneur had a small equity partner who operated a portion of the business located in another city. As the entrepreneur could not travel, this minority share owner was not managed very much outside of his ability to make money, which he did on a continual basis. However, as the entrepreneur discovered, there were recurrent problems with how the small equity partner managed the office, from unnecessarily low pay to ethical issues.
This shareholder, who actually owned less than five percent of the company, thought of himself as a partner rather than as an employee who happened to own stock. I remember one conversation I had with him about this, and he had a hard time accepting the fact that he was not a partner, but only a small equity owner and an employee.
If you are thinking that this person had a giant ego, you are 100 percent correct. This person did have a giant ego, but he also had a skill set that the company needed. While he was a pain to deal with, he did bring some valuable things to the table, including a proficiency in bringing in business and generating revenue.
Never miss a local story.
Despite these skills, several fundamental flaws kept creeping up. Among them, of course, was his ego. In addition, he had some personal financial issues that kept him asking for more and more money until he was — and I am not exaggerating here — being paid more than five times that of a comparable employee. He covered his sizeable salary by paying his staff low wages and generating lots of revenue so that the office looked like it was doing well.
In order to find out exactly what was going on, the entrepreneur finally made a trip to this office. Upon arrival, the entrepreneur noticed that the office manager, who used two monitors, had rear view mirrors mounted to each one. Remember, this is a true story.
When asked why she had rear view mirrors on her monitors she replied that she had them so the small equity owner could not sneak up on her when he came in. When pressed further she said that he micromanaged everything and that the whole staff would find other jobs if they could.
Letting the minority partner go was a very tough decision for the entrepreneur as he knew that he would have trouble finding another person with the necessary skill set. However, the entrepreneur discovered that the minority partner was looking for a job with a competitor — despite his non-compete agreement — at about the same time that all this was going on. Following this discovery, the entrepreneur finally let the employee go.
When I asked the entrepreneur how he tolerated this individual for so long, he shook his head and said, “I thought I had no choice until I was pushed into a corner and left with no other option but to let him go.”
No employee should ever be considered irreplaceable. Now go out and make sure that you do not allow a situation to develop where employees have to put rear view mirrors on their computers.
Jerry Osteryoung, the director of outreach of the Jim Moran Institute for Global Entrepreneurship in the College of Business at Florida State University, the Jim Moran Professor of Entrepreneurship; and professor of finance, can be reached at firstname.lastname@example.org or at (850) 644-3372.