Greg Smith: Employee Retention During Economic Recovery I was fortunate to appear in the Investors Business Daily on August 25. The topic of the feature article was what employers need to do know to retain their good employees.  Employee retention and employee engagement are vital ingredients for a successful organization. You can view the artile on the IBD website.


Why Good Companies Fail

Tulips, Turnips and Turn a Round Strategies

Have you ever experienced this in your company?  Company X celebrated their 20th anniversary this year.  During those 20 years a lot of things have changed.  Once a shining star in their industry, now the shine seemed to be fading fast.

The HR Director was the first person to bring up the problem.  It seemed the executives were going in one direction and everyone else was moving in the opposite direction.  During the past 12 months they implemented two realignments and laid off 20% of the workforce.  Employees complained they were working the jobs of two people, the lack of communication and a growing frustration and distrust of management.  People reported the leadership direction appeared reactionary and disjointed.  The HR Director tried to explain the problem to the President, but it became clear the meeting was not going anywhere.

When we entered the picture, I requested a meeting with the President.  After I asked a few questions the picture became clear.  He had been in his position for eight months and was brought in to turn things around.  It seemed the harder he pushed the worse things became.  His frustration was palpable. His executive leadership team was not working together and in fact, one of his executives was sabotaging the process.  The combined frustration had caused him many sleepless nights, high blood pressure and was affecting his home life.  If the company did not turn the corner soon they would ultimately face bankruptcy and disgrace.

Jim Collin’s latest book, “Why the Mighty Fall,” describes the five stages of decline this company was experiencing.

Stage 1: Hubris Born of Success

During this stage the company begins losing sight of the values and strategies that made it successful.  Their success becomes a weakness and begins to eat away at their foundation and a feeling of “entitlement” permeates the organization.

Stage 2: Undisciplined Pursuit of More

The organization has the feeling they can do no wrong. They feel they are invincible and blind to their incompetence.  They expand into markets and make risky and undisciplined decisions to grow, purchase, expand and enter into areas they know little about or should be involved in. 

Stage 3: Denial of Risk and Peril

As they enter this stage, warning signs and metrics begin to mount.  Teamwork, communication and morale issues begin to surface.  Despite the symptoms, they ignore reality and continue along the path of destruction.

Stage 4: Grasping for Salvation

At this stage, they are struggling and looking for a silver bullet solution to save them.  Typical actions can include bringing in a new charismatic CEO, bold and daring new strategies, new acquisitions and radical transformations.  The clock is ticking and unless they get the right help at this stage, they have little chance of recovering.   

Stage 5: Capitulation to Irrelevance and Death

So what do you do if you find yourself in this predicament?  The good news is if you catch the decline in the early stages then most companies can remedy the problem themselves.  But when the problem has gone on for a lengthily amount of time, when the band-aids, silver bullet programs, flavor de-jour have failed to work, then you may need outside assistance.  The longer you wait the more difficult the cure.  It is similar to a patient who keeps experiencing a pain that never goes away.  When they finally go the doctor the treatment ends up costing a lot more money in lost opportunities, time and inconvenience. 

I have learned an “outsider” has a special ability to address and talk openly about business matters an “insider” cannot.  The old proverb, “it is lonely at the top” is true.  Executives can share things with me they will never share with others in the company.  This position of trust is sacred and the objective and honest feedback is critical.

A couple of weeks later the executive team met offsite for a day long meeting.  The executive team was comprised of intelligent, dedicated and motivated individuals.  However, each individual had a completely different personality, values and an opinion on how to lead their company out of the mess.  They were able to lay everything on the table—no holds barred.  At the end of the offsite they had outlined a unified strategy, goals and action steps to move forward.  Now after several months, the company has turned the corner and mostly everyone is pleased in the direction they are going.