Good Owners are Not Necessarily Good Managers (or Employees)

Good Owners are Not Necessarily Good Managers (or Employees)

- Lessons Learned Episode 56

Over the years, I’ve witnessed or been involved in several incidents in which one company bought another and the seller became an employee (usually a manger of some kind) within the purchasing company. One of the most important lessons I’ve learned from this is that someone can be good at owning, managing, and growing a company and not good at managing inside someone else's business. In fact, this is pretty common.

From time to time, you hear people say, “I don’t think I’d be a good employee.” I’ve said it. You may have as well. What we mean is generally that we’re used to being the ultimate decision maker and policy maker. So working on someone else’s goals and following their wishes is something we’re not used to.

In my case, I left my last real job in October of 1995 – just over thirty years ago. And maybe it’s arrogance, but I think I know how to run a business. I barely remember what it’s like to take instructions from someone else. I think that’s pretty common to people who move from owner to employee.

Here are a few more things I’ve learned from experience.

First, somehow, I believe that people who run businesses must be good at certain key activities, such as providing excellent service, managing employees, and making sure all the details are taken care of (even if that just means delegating to the right person).

Unfortunately, I’ve discovered that someone can make good money and grow a business without doing any of those things well. Many people just muddle along, somehow making it work. I think of this as a tradesman’s approach to business. By that I mean that they really love the details of actually doing the work, but they don't enjoy all the details that make a business objectively successful in others' eyes.

Second, it took me a long time (more than ten years) to separate my internal stereotypes of owners and managers. I used to think that managers were on their way up to being owners and owners were focused on all the details that would actually make a good manager. In other words. the Venn diagram had a great deal of overlap.

Over time, I began to draw some very big distinctions. Ultimately, even the greatest, most loyal manager must put the business second. They have to take care of their income, their family, and their careers. And when push comes to shove, they can leave to take another job.

Of course the owner also has to take care of their income, their family, and their career. But the owner does this through the business. In small business, the business exists to fulfill the dreams, desires, and needs of the owner. And “leaving” the business is never a straight forward thing.

All of that simply comes down to: There are certain attitudes and behaviors that will always separate the owner from the manager. Ultimately, the owner has more at stake inside the business.

And that leads us to the third point: Many owners got there without paying attention to all the details. They were never good with the books, with managing people, with being organized, or even with good service. They got by focusing on the job to be done until they grew to the point where they could have over the “details” to someone else.

In other words, they never developed the skills and behaviors you’d expect from a good manager because they didn’t need to. So when they move from owner to employee, they don’t have those skillsets to bring to the new company.

I’ve seen former-owners who had absolutely no attention to detail, no organizational skills, and no good daily habits that would make them a good manager. The result, of course, is that they are not good employees and the new owner is very frustrated with trying to manage someone who just ought to be able to manage themselves.

Oddly enough, the fix is surprisingly easy and almost never undertaken. The former-owner-now-employee needs a thorough onboarding process just the same as any employee. They need to be educated on the vision and culture of the new company. They need to know all the details of “how we do things around” here. And they need to go through a bit of the awkwardness of being the newest hire.

The one thing a former owner should understand very easily is the branding piece. That’s the “how we do things around” bit. After all, they had their way of doing business, and may even have been an attractive purchase based on their processes and procedures. So even though the new company will be different, they bring a certain understanding of why newbie employees just need to “do it our way.”

Action step: If you’re acquiring a former owner as a new employee, you need to plan for it with a serious onboarding process and some training in the skills of a manager. If you have an onboarding process for other employees, start there. If not, build a plan from scratch (and use that as a place to start building onboarding processes for other employees). And then go find some good management training.

Sink or swim is not an effective onboarding process.

Feedback always welcome.

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Episode 56

This Episode is part of the ongoing Lessons Learned series. For all the information, and an index of Lessons Learned episodes, go to the Lessons Learned Page. 

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