Do owners come first? Or employees?

Sometime back, I wrote about how I believe business is all about managing tensions between various interested parties. As a CEO, your job is primarily to be the lubricant who can manage the multiple egos (yes, including your own) and make sure that the entire company moves towards the common goal. A lot of my thoughts on this topic emerged during the past 18 months when I was leading the turnaround at my company.

One of the perennial debate raging in our company leadership (which includes owner-leader, investor and myself) is whose needs should come first in a turnaround situation. The founder-leader had a great lifestyle till end of 2003. he was the consummate deal maker, finding new sources of money whenever the business got into trouble. Unfortunately, he also never made a distinction between business and personal finances. Now, for the few months, I have him on a tight leash when it comes to the money he can take out of the business either through his salary, credit cards or other perks like car, utilities etc. Quite obviously, this is bugging him a lot and I could feel the explosion building up whenever we had a chat.

To my mind, the fundamental difference comes from our personal views about the company and its purpose. He always felt that the company exists to serve him. In a way he was right because before I took the responsibility, he was the lone ranger in the company and every body else looked towards him for results as well as direction. Since he was always required to pull the company out of trouble, he quite rightly felt that the company cannot survive without him. After I took over, I forced the company to make a complete about turn from this approach. There were 2 reasons for this: pragmatic and ideological. As I mentioned before, I am a foreigner in this country, so obviously I cannot deploy the same wealth of contacts that the founder had built up over the past 30 years. Instead, I have to lead through empowerment and by engaging the will and abilities of all the people in the team…sort of distributed leadership! Secondly, I am too much of a realist to think I have the solutions to every problem my company was facing. By engaging the collective talents into the task of turning around the company, I can be assured that any given problem can be attacked from multiple directions and a solution will emerge over time.

In order to engage the collective will, I have to choose who gets higher priority; employees or owners. if I want all my team to engage fully in solving day to day problems, I have to give them the confidence that the company will not marginalize them at the time of crisis. The team has to believe that the company will do everything to protect their jobs, and that experimenting is not a path to unemployment. One of the best ways to demonstrate this changed priorities was through pay checks. So I setup a pecking order in payments: employee salaries come first, then current suppliers, then old debts and then whatever is left over is shared between founder and me. While this did wonders for my company, it left the founder in a weird situation. We have this regular talks wherein this point comes up invariable and in spite of repeating and explaining my perspective countless times, he is frustrated by the financial uncertainty he found himself in.

We had a similar discussion once again today and his core problem surfaced that I am not taking care of him and making him happy. Now, I am not worried about my future in this company. What I do worry is that as the leader, I now have to manage the tension between owners and teams. While the owners have invested money, the team is investing their abilities. Without the team fully engaged, I do not think we stand a chance in medium to long term. If the the founder is not happy and engaged, I will find it difficult to fully focus on the key issue we have today: “How do we grow profitably without investing money into markets up front?”

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