Is blind loyalty to finance employees hindering your business?
Much is written about employee loyalty and how your behaviour as a boss can encourage or prevent staff turnover. Yet I am beginning to notice a pattern within finance departments across the recruitment industry – the phenomenon of blind loyalty.
So why are MDs and owners so reticent to move their underperforming finance people on. Here are 10 reasons I have found:
1. The employee has a relationship with the owner/MD: This doesn’t imply a romantic relationship or one of a family nature – although in small businesses either are possible. In many cases it is a relationship based on camaraderie and friendship
2. They are relied upon: When a MD relies on an employee, they are less inclined to ascribe poor performance to the employee’s ability. Instead they often credit poor performance to factors outside of the employees remit or control.
3. The fear that it could be worse: The fear that a replacement may do an even worse job often paralyses MDs into making the change. If the role has seen other people underperform in it this can compound the fear. If there is a finance team, there is often a concern that removing one member could impact on the output of the other members of the team.
4. The MD doesn’t know better: If this is your first finance hire and/or your experience of finance professionals is limited, it may simply be the case that there is a lack of understanding about what the role should entail.
5. The MD is scared of the employee: Whilst the view of a recruitment MD is of someone who is tough, deep down there are some who are insecure. Whilst not physically scared (although in very rare circumstances this is a possibility), the concern that someone may sabotage your business is real, even if it would be unfounded. Additionally if an owner feels that the employee may be litigious, with or without cause, this can cause some inertia.
6. The MD feels sympathy towards the employee: In some cases the MD may know the employee is out of their depth or underperforming, but has personal empathy towards them. This may be due to personal, financial, health or other reasons.
7. The MD doesn’t want to go through the recruitment cycle: The thought of engaging a recruitment business or reviewing applications followed by interviewing, reference checking, and inducting a new person, is daunting. The MD may believe it’s easier to stick with the status quo.
8. Fear of a gap: There is a genuine fear that the time between one finance hire leaving and another starting will create business issues. This leads to a fear that the business will suffer and consequently provides justification for not making a decision.
9. The employee has knowledge: It could be that they have something on the MD that they may expose. This is sometimes the case, albeit rare. More often than not it is the fact that they are the only ones with specific knowledge. Within a finance function it may be that they are the only ones who know how to operate the various spreadsheets or systems in place, run the payroll etc. Removing that employee removes that knowledge which is a concern.
10. The MD is fooled: A finance person can hide behind numbers, language and technical knowledge which can dupe the MD into thinking they are on top of their brief. Often they will use their charisma on the MD whilst sweet-talking others in their team.
Controlling your finances is one of the most important things a MD will have to do. Arguably the most. So when MDs refuse to remove the underperforming finance person from their team, what they are really saying is that they can’t be bothered. And since that’s highly likely to be the wrong decision, they’re also tacitly saying that they are not willing to manage their business.
The key relationship in any recruitment business is the one between the entrepreneurial MD and the commercial FD. The MD is often an ex-recruiter, who is excited by the sales aspects of the role. The FD needs to work closely with the MD, reviewing any initiatives and providing financial direction. Without the appropriate “critical friend” relationship of the FD, the role of the MD goes unchecked. This can result in poor decision making and weaker financial management. Every recruitment business needs the proper involvement of a commercial FD and the role is really one of being the key, trusted advisor, and in many cases the right hand man/woman to the MD.
So whilst sticking with your finance manager may be like sticking with a comfortable pair of slippers, the reality is, if you want to stride forward you need to make a change to this blind loyalty.