Tuesday, January 4, 2011

Management Flubs Made by Rookie Bosses

Some people start their own business to escape a bad boss. Albert Ko became one after launching his.
The owner of DealPerk LLC, a year-old coupon website in Irvine, Calif., Mr. Ko admits that he developed a habit of shouting at his three employees whenever they made mistakes, which created a toxic work environment.

"They were scared," says the first-time entrepreneur, who's since changed his approach to discipline. He now pulls offenders aside to discuss what went wrong and offers suggestions on how they can improve. "I could see that it hurt morale."
 
Being the boss is a difficult job for many business owners to master. Their expertise is typically in the products or services that they sell and not supervising others. As a result, entrepreneurs are often guilty of handling employee mishaps poorly—or for allowing such blunders to occur in the first place.

"They're in business because they have talent in their field, but it doesn't mean they're capable managers," says Rod Means, a district director in San Diego for SCORE, a nonprofit small-business mentoring and training organization.

The root of the problem is that entrepreneurs see the workplace differently than most workers, says Wayne A. Hochwarter, a professor of management at the College of Business at Florida State University. "When you're running your own place, you've got everything vested in it. It's an emotional thing," he says. But for the average employee, "it's just a job, and sometimes not a well-paying job."

Here's a look at other management mistakes entrepreneurs confess to having made—and how to avoid them:

Failing to check for competence. Jimmy Tomczak, founder of Paper-Feet, a sandal manufacturer and retailer in Ann Arbor, Mich., says an intern once incorrectly assembled 25 of his company's products, costing the business $500 in retail sales. He had showed her what needed to be done but failed to check if his instructions registered clearly. "Now I make sure that new hires can demonstrate competence before letting them go on their own," he says.

A simple way to prevent costly errors is to take the time to patiently teach employees how a job should be done, says Dr. Hochwarter. Too often entrepreneurs hire people without providing clear job descriptions or training, and instead leave workers to their own devices, which can lead to confusion and conflict, he says.

Lying to avoid hurt feelings. Ethan Fieldman, co-founder of Group Interactive Networks Inc., a software company in Gainesville, Fla., says he once severed ties with a contractor whose job performance wasn't up to par by telling him that the firm didn't have any more assignments available. But afterward, Mr. Fieldman says he and several employees at the company began regularly receiving emails from the laid-off contractor asking if any new jobs had opened up. It's been six years and Mr. Fieldman says the emails continue to spam their inboxes.

Though it can be awkward to deliver bad news, managers should be honest about why they're dismissing someone, says Daniel M. Murphy, co-founder of the Growth Coach, a small-business-coaching franchise in Cincinnati. "Giving the truth is good for the business and for the development of that person," he says. Any sort of lie "could spill down throughout the organization," resulting in the spread of false rumors.

Blindly trusting workers. When Wendy Maynard co-launched Kinesis Inc., a Portland, Ore., Web-design and marketing firm, in 2000, she says she and her business partner didn't create an employee handbook or even verbally express how they expected their staff to behave. "We made a big assumption that our professional norms were other people's professional norms," she says. Yet some of their first hires came to the office wearing low-cut jeans with underwear and tattoos showing. One staffer worked on freelance assignments for other companies while on the clock. "We quickly had to change things," Ms. Maynard says.
Entrepreneurs should define in writing what kind of behavior is allowed and what isn't in the workplace, says Janice Brown, founder of Brown Law Group, a San Diego law firm that specializes in employment litigation. The effort will not only deter employee misconduct, but also help a company fight wrongful termination lawsuits or false unemployment claims by former employees, she says.

Giving mixed signals. Hajo Engelke, founder of Custom Choice Cereal LLC, an online retailer in Durham, N.C., normally wears a t-shirt, shorts and flip-flops to work. Last summer, he teased a new recruit for showing up in a suit and dripping with sweat. Yet the very next day, Mr. Engelke walked into the office dressed in just the kind of formal outfit he criticized his employee for wearing the day before. (The reason: Mr. Engelke had a meeting with a potential investor, which he neglected to mention to the new recruit.) Upon seeing Mr. Engelke dressed this way, the employee's "jaw dropped," recalls the entrepreneur. "Every day after [the employee] would ask what he should wear to work."
Entrepreneurs need to remember that workers look to them for cues on to how to behave, warns Mr. Murphy. "As the owner, you are in charge of setting the tone for the environment and the culture," he says. "What employees want more than anything is clarity of what are the rules and expectations."

Write to Sarah E. Needleman at sarah.needleman@wsj.com

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