Critical but outdated! How do SMEs handle the paradox?

As we undertake transformation in SMEs, one of the most critical facilitators and predictably stumble blocks, are people. Many employees implicitly understand the need for change and take to it immediately. In fact many of them wonder what took the owners so long to embark on this transformation. There are two reasons for this feeling — one they see clearly that their roles are getting sharply defined and hence they have an opportunity to showcase their performance. Secondly many of them struggle with myriad operational issues and the process changes really ease their lives making them less stressful. That’s the easier part. The trouble is with employees that are critical to the operation but resist change. They are critical because they handle a significant portfolio or have been with the owners for long and hence trustworthy, but resist change because they feel threatened. Consider the following cases:

1) In a client in chemical industry, the key person was the production head. He has been with the business for almost two decades and has virtually held fort across all operations for over ten years. Everybody in the plant reports to him. A new crop of people joined in various functions and were keen to implement our suggestions but he would unsettle them. All processes ultimately ended with him. We restructured the organisation to restrict his influence and hence ring in the change but he would always be ahead to block progress. The client was keen but did not want to hurt the employee. In all interactions with us he expressed his helplessness. Never did we recommend his removal since he had the knowledge of many critical products so it was important to leverage him.

2) In a trading client of ours, the COO was the owner’s right hand man. So much so that the owner left all operations to him and only deciding on strategic issues. But he also realised that this arrangement is the biggest block to growth since the COO was a prima donna and blocked any change that we wanted to bring. The owner, in conversations with us, pleaded us to bring in the change in the COO through counselling and training. He believed if the COO changed, the organisation will transform.

Many owners suffer from this dilemma. How should we handle this paradox? In our experience, there is really no choice but to catch the bull by the horn. Because the other option is to hold the organisation hostage to somebody’s obstinacy. And why? Because the owner believes no one can do what this employee is doing and loyalty is supreme. While the latter is a valued quality in SMEs, the former is not. It is possible to get people who are better if the processes and knowledge capture is right.

By the way in both the cases we did manage to transform — in case (1), we managed to move the person to a new unit and in the second, made the owner communicate the expectations clearly and create an action plan.. We also helped the owner recruit an assistant who oversaw the program while the COO managed the operations.

It is important for the owner to realise the the organisation is bigger than individuals and one person’s refusal to transform can affect the whole organisation’s growth and prosperity.