Years of consulting have taught me that the most perilous time for a small company is when it has grown to a point where it can no longer be managed informally. The founder of the business realizes that it is impossible to keep up with everything without some kind of help but has qualms about suddenly having to share decision-making responsibility. Part of the hesitation relates to money. After all, in a private company, any new employee’s salary comes directly out of the owner’s pocket. It is understandable that the goal becomes paying as little as possible.
An owner who faced this situation wanted me to confirm that he needed to hire an inventory professional. I responded by explaining very clearly that it was past time for such a move. He told me he would get a clerk.
I replied: “A clerk works for a supervisor. She teaches the clerk how to do the work. And if that clerk is absent, the supervisor does the work herself. Can you teach inventory management and, from time to time, manage it yourself?” I knew that, if he was so capable, he would already be doing it.
“No, I can’t do that,” he responded. “Should I hire a supervisor then?” Images of bills flying out of his wallet were probably running through his mind.
“If you have an adequate inventory system up and running, a supervisor-level person can take it over and manage it, but you have nothing,” I pointed out.
“Can’t a supervisor set something up?” he asked.
“Supervisors manage a system that is already in place and train employees on how to manage pieces of it,” I explained. “You need someone to select a solution, implement it, train employees, and know if it is performing as intended.”
The owner dejectedly sank in his chair. “How about I hire a prom-ising, young person capable of growing into the job?”
“Please don’t put short-term financial concerns ahead of the long-term survival of your company,” I urged. “You can personally give no help whatsoever to your new hire when it comes to managing inventory. You need to hire someone with substantial experience. And, yes, that person will command a salary commensurate with that experience.”
That hit him hard, but he still couldn’t get past the money. “My company has always been profitable, so I’m in no danger of going under just from a little inventory trouble,” he told me.
“You are wrong,” I said. “As your company continues to grow, that ‘little inventory trouble’ will grow too. Expediting will remain the norm. Soon, you’ll be unable to quote reasonable delivery times or make promised shipments. Chaotic inventory is like a virus: If not treated, everything becomes infected. You need an inventory expert, and you must have absolute confidence in that person. This means hiring an experienced professional and paying the going rate. Anything less is rolling the dice with your company’s future.”
The owner thought for a moment. He and I both knew the future of his company would be decided with what he said next.
“I guess you’re right. Will you help me find the right person?”
Of course, I was more than happy to. This was five years ago, and, since then, that new hire has helped make the company more prosperous than the owner ever imagined.
When the head of a small company realizes it’s time to share decision-making, it’s crucial to distinguish between the things that are possible to teach a new employee and those that require other skills, knowledge, and expertise. An inexperienced person will make a bad situation worse very quickly. The wise choice is hiring an industry professional who can effectively manage what the owner can’t teach.
Do you have an anecdote that teaches, enlightens, or amuses? Share it with the readers of APICS magazine. Stories should be approximately 750 words. Email submissions to firstname.lastname@example.org.
Randall Schaefer, CPIM, is an industrial philosopher and retired consultant. He may be contacted at email@example.com.
To comment on this article, send a message to firstname.lastname@example.org.