The bMighty Blog -- Business & E-Business

Many smaller businesses celebrate their non-corporate culture in which employees are treated like family, turnover is low, and everybody is vested in making the company a success. But sometimes, the very familial nature of a smaller business can cause management to lose sight of the bottom line, with devastating consequences.

Inc. magazine has a fascinating article on St. Paul-based Reell Precision Manufacturing, a 210-employee company which found its niche in making laptop hinges. Throughout its 37-year history, the company prided itself on employee ownership, a deep aversion to layoffs, and a democratic leadership that let even the lowest level employees make decisions whenever possible.

Up until about eight years ago, the company enjoyed extremely low turnover rates but a couple of missteps amid a changing marketplace caused it to falter. Almost overnight, everything changed.
Writer Bo Burlingham says that Reel founder Bob Wahlstedt "concedes that Reell put too much emphasis on its identity as a great place to work and not enough on paying attention to the financial needs of the business."

Wahlstedt is further quoted: "Whether or not we'd changed leadership, we would have lost both the value and the financial stability of the business without getting more intentional about those things."

It's hard to say whether Reell would have fared better had management been more willing to make some tough decisions regarding employees. Wahlstedt believes the company will pull through: "This is a tough time, but it's a necessary time, and I believe we're going to come through it. I think there's going to be a better story down the road."

But for smaller businesses, this balancing act is a delicate one, akin to walking a tightrope. If management leans to far to one side (the bottom line) or the other (their employees) when making decisions the company could suffer.

Ironically, the Wall Street Journal Online has an interesting article in its Small Business section titled How to Get Workers to Think and Act Like Owners.

They can act "like" owners, and they can, and should, be treated as such but sometimes, when the difficult decisions have to be made, the ones in charge have to remember that they in fact are.

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