Dear Madeleine,
I have owned a boutique specialty consulting firm for over twenty-five years. My founding partner died a few years ago and left me her share of the business, so I am the sole owner.
I am working with a broker to find the right buyer for the business. I don’t expect to get much for it, but we do have a small, dedicated clientele, a stellar reputation, and very little competition, so it should set me up with a reasonable retirement.
My problem is that I am being heavily pressured by an employee to include her in the proceeds of the sale. She started as our receptionist/administrative assistant and worked her way to being our office manager. She keeps dropping hints that she expects a share.
Over the years, she often asked to become a partner in the business but could not contribute investment funds—and, honestly, never brought enough value for us to seriously consider it. In fact, she has not been that great an employee. She has often taken leave for health reasons she declined to disclose and never presented doctor’s notes. She has had multiple dramas—a spouse with a serious gambling problem and wayward children who seem to need endless bailing out of one problem or another. She seems to be cursed with terrible cars that break down even when brand new. There is always an excuse for lateness, and poor task completion.
We provided her with many opportunities over the years to take on more responsibility (marketing or accounting duties, for example), but she always dodged them, claiming to be overwhelmed with her existing workload. Our attempts to gain clarity on said workload were met with stonewalling or diversions.
My partner and I often talked about letting her go and finding someone more reliable who might one day be a likely partner, but we always felt a little sorry for her. To complicate matters further, I really like her as a person—she is funny and fun and has a big heart.
I am simply not inclined to turn over a big chunk of cash when the business is sold, and I don’t know how to tell her. I am afraid she will quit and badmouth me all over town or even sabotage me in some way. I have asked a lot of smart people for their take but am on the fence about this. What are your thoughts?
Over a Barrel
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Dear Over a Barrel,
Here is a principle I learned from our family business consultant, the Wharton Professor John Eldred: All relationships with employees start out as contractual and over time inevitably become emotional—especially for people who are relationship-oriented, which you undoubtedly are. I have had about twenty years to observe this principle play out in our own company and with many friends who have founded small businesses and many clients who work in even the largest of organizations. So, please forgive me in advance for what is going to sound cynical.
Your office manager (OM), who is clearly appealing enough to have made you override your rational assessment of countless breaches of trust, is manipulating you. She may or may not be aware of it, and ultimately it doesn’t really matter. There is a strong bond between the two of you, and you may even love her when it comes down to it. You know that she almost certainly needs the money. It is these feelings that are clouding your reason.
But here is the thing, Over a Barrel—unless your OM does something that adds an extraordinary amount of value in the last chapter of your consultancy (for example, she brings in the right buyer or prepares a compelling presentation deck that you couldn’t have done yourself), it doesn’t sound like you owe her anything other than a fair severance package. It doesn’t even sound like you could in good conscience provide her with a glowing recommendation, though I suspect you would if a potential employer were to call you.
The hinting is not acceptable, and you do not have to take the bait. Just smile when she does it—but don’t nod your head. She is poking you to find out what she can expect when you do sell, and the only thing you are responsible for is making sure she knows she will no longer have a job once you have sold. If you figure out how you want to handle severance pay, you can certainly share what she can expect. If you tell the truth about what you have already decided and properly manage her expectations, you are behaving ethically. Once the deal is done, you are certainly at liberty to give her whatever feels right to you.
If you spill the truth in advance, whatever bad behavior you anticipate will probably happen regardless of what you choose to do. From the sound of things, OM blames everyone but herself for anything in her life that goes awry. Whatever you do choose to give her won’t be enough. But again, anyone who knows the two of you will pay no heed to any bad-mouthing she does—because based on what you have said, I guarantee she has no credibility.
In The Power of Ethical Management, the book Ken Blanchard wrote with Norman Vincent Peale, they outline what they call “the ethics check.” It consists of three questions you can ask yourself to make sure you can live with your decision:
- Is it legal?
- Is it fair?
- How will it make you feel about yourself?
In your case, employment laws where your business is based will dictate what is owed to employees when you sell or close your business. Then, based on your OM’s contribution to your success, what feels fair to you? And finally, how will you feel if you give in to the manipulation—resentful, perhaps? Or if you go scorched earth and share none of the bounty—guilty, perhaps? If people around town hear how you behaved, will you be able to hold your head high?
I wonder what the smart people you consulted advised. Presumably they have more insight into the situation, and I can only assume that they all think OM has been taking advantage of your good nature from the get-go.
Good luck with finding a buyer, and when the time comes, happy retirement!
Love, Madeleine
About Madeleine
Madeleine Homan Blanchard is a master certified coach, author, speaker, and cofounder of Blanchard Coaching Services as well as a key facilitator of Blanchard’s Leadership Coach Certification course. Madeleine’s Advice for the Well Intentioned Manager is a regular Saturday feature for a very select group: well intentioned managers. Leadership is hard—and the more you care, the harder it gets. Join us here each week for insight, resources, and conversation.
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