A STUDY BY THE Norwegian School of Economics and Business Administration found that a family’s eldest child does better academically and financially than his or her siblings, regardless of their sex. He or she is the most successful at school, gains the best grades and lands a place at one of the ‘better’ universities – which usually leads to a ‘good’ first job.
The child does better because he has more of his parents’ attention, and because he can dominate his younger brothers and sisters.
That’s family life, but what about business? Can we learn anything from this? And is there anything useful we can apply to the smaller companies I often deal with which account for some four million commercial enterprises. I think we can.
Smaller businesses function along similar lines to most nuclear families. Usually there is a strong head of the firm, commanding a role similar to the old-fashioned Head of the Household, and a strong sense of the need for mutual cooperation.
There is, also, intense rivalry and internal competition.
Like families, small firms produce tight, often unique, cultures. They become small worlds, operating by their own rules.
Strong workplace cultures are forged by having to battle each day with adversity.
But the very act of struggling to stay afloat can drive staff together rather than apart.
There’s nothing like knowing your firm has battled against the odds and lived to fight another day and knowing that you and all your colleagues have done their bit to aid its survival.
Much of this is really positive. People often want to work for smaller businesses because they like being part of a tight team where everyone’s effort counts. They seek workplaces that have a strong esprit de corps and where their individual contribution will be highly visible (for good or ill).
So, to return to my main question. If the eldest child does best in life, does the same apply to employees in smaller firms? Does the first person hired do best? Does the firm put more effort into helping this person succeed? And does their dominance within the firm mean others will inevitably have fewer chances to shine or have their say-so?
I think, on balance, after many years dealing with smaller companies, I can give a qualified ‘yes’ to all these points.
Undoubtedly, there is much agonising that goes into hiring employee number one.
Once the founders have set up the business they will debate long and hard about who they first take on.
They will want someone with a strong sense of responsibility who can be moulded into the way the founders like to work. Like the first born, this first employee will get the full attention of the founders. Subsequent employees will have to compete for their time. As firms grow larger, the first employee will have a large degree of ‘founders’ rights’, enjoying privileges other staff might consider unfair.
This is something that owner/managers must watch out for. They should be wary about creating a culture where new recruits perceive that there is an ‘old guard’ which is treated with kid gloves.
Founders must be aware that with each new employee, the firm changes. New staff are not joining the initial organisation, but one that has evolved.
It may be the case that the firm has developed to such an extent that the early joiners are no longer of high enough calibre or quality to maintain their roles.
The chief problem will be cultural, however. Ineffective management will lead to a collapse in workplace morale, signalling that it is acceptable for an ‘old guard’ versus new employees position to have become established.
This will produce an unhealthy working atmosphere and a falling-off in team communication.
How do you spot if this is happening?
Some tell-tale signs of trouble ahead will be normally happy and vocal staff who start to clam-up at staff meetings.
If you don’t work hard at getting them to express their hidden resentment it will lead to a long and protracted death of your business as people become increasingly reluctant to stay late at work or go the extra mile.
The other consequence of favouring the first-born in the workplace is that even fairly fresh staff will start not to bother with offering the management new ideas or useful suggestions towards the firm’s development.
As most small businesses sadly remain small all their lives, bringing about change and keeping products and services fresh and in line with the market place is no cosmetic challenge. It is the lifeblood of the business.
My experience with struggling small and medium-sized companies shows that they can get more than a little inbred.
The key objective for all SMEs must be to avoid becoming inflexible and ill-adapted for change.
In today’s rapidly-changing business world, ‘fleet of foot’ should be the way they would want to be described.
Nick Hood is a senior London partner at Begbies Traynor, a British London-based business recovery and turnaround specialist
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