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I was asked a question:
How does an entrepreneur choose which people to work with?
Family, friends, or former co-workers? How do you approach
that issue?
The question intrigued me
and sent me back down memory lane! I was raised in a family
owned and operated business. My father was a serial
entrepreneur who had several businesses. He landscaped,
performed small construction jobs, ran a taxi service,
started a food delivery service, had a fleet of ice cream
trucks and operated an ‘after hours joint.’ My father
operated primarily in the informal or underground economy as
described by Phillip Cochrane, PhD. I mean those businesses
operated in the untaxed and unregulated segment of the U.S.
economy.
As a result of the space
that he played in, his employees had to be people he knew
and could trust, i.e. family and friends. I very seldom saw
a stranger working for him. If a new ‘stranger’ was hired,
it was someone recommended by one of his VERY close friends
or a family member. Although you were a family and friend,
you had to be able to perform as in any business or
organization. If you didn’t deliver (literally in some
cases), you were demoted, redeployed or in some cases,
terminated, especially if your efforts directly reduced
profits.
However, one of the
glaring weaknesses in his human capital strategy is that he
often allowed underperforming family and friends to return
to work after he cooled off. His rationale – ‘They are
loyal people that I can trust.’ He was adamant that his
role was to provide opportunities for those close to him,
which meant family or friends.
Unfortunately, more often
than not that same employee would often make a similar
mistake and cost him more money! That mistake in turn
limited real growth and compelled him to continue to operate
in the informal economy. I often heard my siblings describe
the repeat offenders as ‘butchers’ and ‘botchers’ who were
not too smart.
My oldest brother Edward
M. Parker Jr. was also blessed (or cursed) with the
entrepreneurial spirit as well. He, however, was intent on
operating a legit business in the formal economy. (Well,
during the day! That is an offline conversation!)
He and his best friend
launched Parker & Carter Home Improvement in 1970, funded by
my father’s entrepreneurial activities. Since his business
was one that required ‘specialized’ skills, he had to adopt
a modified friends and family human capital strategy.
To be continued in June’s Economy Section: Part II -
Entrepreneurship – Who should you partner with or hire? |
