Theory E²: Working with Entrepreneurs in Closely-Held Enterprises — I. Close to the Heart
3. Informal Performance Criteria and Review
The first two issues facing the entrepreneur – diffuse roles and informal intentions – inevitably culminate in a third issue. In many closely held enterprises, there are high levels of informal control but low levels of formal evaluation and review. People working in the closely held enterprise don’t know how their performance is being evaluated. Their “boss” is likely to tell them: “I can’t tell you exactly when we are doing it right, but I know when we’re doing the right thing.” Our coffee bean entrepreneur comes to mind.
This lack of clarity regarding performance can lead to burnout on the part of those who work with the entrepreneur. We see this in the frequent turnover of staff in many human service agencies and in many professional practices. There will be a few “old-timers” who have been there many years, know the “ropes” and know that their job is secure (even if they are not very productive) and, most importantly, can “read” the moods, nonverbal evaluations and brief, cryptic comments of their boss regarding “how things are going.”
Newer employees will burnout because they try hard and believe ardently in the entrepreneur or in the broader enterprise. They identify a mission, vision and purpose for the enterprise, but typically see this mission, vision or purpose embodied in the entrepreneur rather than in any formal statement of mission, vision. They also see the values of the enterprise embodied in the entrepreneur. The problem is that they don’t know how to translate this into their own decisions and actions. They can’t really be “just like the boss,” given that they don’t own or tightly control the enterprise. Plus, they are meant to be working on behalf of the entrepreneur, to complement rather than replicate her performance. So what is the employee to do and how is he to receive feedback regarding how he is doing?
The entrepreneurial challenge, in this case, is rather straightforward (though not easily achieved by many entrepreneurs). The entrepreneur must identify appropriate goals and objectives for her employees and, most importantly, identify appropriate levels of accountability. This is where flexibility and expedience comes to the end of the line—the specific performance of employees in the enterprise. Every employee should be given clear guidelines regarding what is expected of them in the organization and how specifically they are to be evaluated and for what they are to be rewarded (with regard to continuing employment, compensation and potential career advancement). Organizational psychologists can be of valuable assistance in helping entrepreneurs establish and communicate these guidelines.