Greed and lack of appreciation for customers, stockholders and employees can lead to serious problems.



We are all guilty of it in one way or another - turning our greatest successes into failures. Most people do it in one form or another in their marriages or other relationships, and we usually do it to our successful businesses.

If you have lived as long as I have, you've seen it happen over and over again: favorite restaurants change their recipes to save money, favorite getaway spots and hotels change their amenities, favorite banks change their policies and services, etc. You probably know what I'm talking about. And if your company is having great success, I can guarantee that someone in top management is already at work turning its success into failure. Is it you?

Why do people usually turn success into failure? Look at what happened to the wildly successful company, Enron. How can you drive a cash cow like a public utility into bankruptcy? By being greedy, and ceasing to love and appreciate your customers, stockholders, and employees who are making you successful. I've seen this happen in the HVACR supply house business too, haven't you? Oh, not to the size and extent that it happened at Enron, but most wholesalers that fail or lose market share do that because of the policies of someone at the top. They can (and usually do) blame others, but customers leave because management has turned its successes into failures.

How do you do that? The same way that they did it at your former favorite restaurant: you change the recipes, raise the profit margins, reduce the staff, cut wages, buy cheaper products, start charging for amenities, and institute company policies that make you less customer friendly. In other words, you get greedy and fail to appreciate those who have done so much to make you successful.

When was the last time that you heard of any company laying off employees? It has probably happened recently to a major industry where you live. What happened? As any business consultant can tell you, this is a sign of poor management and an impending failure - yet the blame is put on having too many employees. And what is the result? A city in recession, so there are fewer customers, and reduced amenities and customer services to drive the rest of them away.

In our business, the first thing a bad manager usually does in a successful period is to try to raise profits by cutting the commissions of the salespeople. Then the company cuts employee benefits, limits cost-of-living raises, cuts or reduces bonuses, cuts or ends employee (or customer) incentive programs, and limits travel (or phone) expenses. And then (despite success with current policies) the company institutes new policies and guidelines to protect itself against the normal risks and hazards of doing business. The result is a loss of the employees who are making the company successful, while good customers are driven away. Then come the layoffs.

You can often see disdain for success among top managers or owners in the way they treat their top-performing salespeople. Those individuals who are wildly successful and are raking in company profits usually have their territory cut, or their best customers assigned to someone else, or their profit margins reduced, or fewer of their expenses paid. Then there are attempts to not pay them what they are owed, or other company policies are initiated to make them less successful. I see this happening in our industry every day.

Recently one top-producing salesperson told me that his company stopped its annual sales contests (which included a trip with a best customer) because he won them every year. Good thinking! Yes, that's how you succeed at failure. <<