This is a story about your most delightful headache. Or perhaps your company’s Achilles’ heel. Why is the spectrum so wide? Because we’re talking about the inner drive that made America great, and its consequences when it manifests itself in inappropriate places.
It’s no hazard to say that in every business today, including yours, there are people at all levels running some sort of operation on the side. It may be the vice president creating sophisticated hedge fund ventures that siphon off or disguise revenues and losses, as apparently happened at Enron. It may be the assistant hosting a Tupperware party for fellow assistants during lunch hour. In either case, and all those case in between, you must find a balance.
This is not a one-size-fits-all discipline. Different industries have different standards for free-lancing; the type and scale of the enterprise, the level of the employee, and the possible effect on company cohesion and morale are all factors to be considered. The most difficult aspect for you, as the CEO or manager, is to keep informed of what is going without letting it distract you, while retaining your options to either tolerate or terminate the activities.
“I just can’t help it,” said the executive at one tech startup a couple of years ago, who could hardly talk about his employer but couldn’t stop describing his own ideas. He wasn’t confessing; he was boasting. This took place during that now-distant, faraway time of the dot-com bubble, but it is still illustrative of the worst kind of free-lancer’s mentality — the chap who essentially uses your business to launch his own. It was astonishingly prevalent, and its effects seem to have filtered down into other areas as well.
Certainly the lack of a positive impression left by the majority of dot-com startups is due to this institutional disloyalty as much as to any lack of marketing or pricing strategy. But it is important nevertheless to understand why this seemingly self-destructive attitude prevailed. It began with the resistance to change and innovation by the old-fashioned electronics and technology giants. Bright people were being stifled; ideas were incubated and abandoned. Thus there came a time when a company’s inside entrepreneur would surface and begin taking the ideas not snapped up out into the marketplace. Of course, this could only benefit the company if it retained a measure of control over the process (and some ownership stake in the ideas spawned on its property). Few of the dot-coms were organized enough to do so.
In looking at your own company and its policies, it may be worthwhile to consider whether your executives and employees “need” the outlet of sideline operations. Most, I would venture, don’t — they either aren’t talented enough or productive enough to justify any concessions. Yet that doesn’t mean an outright ban is the best policy, as its fair enforcement might curtail the efforts of the celebrated dry-fly tying specialist and the noontime telemarketer alike.
Remember, too, that employees with the esprit to start side ventures are in a sense calling attention to themselves for a purpose: They may feel under-challenged and unappreciated in their jobs. Instead of taking a negative or punitive approach, you may want to divert their energies into a similar company arena.
The higher up the executive ladder you go, however, the trickier these kinds of decisions get. There tend to be two or three types of ventures, ranging from passive investments that for some reason become “active,” consuming your executive’s time, to charitable activities that are intended to raise an executive’s profile or status, to the blatant attempt to jump-start a business that may end up competing with your own.
You will again have to proceed on a case-by-case basis, consulting with your lawyers to determine who may be potential competitors. There’s an argument to be made for creative tension, which is why some very busy executives still want to add to their overloaded dockets — it may well be that Type A people can relax only by doing more. I would look askance, however, at anyone who gets involved in running a restaurant or a minor league sports franchise. Their headaches will only become yours, in my experience.
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