7 Mistakes Entrepreneurs Make in Managing People

I think it’s fair to say that managing people has historically not been one of my strengths, but then for that matter, there are plenty of areas of business that aren’t my strength, either. Sometimes you just have to “soldier on” and do the best you can.

Among the many mistakes that I’ve made in managing people, I think these following ones are the most commonly made by other entrepreneurs as well:

1. Entrepreneurs tend to not give the whole space of “Managing People” enough time and energy.

Entrepreneurs tend to underestimate how energy spent in such areas as hiring people really carefully, communicating with employees, and motivating employees can make a giant difference in performance.

Entrepreneurs tend to be a little myopic and confuse their mind-set with that of an employee. The employee does not have your natural motivation. Unless you tell them and tell them again, they don’t understand your vision for where the company is going to go. Unless you tell them, they don’t understand how their work fits into the bigger picture, that you appreciate their work, and why working for your business is special.

2. Entrepreneurs tend to understaff their businesses.

As a result, employees at entrepreneurial companies often don’t have enough time to do their jobs well and their focus may be divided between their principle job and another job they are temporarily filling in for. Often the owner can’t spend the time she should focusing on the work that really matters because she must spend her time putting out fires due to a lack of quantity or quality staff to do it for her. Furthermore, employees at an understaffed business tend to burn out, get fed up, become demotivated, and leave. Then the entrepreneur is faced with vacant positions and high turnover, which makes the whole situation worse.

3. Entrepreneurs tend to be less rigorous in their hiring than larger companies are.

Entrepreneurs might hire the winning candidate for a key position after just two interviews, while a larger company might put the candidate through a battery of six or seven interviews plus extensive reference checking.

Does it really matter? I hired an accounting manager who later became my CFO and who I eventually learned was stealing money from me. Did I do a rigorous background check? No, I was stalled out getting a reference from his previous employer because he told me he had a personality clash. Hiring is not easy. But that doesn’t mean you shouldn’t give it a lot of effort.

4. Entrepreneurs tend not to match employees well to their positions.

Being an entrepreneur, you are constantly called upon to perform many different jobs, and you know you must do them well enough to have your company survive. Being an entrepreneur, you probably have above-average talents in a lot of different areas. You almost certainly have above-average drive, and that’s very important when it comes to job performance.

Hence, entrepreneurs often overestimate the quantity of work to expect from employees. They also tend to underestimate the adjustment time for their employees when they switch to new tasks and new jobs. They tend not to be careful enough in matching new hires’ skills and interests to the job they are trying to fill. Often this comes about because they don’t spend enough money and effort to have a lot of potential job candidates to choose from.

5. Entrepreneurs tend to give little effort to motivating employees.

Most entrepreneurs would rather work on their product launch or marketing campaign than think about motivating employees. Besides, shouldn’t good employees be self-motivated? No, they shouldn’t be. You, as the entrepreneur, should give them reasons to be motivated. You should regularly create a clear vision of what your company is all about, where it is headed, and why it matters.

You should convey to all employees why their work matters and that you appreciate their work, even when they are more or less doing their job but not necessarily doing anything exceptional. Employees need to feel wanted, and they need to feel wanted and appreciated by you. They need to feel part of the team.

I have been shocked to hear how a small remark or even a particular voice tone I use can really impact an employee—positively or negatively. Usually I only find out because someone tells me about it later. Like some entrepreneurs, I’m just not that observant about such things! But I try, and so can you!

6. Entrepreneurs tend not to be good at working with “problem employees” to improve their performance.

Over the years, I have learned that the vast majority of time, if you are willing to give it a little bit of effort, you can usually turn around an underperforming employee. Sometimes the improvement can be startling.

In another presentation I offer specific suggestions on how to improve the performance of employees with various types of work issues. Perhaps most important is first realizing that yes, you usually can help employees turn around their performance, and most all employees really do want to succeed!

7. Entrepreneurs tend to be reluctant to fire problem employees.

Although you don’t want to be firing employees left and right and you generally want to work with underperforming employees to improve their performance, there are situations when the sooner you fire a really bad hire, the better it is for all. Sometimes a problem employee can not only create an immediate performance problem for the company, but can also undermine morale for the rest of your employees.

About Bob Adams

Bob Adams is a Harvard MBA serial entrepreneur. He has started over a dozen businesses including one that he launched with $1500 and sold for $40 million. He has written 17 books and created 52 online courses for entrepreneurs. Bob also founded BusinessTown, the go-to learning platform for starting and running a business.