What helps the most in the future success of our business?

At platform no. 2 of Malad station, there is a book stall. The employee there is since 23 years…!

At our home, the same person delivers newspaper since last 11 years. He knows which papers we like, so whenever there is some scheme or some new paper is coming, he always informs.

The helper at the grocery shop from where my wife buys our provision, helps her remember things when she goes to place monthly order. He knows which things are regularly used by us, because he has grown up in that store and he knows buying patterns of all regular customers. My wife feels pride by the special attention that he extends.

The computer maintenance company that repairs our home PC, has one supervisor engineer since more than two decades. He knows entire history of all the various generations’ PCs that came to my home. He understands my problem quickly and sends the engineer accordingly.

The common thing in all the above examples is some employee who has been with the firm since more than a decade. Their presence makes the customer’s experience much more comfortable. Everybody prefers to deal with a known face. A customer’s comfort decides his satisfaction levels. A comfortable, happy, satisfied customer is a profitable proposition for any business. An old (experienced) employee is a very valuable asset to the company, because not only a customer but also vendors or any other party repeatedly dealing with the business finds it comfortable to deal with a known person, rather than dealing with a different person every time.

We all may have encountered the frustration of talking to different, ‘faceless’ persons every time at the call centers of Mobile, Cable, Telephone, Bank, Credit Cards etc. companies. If, for solving a single problem, we need to call that call center more than once, undoubtedly we will be faced with repeating the same thing again to different people. A customer is not happy or comfortable passing through such experiences.

The current health of our business is reflected in the financial statements listing the assets, liabilities, sales, profit, margins or growth rates. It can also be gauged by the market share and the brand equity held by the brands.

But, how can we judge the future sustainability of the growth of a business? Of course, good products, sound financial health, large customer base, good market share, reputation and positive brand equity promise a good future ahead. But, in addition to all this, one vital element plays the most significant role in the building of strong foundation of the company. And that vital element is the number of veterans or senior employees in the company, who have spent many years in the company.

If we look at the successful companies, we can’t miss the significant role played by these ‘veterans’ in consistently shaping the future. An old employee knows the business, its environment, competitors, challenges, its promises and its people. And that knowledge cannot be replaced by replacing that person. When an old employee leaves, this knowledge also leaves along with him. This is a huge loss to the company. The new person may learn and understand the processes, but the experience and knowledge of the old person will never be retrieved. Without the long term availability of good employees, a company just can’t build strong foundation, and hence can’t go much ahead.

An experienced investment banker once shared this with me. “In evaluating any company, we always try to find out how many people at various important positions are with the company since more than five, ten or fifteen years. That tells us about the depth of the experience of the management and the quality of company’s long-term relationship building practices. The newcomers, however highly qualified, can’t be expected to take the company ahead sooner. That company will have to wait longer to really take off. And that waiting may be unaffordable. Moreover, an employee is the first hand witness of what is going on in the company. Every employee has his/her own dreams. They stay with the company as long as they have hope of fulfilling their dreams by working with the company. When a person gets disillusioned, she leaves. So, the tenure of important employees is one very significant indicator of the stability of the company and its future. For us, a company with more veterans is undoubtedly on a strong footing.”

An employee-employer relationship is an important relationship from the business perspective. Maintaining any relationship is a challenging task. It requires give-and-take from both the parties. If the company respects the employee and gives opportunities to express his abilities and realize his dreams, the person will stay with the company for a long time. But, if the company has short-sighted ‘hire-and-fire’ approach, the disgruntled employees will leave, carrying bitterness and spreading bad reputation outside. Those continuing inside also live in a persistent state of fear and will fly away at the earliest opportunity. Those who remain are the sour apples, who don’t find employment elsewhere. Such excessive churn causes a chaos in the company and quality, customers, sales, productivity and profitability suffer because of the persistent instability and uncertainty.

We have to accept this fact that the strength of the foundation of a business depends mainly upon the employees who are with the business since a long time. We must try to keep such employees. We must maintain good relations with them. We must invest in them and help them to upgrade, grow and fulfill their dreams. If they stay and grow, they will help us grow and fulfill our bigger dreams. If we can’t build strong relationships with our employees, how can we expect them to build strong relationships with our customers? To increase the chances of future success, we need to increase the number of long-term employees in the company. It is very simple. We must notice and act on this simple fact.

Otherwise Aaya-ram and Gaya-ram can make our company a guest house, where people come to spend some time in between two good jobs. No wise entrepreneur would like to turn his company into a transit camp or a career parking lot.