The Hostage Syndrome

The hostage syndrome is a very real and business-threatening series of attitudes, events and poor judgments that make us dependent upon people, resources, and or processes that limit and, in many cases, cripple the effectiveness of our business.

They become evident in:

· Financial returns and increased costs.

· Distribution.

· Vendor Requirements.

· Supplier requirements.

· Personnel.

Often it can be best described as making the best choice from a variety of poor options. Not that we don’t recognize the same, but rather we don’t perceive that there are any true alternatives to these choices, or that we are not willing to change the status quo because of an immediate negative result.

Poor perceived options are a direct result of pressure. Many times, the opportunity to relieve this pressure is self-evident, but the risk of doing so will cause disruption, additional work, cost in resources, and a drastic change in some cases.

Examples:

There is a vacancy in a department that requires a specific skill set to maximize the effort or result. Since there is pressure on a daily basis to have this position filled, we accept what we can find, versus being committed to seeking the right fit.

Effects:

· Increase costs in training.

· Slower work effort of the team process.

· Constant concern over quality and performance.

· Increased supervision.

· Client (internal or external) disappointment.

A supplier requires a sales presence in a territory for their requirements. We don’t have a qualified asset to provide that presence, so we settle to have an inferior resource. This settling for, rather than seeking for the right fit, puts the relationship in jeopardy and wastes time, effort and investment.

Through this settling process, we get and accept marginal results, which places stress on the relationship with the supplier, and loss of trust. Eventually, due to the pressure to comply and the inability to meet expectations, the relationship is placed in jeopardy, if not ultimately lost.

In the interim, we compound the effect by expending valuable time and support for an asset that may take many years to cultivate, if at all. Usually this won’t work, due to the pressure of production being time-bound.

Effects:

· Slow ramp-up to supplier’s expectations.

· Large cost in training, support, salaries, expense reimbursement.

· Eventual failure of the hire.

· Possible loss of supplier.

We have several marginal producers on board, and although they are paying for themselves, they are not achieving forecast. The fact that they are not achieving forecast means that they are not profitable. But what production is realized often is considered better than nothing, so we continue to allow the same to continue. By doing so, we enable these poor results and thus can be perceived as supportive of the same for the greater good. Unfortunately, this is harming the greater good.

Effects:

· Loss of profits.

· Increased costs.

· Negative impact on producers.

· Increased supervision requirements.

In production cases in which we are purchasing product, we accept poor quality, delayed delivery and inferior workmanship, due to cost and competitive pricing in order to address the market and to be topically price competitive. In these cases, the end user will only bear so much and then seek an alternative provider. At the same time, in order to make deliverable deadlines, we invest additional resources to make it right; retooling, driving margins and profits down, at the same time, deploying resources that often have originally been targeted for other required efforts increasing costs to fulfill promises made.

Effects:

· Key resources are diverted from other projects.

· Smaller projects are delayed or deadlines missed.

· Quality of smaller projects suffers.

A large opportunity presents itself that we know we can supply and will be profitable. In order to fill the contract, this opportunity requires an expenditure of the majority of resources that are available. In affect, the business becomes dedicated to the fulfillment requirements of one client. The account literally drives substantial income to our business and may be as much as 60-75% of our work effort. Our organization is now designed to fit this key client, and therefore, we become dependent upon the continued relationship.

Effects:

· In the creation of this dependency, we exhaust current resources and become comfortable in the arrangement, neglecting the original core business.

· We have created such a narrow focus that if the account is lost, it could cripple the business.

· New advances and/or techniques are not explored that would be essential in the overall marketplace.

We have a star producer who is exceptional in all but behavior and culture. This individual proceeds at their own pace and exhibits overt non-compliance, but they are the top producer. We look the other way and make excuses for the same, due to the affect they have on our bottom line revenue generation.

Effects:

· Culture is affected.

· Remaining producers become complacent and non-compliant.

· Overall morale, both in support and sales staff is affected.

· Overall production suffers.

There is another hostage situation that we also create. Small business owners may suffer the penny-wise dollar foolish syndrome. Instead of hiring resources that perform support and/or administration services, we elect to do these ourselves. We see this as a cost savings or that there is no one in the organization competent to complete these tasks.

Effects:

· Our number one resource, ourselves, is taken out of vital production and management roles.

· We increase investment of personal time working in the business.

· Micro-management occurs.

· Empowerment principles fall by the wayside.

Owners under pressure:

As in most situations in life, “We are our own worst enemies”. Pressure usually comes from inattention to details, lack of consistency, unclear policies and the making of exceptions. Usually the undertow of all of this is fear.  Culture, the creation and maintenance of the same is the key.

· Clearly state and broadcast culture.

· Do not tolerate exceptions to culture standards.

· Always keep your vision statement in mind.

· Make important decisions in a timely fashion.

· Develop an empowered workforce.

· Be the role model for accountability.