COACH'S CORNER
By Barry Knepper
As Seen In Queensborough - The Magazine of the Queens Chamber of Commerce

What To Do with an Underperforming Partner

TAB Member's Question:
I have a 50/50 partner who is underperforming. Early on in the company's evolution my partner had a specific key role and did it reasonably well. Recently, he moved into a new role and his former role was filled quite well by someone from the outside and at a much lower cost. My partner as not performing well in his new role and I can't figure out to do with him. His best skills were in the old role, but there is no reason to move him back there. We have been lifetime fiends, but his is now responsible for significantly less than his 50 per cent of the profits. How do I handle this situation? We are both young and have many working years ahead of us.

Tab Coach:
You need to have an open, honest and non-threatening conversation with your partner as soon as possible, regarding the difficulties in the partnership. One meeting or conversation is not going to resolve the issue. Your Tab board will also be able to help you develop what this conversation should sound like in order to be productive.

This is an opportunity for you to use TAB's Strategic Business Leadership Program in order for each of you to develop you personal vision and to identify your personal strengths and weaknesses. If you share your results you will begin a dialogue, which may lead to an understanding regarding his changing role in the company.

Perhaps the problem is not underperformance but the compensation levels that have been setup. People should draw salaries (even partners) based upon their contribution, skills and performance on the job. The division of profits is then done strictly on an investment basis, which is a 50/50 in your case. Owners should not be paid excessively for being owners, but should benefit for their risk of investing in the company through distributions on a proportional basis to their ownership.

A 50/50 ownership is an inherent problem because there is no way to resolve disagreements. There should be a pre-defined buy/sell with a yearly evaluation of the business. Having an outsider hold one percent as the swing vote can also work.