I have considered starting an Internet group for MSPs, but the thing that scares me the most is the advice misalignment. It drives me nuts when I look at the group pages targeting MSP owners. The problem I usually see is that more often, the advice is wrong, based on the maturity stage of the company asking the question.
One of the most infuriating, common group messaging posts is when an owner asks the community about a rogue engineer that will not:
- Follow the processes
- Process tickets
- Enter their time and/or notes in real-time
I immediately see everyone jump on a bandwagon to advocate that they fire the rogue engineer.
The right answer depends on the current maturity level of the company.
There Are Four Basic Maturity Stages That All Companies Go through
Growth Stage 1: typically, under 8 employees
Everyone reports directly to the owner. There is very little need for KPIs because the owner is close enough to all the customers that their strong, and very accurate, gut feelings about how the employees and clients are feeling keeps the company running smoothly.
For example, the owner knows an agreement is becoming unprofitable because they have been talking to the client and have been directing the engineer to go onsite. Tension develops between the owner and the engineers because the owner feels things are taking too long. Since the owner is close to the situation, they will be more likely to micromanage the problematic situation.
Growth Stage 2: typically, up to around 15 employees
The most common organizational structure is for the owner to promote their best tech to service manager. In this stage, companies start hearing:
- Gary Pica talk about industry standard KPIs like:
- All-In Seat Price
- Endpoints per engineer
- Paul Dippell discuss Best-in-Class margins
The company would like to compare themselves to the industry standards, and they try to run some reports to see how they stack up. The problem is they run those reports, and they do not make any sense because there is so much “bad data”. At this point, the company discovers that they have bad data because they do not have any standard processes and procedure in place, creating good data. So, they go to work on process and procedure, which creates good data and creates meaningful and consistent KPIs.
At this stage, the “data” is getting better, and KPIs begin to confirm what the owner already “knows” in their gut. But more people in the company become aware of the issues. Unfortunately, agreement profitability generally does not improve, yet. I have come to realize that when an owner sees cold hard truths about unprofitable agreements, they have to go through the Five Stages of Grief: denial, anger, bargaining, depression and finally acceptance. Many company owners will take up to 12 to 18 months before they take real action and make tough decisions.
Growth Stage 3: the emergence of the leadership team and the Rule of 7
Typical leadership team members:
- Someone representing sales.
- Someone representing admin/finance.
- 1 and 3 people representing service delivery.
At this stage, no manager should have more than 7 direct reports.
It can be pushed to 10 or 11, but the manager will not be doing a great job with each of their direct reports. It takes a few years to develop a next generation of leaders. The sooner a company starts training and grooming them, the better off the company will be with regards to the Rule of 7.
Company culture becomes incredibly important (mission, vision, core values). As employees become one or two levels away from the owner, culture can go off course quickly. As the owner and the leadership team become one or two levels removed from the individual client interactions and individual tickets, the dependence on KPIs increases dramatically. Financial literacy improves as the leadership team manages the budget and critical financial KPIs. Owners tend to struggle with Highest and Best Use (HABU) of their time because they have successfully transitioned all their “hats” to other leaders.
Growth Stage 4:
The owner is focused on legacy, transition planning and sharing wisdom while the leadership team runs the company.
Firing the Rogue Engineer Is Absolutely the Right Answer for Mid-stage 3 Companies
It is absolutely the wrong answer for Growth Stage 1, 2 and early Stage 3 companies. You won’t even find it to be a problem in Stage 4 companies.
Stage 2 companies are just beginning to create processes and hold engineers accountable.
It takes time to understand, document, train, implement and measure new processes (The Sea-Level 5 Phases). Leaders should cultivate new habits, and this takes time. I agree there will be times when managers want to fire the rogue engineer, but they find themselves making the typical excuses:
- “Clients love them.”
- “They can fix anything.”
- “They will work all hours.”
These are very valid excuses in Stage 1 and 2 companies.
Most of the time, companies consider themselves lucky to have the Rogue Engineer and would find themselves in a real bind without them. The right answer is to continue to teach and coach the engineer using every means available to get them to get onboard with the increasing maturity of the company.
Stage 3 companies will have a different feeling.
The leadership discussion about the rogue engineer begins to change. It starts to sound a lot more like:
- “They create too much havoc and disrupt our business process flow.”
- “They create a morale issue with the engineers that do follow our processes.”
Typically, most engineers follow the processes meaning the dependence on the rogue engineer diminishes. The business axiom “Those that got you where you are may not be the same ones to get you where you want to go,” begins to ring more and more true. At this point, the right answer is to release the rogue engineer to go work for other Stage 1 or Stage 2 companies, where they will ultimately be much happier.
When clients ask us about their Operational Journey, Sea-Level coaches always consider their current growth stage and guide them to the answer that will allow them to operate at the next level they are trying to achieve.