Case Study: When Key Employees Clash

Editor's Note: This fictionalized case study will appear in a forthcoming issue of Harvard Business Review, along with commentary from experts and readers. If you'd like your comment to be considered for publication, please be sure to include your full name, company or university affiliation, and email address.

The caller ID on Matthew Spark's phone read "Kid Spectrum, Inc." It was someone from the Orlando office, probably administrative director Ellen Larson. She had been in daily contact with Matthew since he purchased the company, a provider of in-home autism services for children, eight months ago. He appreciated Ellen's eagerness to help him build the business, even if she was sometimes abrupt. Kid Spectrum's previous owner, Arthur Hamel, had told Matthew that Ellen, with nearly two decades of experience in health services, would be one of his biggest assets.

"Matthew, it's Ellen. I don't want to bother you again, but we have a situation down here."
Matthew sat back in his chair and readied himself. The "situation" could be anything from the copier running out of ink to the building catching on fire.

"I'm calling about Ronnie," she said.

Ronnie Emerson was director of clinical operations in Orlando, a position Matthew had created soon after taking the reins at Kid Spectrum. Ronnie, whose son had Asperger's, had been working with special needs children his entire career and had been with the company since the start. The other 40 clinicians on staff regularly turned to him for advice. So it seemed like a no-brainer to promote him to a formal management role.

"He's not up to the job," Ellen said now.

"That's a strong statement, Ellen," Matthew said.

"I know, but it's true. He's still resisting the new protocols for time sheets. It's been eight months, and he has yet to complete them on time. You know the impact that has on insurer reimbursement. And he's hardly ever here in the office."

"He's supposed to be in the field 50% of the time. He still has clients."

"It's more like 95%. I haven't seen him since Thursday, and you know I'm always around."
Matthew sensed that Ellen was exaggerating, but he couldn't be sure. Managing the Florida-based business from Chicago was proving to be difficult. Matthew had bought Kid Spectrum through a search fund; a small group of Illinois-based investors had given him money to find an undervalued company and make it more profitable. Their only hesitation about this first venture was Matthew's plan to run it from a distance. In fact, one investor had suggested he move to Florida for a while. But he was still meeting regularly with the investor group about other potential opportunities. And his wife had no interest in relocating; with two kids under five, she wanted to be near her family.

"He doesn't get that he's a manager now," Ellen said. "Not only does he fail to comply with your new systems, but he doesn't seem to care if his clinicians do. I mean, he barely blinks when they call in sick. Right after Memorial Day we had 14 people out, and he didn't do a thing. We spent the entire day scrambling to find subs."

"Well, that's certainly not optimal," Matthew said, worried his inexperience was showing. Before forming the search fund, he'd spent four years at a venture capital firm and then three years as president of one of its portfolio companies — a medical device maker. Until Kid Spectrum, that had been his only operational role.

"Ellen, I really need to find out more before passing judgment on Ronnie. I know he's more laid-back than you, but..."

Matthew regretted his words immediately. Ellen was sensitive about the fact that people thought she was uptight.

"Have you talked to him about any of this?" he asked quickly.

"I mention the time sheets every time he calls in, and he promises to get to them. But then nothing."

"I'll be down next week for the clinical team meeting. I'll check in with Ronnie then. Like I said, I really need more information."

"Well, you're not going to get it in a day trip," she said. "Besides, he'll tell you everything is all right, that the clinical team needs more time to get used to all the new systems. But from my perspective it's not time that's needed. It's effort. Ronnie makes things really difficult for the office staff."

"I'll see if I can come down for longer, maybe a week or two." He wasn't sure how his wife would react, but he knew this was important. He tried to say goodbye, but Ellen kept talking.

"When you took over Kid Spectrum, you said you wanted to run it more efficiently, more profitably. I remember you saying that in the main conference room when we first met you and again in your welcome e-mail." She sure had a keen memory. "So," she said, "I'm just trying to help you make good on your promise."

Down in Florida

The team meeting had run long, so most people rushed off to their next appointments. Matthew, who used the conference room as his office when he was visiting, opened his laptop to check e-mail but then noticed that a senior clinician, Maxine, was lingering in the doorway.

"Hi, Maxine. Can I help you with something?" he asked.

"You're getting an earful from Ellen about Ronnie, aren't you?" Maxine closed the door behind her.

Matthew was alarmed by her candor. The few times he had met with Maxine, she had seemed quiet. Was Ellen badmouthing Ronnie around the office?
"Well, I can guarantee he's not as bad as she says," Maxine said. "He's a really good guy. Y'all did the right thing by promoting him."

"I'm glad to hear that."

"You know, he's told us about the new systems, like the one for turning in our hours, and we understand why they're important. But Ronnie doesn't drill down on us like Ellen does. She's way too intense for how we do things here. She always has been. She's supposed to be supporting us clinicians in our jobs, but she acts like we're here to serve her. In my opinion, Ronnie focuses on what matters: the patients."

"The patients are important," Matthew said, trying for diplomacy.

"He understands what they need more than any of us really — with his son and all."

"OK, Maxine. Thanks for that input."

She turned to open the door then paused. "If you ask me," she said, "Ellen's the one who's trouble."

Two Sides to Every Story

Later that day Matthew was in his makeshift office waiting for Ronnie, who was nearly 20 minutes late for their 3:00 appointment.

Clearly, Ellen and Ronnie had completely different work styles. But Matthew's plan for reorganization and growth rested on collaboration between the administrative director and the director of clinical operations. No one else had the right skills and experience for either role.

Ellen and Ronnie didn't have to be best friends, but the tension between them must not turn into an "us versus them" battle between the clinicians and the back office. That could completely derail his expansion strategy.

"I'm so sorry I'm late." Ronnie walked in and shut the door behind him. "I was with a client, Harry. Eight years old, such a good kid, but he's struggling with school, and his aide seems like she wants to give up. But we were making such strides today."

Matthew appreciated how dedicated he was.

"How are you doing?" Ronnie said. He always asked as if he really wanted to know.

"I'm good, I'm good," Matthew said. "But I wanted to see how things are going with you and your team, particularly with the new systems, the time sheets."

"Well, we're easing into them, you know. These clinicians aren't worker bees. They're used to being with kids, helping kids, so they need time."

"We could do another training session if you thought it made sense."

"No, no, I don't think that's necessary," Ronnie said. "We just need more time. All this emphasis on efficiency is new for us. We're dealing with some rough cases, families under a lot of stress. You can't just zip in and zip out because that's what a time sheet calls for."

Matthew nodded. "Of course, the client comes first."

"Right. That's what's kept us in business for so long."

"But we won't stay in business without becoming more profitable. Arthur struggled with cash flow because reimbursement was so slow. No insurer will pay us without the proper paperwork. If we want to grow the business — and help more kids — we need to follow these new protocols. And we can't have a quarter of our staff out every holiday."

"I know who's complaining about that. Ellen. She acts like we're in the military. Time sheets on time. No one gets sick. It's just not realistic. She was obsessive before, but now it's getting ridiculous." Ronnie paused and swallowed. "It's like you've given her a license to be more uptight."

"As the administrative director, she needs accountability from you and your team, Ronnie."

"And she has it. But I need a certain amount of flexibility so that I can meet the needs of the kids. And, frankly, she needs to back off." Ronnie's face had turned red. This was the most worked up Matthew had ever seen him.

Nip This in the Bud

As he walked by the front window of Austin's Coffee, Matthew saw Arthur, Kid Spectrum's former owner, already in line. Arthur's tan was a shade deeper since their last encounter.

"Retirement treating you well?" Matthew asked him.

"Very well," Arthur said. "But I miss the office, the people. The golf course is far less exciting."

"Thanks for meeting me," Matthew said as they sat down.

"My pleasure. I told you I'd always be available. You spending more time here? Have you convinced that wife of yours to get more sun in her life?"

"No, not yet. But I've been down for the past few weeks, trying to sort out some issues in the office." Arthur raised an eyebrow. "It's Ellen and Ronnie." Matthew explained the growing animosity.

"Those two were always a bit like oil and water. Ellen wanted more protocols, more stuff she could control. It sounds like it's gotten worse. Maybe the new power has gone to her head."

"But we need those things if we're going to grow the business—"

"Yes, that's what was limiting us before. But Ronnie is the heart of that office. He always has been. You're not thinking of demoting him, are you?" Arthur asked.

"I've considered it, but there's really no one else who could fill the role. And my investors have no interest in expensive outside hires. Besides, I think that would only solve half the problem."

"That's right. Ellen isn't going to go easy on anyone in that position."

Matthew thought about all the nagging e-mails to Ronnie that Ellen had bcc'ed him on during the past week. She sent them even when Ronnie was in the office, sitting five feet away.

"What do your investors say?"

"I haven't brought it to their attention yet. It's not hurting the bottom line, but it could, especially if reimbursements continue to come in so slowly, and if all this tension hurts morale."

"Exactly. You need to nip this in the bud."

Matthew cringed. "I know, I know. That's why I've been down here. I was hoping a solution would come to me if I could see what was actually happening."

"And?"

"They're at each other's throats, and I'm honestly not sure I can have them in the same office anymore. But I do think they're both just trying to do their jobs. Ronnie needs to get with the systems, and he promises he will. I know all the clinicians like him, which is most important, right? And Ellen is looking out for the business — following my protocols for the staff — even if she may be going about it in the wrong way."

"Have you sat down with them?"

"Individually. Not together."

"It sounds like you're stuck between a rock and a hard place," Arthur said.

Yes, Matthew thought, between Ellen and Ronnie.

Q: How should Matthew manage the hostility between his employees?

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