Question: Case prepared by Hattie Bryant, creator of Small Business School, the television series made for PBS and Voice of America. Small Business School video clips are available. Lorraine Miller decided that she would rather be her own boss than work for someone who made her feel insignificant. That's why she started her own business in 1 975. She had a secure job as a lab technician working in her field of study, but the owner of that company refused to answer her inquiries about how things worked, and made her feel undervalued and unrespected. She quit this disappointing but secure position and, with just $2,000 of her own money, she started selling plants. Today, the company that Lorraine founded, Cactus & Tropicals, provides indoor and outdoor landscaping for over 500 customers, and its retail stores and greenhouses are full of exotic plants and gifts. Not only has Miller grown the business to one of the largest of its kind in Salt Lake City, she was named Utah's Small Business Person of the Year in 1 994, and received a national award from the U.S. Small Business Administration. Lorraine was named by Ernst & Young as one of Salt Lake's outstanding entrepreneurs in 1 997. Lorraine has said, "I start from the premise that I can grow my business to a certain point, and then after that, I'm stuck, because I can only juggle so many bottles at once. If I don't teach employees everything I know, I simply cannot grow the company." This is the reason that teaching is Lorraine's top priority. She has to grow her own talent.
Lorraine's philosophy has always been that work should not be grueling; it should be pleasant-even fun. She believes in treating employees with great respect, as if the company were one big family. One of Lorraine's employees said, "I worked in the corporate world for about 11 years, and there you're just a number. And you come here, and each one of us is asked to express our opinion." Part of being a member of a company of family members is that self-determination and goal setting is expected from everyone, and at Cactus & Tropics employees set financial and performance goals for their own departments. This procedure involves reviewing the financial statements of the company. They are privy to the costs of doing business, in addition to knowing the revenue. It is fairly common for employees to know what the sales figures of the company they work for are, but rarely do they know what it costs to run the business. As often happens when a company owner is brave enough to open its books to the employees, Lorraine's were surprised by the numbers, and had greater respect for her once they saw what the expenses really were. In fact, they encouraged her to take more personal salary and benefits from the business, once they learned to interpret the financial statements and reports. They realized that employees cost far more than their salaries or wages, because of the additional 25 to 30 percent (or even more), that employers pay for taxes and benefits. Employees are often shocked to see the cost of insurance, utilities, advertising, computer systems, telephones, a lease, and the like.
Lorraine argues against the notion that owners do not have time to teach employees to understand, or to share information with them. She says the benefits derived from sharing information far outweigh the cost of taking the time to do so. To learn how to run her company with open-book management techniques, Lorraine took a course taught by Jack Stack, author of The Great Game of Business. Lorraine's goal at Cactus & Tropicals has always been to deliver to customers more than they paid for, and to do that by finding people who want to work in a place where they are given guidelines-not rules. The staff at Cactus & Tropicals is expected to ask questions, create and improvise, and serve customers with little or no supervision. Lorraine cut her schedule by several days a week for a while and invested the time to teach everyone how to read a balance sheet, how to forecast sales, how to measure individual and team productivity, and how to earn performance-based bonuses. Lorraine learned to value her employees and give them the opportunity to succeed through their own knowledge, skills, and abilities.
Case Study Analysis
1. How can a person's life experience affect the way he or she manages people? Use Lorraine Miller's story to illustrate one example.
2. How did Lorraine finance the start-up of her business?
3. How do we know what others think of Lorraine and her business?
4. Why did Lorraine decide to involve her employees in the financial aspects of her business?
5. What is the risk in teaching employees how to read the company financial statements?
6. What do you think about the word boss? Would you rather be supervised by a person who is more of a teacher or mentor or coach than one who simply tells you what to do?