Four Penultimate Signals To Watch For

To be frank, part of the reason I'm writing this article is because I just love that "penultimate" word. It means "second to last", which means that there's just one thing left after the penultimate step appears.

That thing in this case is something really bad, like your firm closing, your partnership splitting, or maybe you, as a key employee, leaving a place you've grown fond of because you no longer think that things will change.

Over the years I've had the privilege of seeing deep inside nearly 1,500 firms. Whether it was an engagement or a "cry for help" email or testifying in court, the messy truth is right there to see. But I've always been fascinated by what happens just before that really bad final step. That's what this is about.

Penultimate Steps That Signal Major Change

There aren't many of them, so I can keep this short:

1. It's a penultimate step when a partner is viewed as not carrying their weight. This starts with little conversational hints that don't include the partner, whispered to other employees or spouses or partners. It isn't even always true, but whether it's true or not, the partnership is going to split. Or at least that partner will be gone, and it won't be an amicable divorce. It can even stretch on for a few years before someone forces a resolution. This is one reason why I strongly advocate that partner roles look like concentrate rings with little overlap rather than a stack of plates where comparisons are easier to make. It's also why every partner who owns 20% or more should be paid similarly, and not tied to individual results.
2. It's a penultimate step when a key employee begins protecting the staff at large from a principal of that same firm. It doesn't happen quickly, because nobody in their right mind takes a job where it's necessary to protect the team from the idiot who owns the firm. But slowly the conscience of the key team member (you) starts to get uncomfortable with the demanding, the bullying, the unfairness, or the undermining of another employee. This principal behavior becomes a pattern and the key employee cannot go along with it. That employee will certainly address the issue with the principal, and it might get better temporarily, but then things revert to where they were before. There are many great things about this firm, but the leadership style isn't one of them, and at one point you'll have to put your own oxygen mask on and leave the place. You can't keep shielding that principal from his or her behaviors, and the employees you're leaving behind will just have to fend for themselves.
3. It's a penultimate step when a key employee who is headed for an equity position feels like they have earned that stock grant and refuse to pay for it. This employee I'm talking with has always been there for quite some time and they have always risen through the ranks. They head up a key area, too, that frees the owner up: client management, sales, creative direction, chief software engineer, or core strategist. Much of the firm's success hinges on their contribution, but they have come to feel entitled about ownership and they want it handed to them or discounted very steeply. They are also seldom willing to take on personal risk (like a loan or a personal guarantee). So what's going to happen? You, the principal, are going to be manipulated into a power play and give in to their leverage...or that person will leave, often in a flurry of resentment, and sometimes taking a few team members with them.
4. It's a penultimate step when your engagement level slips past a certain tipping point. This one is harder to write about, because I don't have any specific guidance on where that tipping point it. Something an extra vacation or a sabbatical or a new service offering will do the trick, but the lack of engagement I'm talking about is the one that haunts you over at least six months and it's starting to settle in that you need to move on.

So, what's the core advice? When you see the first whiff of any of these four things, surface the issue kindly and firmly and deal with it before it festers. Be aggressive, while knowing where this will head if it's not faced directly. Take an honest look at a wound before facing an inevitable amputation.