For business owners, managing human capital isn’t just a task—it’s a cornerstone of success, directly impacting business value, employee satisfaction, and risk mitigation. Yet the complexities of performance management, legal compliance, and employee relations can be daunting.
In a recent discussion, Emily Wood, Partner and Chief Client Officer (CCO) at Connecticut Wealth Management (CTWM) sat down with Daniel Schwartz, a Partner in the Labor, Employment, and Education group at Shipman & Goodwin, to explore practical strategies for navigating these challenges. With years of experience as a workplace attorney, Schwartz specializes in helping businesses address issues ranging from discrimination and wage compliance to performance management and workplace strategy.
- The Role of Performance Management in Business Success
- Navigating Family Dynamics in Leadership
- Mitigating Risk Through Proactive Systems
- The Strategic Value of HR
- Building the Foundation for Long-term Success
The Role of Performance Management in Business Success
Human capital is a major driver of business enterprise value, and in smaller businesses, every role carries significant weight.
“In a small or family-run business, every person impacts the bottom line so having optimal performance is key to surviving,” said Schwartz. “You really need to have the right people in the right job.”
When performance is optimized, it streamlines operations, maximizes productivity, and reduces costly turnover—ultimately setting the stage for sustainable, long-term profitability. Effective performance management can drive growth by improving employee engagement, reducing turnover, and boosting morale, which leads to stronger business outcomes.
Navigating Family Dynamics in Leadership
“With many of our business owner clients adopting EOS as an operating system to structure and develop their organizations, we continue to hear the phrase ‘right people, right seat,’” said Wood. “This challenge becomes even more pronounced when those ‘right people’ are also your family members.”
Providing honest feedback while maintaining harmony is critical, although Schwartz cautions not being overly critical of your family members. Open and honest communication is the foundation of a successful relationship, where you can have your disagreements while still preserving family bonds.
“What I think is critical to add is the importance of having clarity on where you are going and having a plan,” said Wood. Succession planning requires clarity and communication across generations. “We call it preparing the heir. These conversations can’t happen in a vacuum. It’s about setting expectations and aligning goals.”
Fairness is another crucial factor. Special treatment for family members can create division among employees. Successful succession plans involve cohesive efforts across the organization, fostering unity and shared objectives. Moreover, effective succession planning can help preserve and grow wealth and ensuring that wealth transitions smoothly across generations.
Mitigating Risk Through Proactive Systems
The fear of lawsuits is a common concern for business owners, particularly those without in-house HR expertise. Proactive systems and clear communication can significantly reduce these risks.
“Preparation for a termination, discipline or performance discussion are really the key to avoiding lawsuits,” said Schwartz. Employees should not be surprised by termination or disciplinary action, which is why documentation is critical to keeping an employee informed of potential consequences.
The value of partners like a labor attorney cannot be underscored here. “Clients who work with professionals like yourself feel more confident. Even if issues arise, they have the tools and support to navigate them successfully,” said Wood.
Additionally, managing human capital and performance with clear systems can reduce the risk of unexpected legal and financial burdens. By having well-established policies in place, business owners can safeguard both their employees and their bottom line.
The Strategic Value of HR
With increasing complexities in compliance and employee relations, many business owners are realizing the need for dedicated human resource (HR) expertise.
“The days of CEOs managing everything themselves are becoming less sustainable,” said Wood. Hiring an HR professional or engaging a fractional consultant can help businesses stay ahead of evolving regulations and focus on long-term growth.
For CEOs hesitant to hire HR professionals, the question often arises: How do you measure success in that role?
Schwartz offered a straightforward answer: “If HR can take tasks off the CEO’s plate and allow them to focus on strategy, that’s success.” Effective HR professionals solve problems, ensure compliance, and foster a positive workplace environment. While HR may not directly generate revenue, it contributes to cost savings, reduced turnover, and operational efficiency.
Wood added, “It’s not just about saving money—it’s about creating ease for business owners so they can work on the business, not in it.”
Building the Foundation for Long-Term Success
Strong systems, clear expectations, and trusted partnerships are essential for business success.
As Schwartz emphasized, performance management is an ongoing process. “Regular feedback and coaching not only guide your team but also protect your business,” he said. Fostering fairness and open communication creates a culture where employees feel heard and valued.
“It doesn’t have to be lonely at the top,” said Wood. “By leaning on trusted advisors and building a strong team, business owners can confidently focus on growth.”
At CTWM, we partner with business owners to provide the expertise, tools, and resources needed to navigate challenges and seize opportunities. Through collaboration with experts like Shipman & Goodwin, we help our clients make informed decisions to take the next right steps for their business, their team, and their families.