What if the biggest business threat isn’t your competition or economic downturns? What if it’s happening right under your nose, performed by people you trust in amounts so small you barely notice?
We’re talking about the three types of theft that good employees, contractors and even clients commit — energy, time, and money — and why by the time you see money disappearing, you’re already too late.
This is the first in a four-part series. Coming up: spotting energy theft, identifying time thieves, and when small theft becomes a big financial loss.
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Death By A Thousand Paper Cuts: When Good People Drain Your Business
Unmasking Business Threats: Death By 1000 Papercuts
What if I told you the biggest business threat isn’t your competition, economic downturns or even losing your biggest client? What if the thing slowly killing your business dreams is happening right under your nose performed by people you trust in amounts so small you may barely even notice. We are talking about the three types of theft that good employees, team members, and contractors commit and why by the time you see money disappearing from your account, you’re already too late.
Gwen, this episode isn’t about embezzlement. It’s not about obvious stuff. This is about what I like to call the death by 1,000 paper cuts that happens when oftentimes team members who start off as good people with good intentions slowly drain your business of its most vital resources. Gwen, I want you to kick us off by telling us what are the three key thefts that you have witnessed in your time in business.
It’s energy, time and then at some point, it becomes money.
It’s energy, time, and money. Do they happen all at the same time or individually? Is there a specific order that you’ve seen it in? How does this manifest?
Money happens last and only after the others have been going on for a long time, unless you have someone who is truly malicious. We’re working under the assumption that these people are not malicious. Someone who’s malicious will go for the money right off of the bat. It’s an easier thing, quite honestly, but there’s still energy and time. Usually, energy is first then time and then it becomes money. The energy comes first because it’s the hardest for us to track. Time is easy for us to track and money is the easiest for us to track. We always start by energy drains from the business. What I mean by energy drains is where people are taking more of your energy than is due for the situation.
What you’re saying is that, we as business owners are always trying to watch our bank account. We should be paying attention to our energy levels when it comes to the people we work with.
As business owners, we're always watching our bank account. We should really be paying attention to our energy levels when it comes to the people we work with. Share on XI believe that because that is a very early warning sign. When I think about getting on a phone call with you as one of my trusted associates, I’m always like, “I don’t want to talk to Tanya.” That means you’re probably draining energy from me. The question you need to be asking is, why are they draining energy? Are they draining energy because of your relationship because it’s taking more energy to manage them than you think you should for this job? Is it taking energy because they are just energy vampires? They are people who are energy vampires for other people who may not be an energy vampire for somebody else.
That’s also an interesting thing to note. Only because someone is an energy vampire for you, doesn’t mean they’re an energy vampire for somebody else. What’s taking that energy? Is it because I feel like I’ve explained the same things fifteen times and I’m having to explain it again? That’s energy. Now, it’s also a bit of time but mostly it’s energy. Am I just like, “I’m so exhausted after talking with this person?”
Keeping in mind, we’re talking about people taking money from your business. Energy vampires can also be customers. They don’t have to be contractors or employees. They may be paying you X to work for you but they should be paying twice as much because of how much energy they’re taking from you. That’s another form of theft by a 1,000 paper cuts that no one’s paying attention to.
Why Business Owners Miss These Subtle Thefts
We spent quite a bit of time talking about the energy theft and I know we’re going to unpack each of these in their own episodes. Our next episode will be energy, the episode after that will be timely and after that will be money. I’m curious, though, from your perspective. Why do you think business owners miss these thefts? Are they dumb? Is it dumb business owners only?
People are not dumb but we don’t always pay attention and that’s the piece. People take energy from us. People take time from us and people subtly take money from us all the time. There’s a little bit that we become blind to as part of it and as I said, money is a little less obvious. The time in the energy is one that’s very subtle. It’s not because people are stupid, but it’s often because we assume the problem is us. We blame ourselves, “It’s my fault that when I get on a call with Tanya, I’m exhausted.” Maybe it’s not your fault. Maybe it’s Tanya that’s the issue. We know how we feel about that Tanya.
I’m just going back in my own work history, both as an entrepreneur but also as an employee and as a manager. When I think about some circumstances in my background, I can remember times where I thought each incident was small and easy to explain. They had a hard day, so they needed to unload on me or I was running behind so I’m just a little bit shorter-tempered than usual.
This wouldn’t typically get under my skin. It’s just getting under my skin now. Sometimes, especially that person who asks like a million questions about things that don’t matter. You can go, “They’re trying hard. That’s why they asked a million questions because they’re trying hard.” Also, the people who have been here so long. Do you think there’s other things that contribute or go ahead?
No. There’s all sorts of ways. I’ll say make excuses and take ownership for the problem. Now, I also think that that’s appropriate in the beginning. This is about pattern recognition. Is it happening a lot and does it happen a lot with the same person? Now, we’re starting to see patterns. Also, the question is, does it happen a lot but it happens with everybody? Maybe that is a you-problem.
If you are the common denominator maybe it is a you-problem. Both have to be considered but if we see that it’s like, “I have no problem talking to anybody except Tanya.” That’s probably why Tanya is a particular energy drain for me. If I’m having that with everybody, then that’s probably something I need to look into because back to, I am the common denominator. It is about pattern recognition and we want to assume positive intent. At least I hope we do.
That’s the place that we want to be in. We want to assume positive intent but there is a point that positive intent is no longer appropriate and that is when there is a repeated pattern. Is this pattern repeating? Is the pattern of the person unloading on you repeating? It happens once a quarter. That’s probably not that big of a pattern and that’s probably okay. Happening once a week might be an issue that needs to be discussed because that’s the thousand paper cuts.
It’s not so often that it’s like, it’s not happening every day so it’s not an everyday problem but every week is quite a bit. That’s 52 times in a year. That’s a lot. It doesn’t say, “It’s just ten minutes.” Ten minutes 52 times, that’s 520 minutes. We’re now losing a full day of productivity over the course of a year. It’s like, “That’s only a day.” Still, it’s a day. It’s a day. It’s a full day of productivity. This starts adding up and it’s never just the ten minutes.
The Warning Signs: Physical, Productivity, And Financial Indicators
When I’ve heard you say this in other circumstances, there tends to be some warning signs. There’s some physical warning signs in terms of how you feel. There’s productivity warning signs and then sometimes, there’s some financial indicators as well. What would you say are the physical warning signs that you’ve got because the physical stuff is the time or the energy more than money. What would be some warning signs of that? You’ve explained a few but just having a nice list is helpful.
It is about, do you feel like the amount of work is getting done in a period of time is appropriate for the amount of time that it’s taking? We’ve seen a situation where someone was working part-time but yet we’re not getting that amount of hours of work out of them. It’s like, I understand that you’re working part-time but I think I’ve given you 10-hours of work for 10-hours of time but yet you’re not actually getting all of the things done. There’s the question of like, what are you doing? Are you showing up on time? Are you using the time the way that it’s supposed to be used? Are there little sayings, indications or behaviors that you’re seeing? Back to pattern recognition is what we’re looking for here.
Pattern recognition over time and they’re always what I call yellow flag. That’s why I got my little hand up because whenever I got my hands up, it’s like, “That’s a yellow flag.” We’ve seen the yellow flag more than once. I see a pattern forming. Let’s see if this is a pattern. If we can continue to see it, then I call it the Orange flag. The orange flag pattern is pretty obvious. We need to pay close attention and take some corrective action now and see what happens.
Depending on what we see, then it’s what I call a red flag. The red flag is, we need to take actual serious specific action. Usually, at this point, that’s dismissal in some form or fashion, depending on what relationship it is. Back to whether it’s a customer or if it’s a contractor and employee. I look for the yellow flag, orange flag and red flag. As I said, the yellow flag is, I’ve seen pattern recognition. I’m seeing a thing happening repeatedly often enough that it feels problematic.
Orange flag is, now that I saw the yellow flag, I’m still seeing it again and again. That’s the time that we want to be taking corrections on activity and/or digging deeper into what’s happening. Another client situation that happened sometime ago was a not good employee. He has been a good employee but just nose to the grindstone and get things done but she’s not someone who would be a warm and friendly personality in the first place, but was showing up in a super harsh way.
There are all sorts of ways we make excuses and take ownership for the problem. Share on XWe kept calling the yellow flag and unfortunately, the client wasn’t willing to do the orange flag until it got very bad. It almost went to a red flag. Once they had the conversation, they realized that there were medical issues going on and medications that were being taken and changed and whatnot. The employee didn’t realize how much that was showing up in the public. As soon as she was made aware, she was like, “I had no idea. Please give me a week or two to fix it,” which she did.
This is the situation of, if we let it go, we’re doing a disservice both to ourselves and to the person that we need to be working with because most people want to do a good job. If we let it go too long, what we start doing is, one of my favorite phrases that I haven’t used in a while is we’re reinforcing bad behavior. We’re teaching them that whatever this behavior that we don’t want to have happen is okay.
I’ve sat in on a couple of the executive retreats that you have facilitated and I know one of them, there was a lot of personnel stuff that had come up. I heard you talk about to the business owner that they were experiencing some physical symptoms associated with this person that they hadn’t even realized and what you would point out was it was clear that they were dreading their interactions. Even the idea of having a performance conversation with the individual. You could tell it was making the business owners sweat. They were talking about the amount of fatigue that they felt. They didn’t even want to have team meetings because team meetings exhausted them so much.
That sense of dread that was happening the night before having to go into the office to see the person. From a productivity standpoint, this is something that you and I have both experienced together. There’s a lot of activity but no real progress because all the activity is around managing the individual. Whether it’s how they spend time and how they react to things. Finding that you’re having to spend so much time managing this one person that the rest of the team isn’t getting the coaching that they need. Sometimes, you even find that the other team members start to complain because they notice, too.
All of it is pattern recognition. Starting to say, “This happens each time.” What is that common denominator that is causing that thing to happen?
Shifting From “To Me” To “For Themselves”
There’s something and I don’t know if you remember this but it wasn’t too long ago that you said this. That you were talking to a client who was dealing with a type of theft. You had pointed out that they were thinking about theft all wrong and you brought up an important mindset shift that we all, as business owners, need to go through when we’re focusing on these thefts. Do you remember what that was?
I think I know where you’re going but I do not remember what it was. I’m going to let you go from there and then I can add.
I’m just going to start it off with, you have to switch from thinking, “They’re doing this to me,” to?
If we let it go too long, we reinforce bad behavior. Share on XThey’re doing it for themselves.
Now, you have to explain that because I don’t think the average, especially when you’re a small business owner. Let’s just be real. Everything feels personal.
It is. It’s our business. We own it. We care about it. We do all of these things. We often assume once we start seeing theft of energy, theft of time and worse, theft of money. We assume that they’re doing it to get at us. “You did this to me so I’m going to do this thing to you. I’m going to get even. I’m going to have revenge.” It’s all of those things. Almost always that is not true. At least, not initially. At some point, they can get there.
Almost always all of these types of theft, whether it’s the energy theft, the time theft or even the money theft. It is just what they think they need for them. It is what they deserve. It is what they have earned. It is what should be there right. Not because I’m going to get at you. Most of us spend very little time thinking about other people. We hate to admit that because it sounds extremely selfish, but it’s true. Everything we do is motivated by us, for us. Not in getting to somebody else.
That makes sense but why does it matter? Why does that mindset matter for me as the business owner as long as I get to the place?
The reason it matters is what we talked about early, which is the excuses that you’re making it about that you did something wrong so you deserve this. No, you don’t. You don’t deserve anything even if you made a giant error in some way, shape or form. You don’t deserve anything. Now, you may have consequences to things. That’s a whole different thing but you don’t deserve it unless you’re doing something with mal intent, which we’re back to, we’re not assuming that.
We’re assuming that most people are working under a positive intent mindset. Only because you weren’t right on top of your financial reconciliation, doesn’t mean you deserved to be stolen from. That mindset is important because otherwise, we say, “It’s my fault.” I shouldn’t take any action on the person. No, you should take action on the person because they still stole money.
They may justify it to say, “You didn’t give me the raise that I deserved.” “First off, you probably didn’t get the raise you deserve because you didn’t deserve it. Maybe he didn’t get the raise you deserve because you’re stealing money and therefore, the business doesn’t have any money in it to give you a raise.” There’s all sorts of things that could be going on.
There's a resistance to coaching because we know we're not perfect. Share on XWe have to get out of the mindset that we deserved whatever negative activity happens that it’s our fault. Now, we may have a hand in it. I’m not saying, back to if someone is an energy vampire for me. That’s also partly me but it doesn’t mean it’s my fault. It just means, “I’ve got part of this. I have to make a choice about what I’m going to do about that.” If someone is stealing time, if someone’s taking way more time and we’ve had this happen with the number of clients as well, where they have an employee whose work they are assigned to do should take three hours and the person is taking 6 or 8 or 10 to do the work.
They’re getting paid 6 or 8 or 10, but the owner is only getting paid for three from their client for that work to get done. That’s stealing, too. That’s stealing time. Now, are they stealing time because they’re incompetent? They can’t do the work and the time frame. That’s one thing. Are they stealing time because I said I was at my computer for three hours.
I was probably only working on the project for an hour, so I’m going to bill for three hours. That is stealing time because I’m not doing the work. Are we feeling time because I’m not following the processes? I’m doing it the way I like to do it in my way happens to take three times as long. Who’s fault is that? It’s their fault for not doing what they’re doing. It is your fault for not holding them accountable.
When To Coach Or Cut: Navigating Performance Issues
You were talking about decisions. You get to a place where you have to make some decisions. I’m curious because you’ve walked through the yellow, orange and red flags. At what point do you look at the behavior and say, “I’m going to coach this. I’m going to do some performance management and some coaching.” What point do you cut because it just doesn’t make sense?
I feel like coaching should happen at yellow flag. I’ve seen this issue and I’m going to coach it and truly coach it, which is to me soft. Saying, “I’ve noticed this. I’m a little concerned about what that’s implying. Can we talk about it? Let’s pay attention to it.” Orange flag to me is like a performance improvement plan like a formal, “We are paying attention to this. If you don’t change, there will be action taken.” Red flag is the action being taken.
The thing is, most people don’t want to coach it yellow. They try to coach at orange. They get to red, put in a performance improvement plan which allows them to see that red. It was never going to change off of red but now we’ve had that much more damage before we take action. We talked about when we gave the employee a performance improvement plan. She made huge strides. They’ve been dealing with the issue for six months.
At the yellow flag, they would have stopped and said, “We’re seeing a problem here. I’d like to talk to you about it. Has something changed? Is there something we need to be aware of?” At that point, she could have said, “I just got put on some different meds. They said there were side effects. I didn’t realize the side effects were showing up. Let me pay attention to it.” That would have saved six months of anguish. Not only for the owner who was spinning around in their head about it the entire time but the rest of the staff that this person was working with.
I’m curious about coaching. Do you think that there is a resistance to coaching performance if there aren’t clear systems in place to measure performance or improvement?
There’s a resistance to coaching because we know we’re not perfect either. As soon as we start coaching, what we often assume is that, “We would do it right.” We’re the first event on this show because we do it all the time. That, “Yes, this is what we know we’re supposed to do. We were not doing it. It was not working,” because we’re not perfect. As soon as we can let go of the fact that we don’t have to be perfect to coach, we can get to the coaching space faster.
It’s like, it’s not my place to do this because I haven’t been perfect about it. Back to, we take too much ownership of the issue and say, “If I would have done A, B, C, D, E, F, and G, then this couldn’t have happened.” Maybe or maybe not, but it doesn’t matter because we haven’t done A, B, C, D, E, F, and G, where we are now. If we’re going to wait for that, that’s waiting for a time that probably is never going to hit. A lot of damage can be done in between here and there. The system is an excuse. I don’t think it’s necessarily the problem. It’s a great excuse because it feels very justifiable.
This is something else I’ve heard is, but it only affects X. It only affects me. Everybody else loves this person. The clients love them. The other team members love them, or it affects customer service but as long as we fulfill appropriately, there’s a lot of customer service calls so we don’t have to worry about it. What about the idea that it only affects maybe one narrow segment of the business versus all of it?
My issue with that is always you think it’s only affecting X because you’re only seeing X. I don’t remember who’s the right person to get credit for it but there’s a phrase of, the way you do anything is the way you do everything. It applies here. You may be only seeing it here, but it is affecting more and more and more places. By the time you find all of the other places is usually when we are nearer death and we are further away from just paper cuts. It’s become very problematic.
Very rarely do I find folks only behave a certain way in one very particular situation. It becomes very quick and I use this phrase a lot. As soon as someone tells you who they are, listen. If they’ve told you in one category, they’ve told you all the categories. You may not be seeing in that category because of whatever the trigger point is for the behavior. That trigger point hasn’t happened in the other categories, but it doesn’t mean that it won’t as soon as that trigger point is crossed.
Sometimes, it’s business, confidence level and comfort level. There could be all sorts of things that are the trigger point for the behavior. Maybe you’re only seeing it here but it doesn’t mean that it won’t happen here. It may just haven’t happened here yet. That is where the piece of this has become very challenging and why the yellow flags have to be acknowledged and paid attention to. The yellow flag is usually only affecting one person. I’m the only one who’s seeing this. I’m the only one who gets exhausted when I have conversations with them.
Do you know? Probably everyone else is saying, “It’s just me. I’m the only one who gets to have a conversation with this particular person.” No one is saying it when the conversation comes out and this happened to another client. This was years ago now, where it’s like, “It’s only a problem for me because we’re having that tension. It’s only me.”
Why Small “Paper Cuts” Become Big Problems
Literally it was a year of this before this person was let go. When the person was let go. the entire rest of the team became so much more productive. They lost a full-time staff member and didn’t have to replace them for nine months because the rest of the staff was so much more productive by this person not being there but no one is talking about that. Her regular thing was she would stir the pot.
As soon as someone tells you who they are, listen. Because if they've told you in one category, they've told you in all categories. Share on XI was going to say this because you find that a lot of times when you have a good team and everybody is there to get the job done. They all have a shared purpose and then you have one troublemaker. You’ll find that person stirs the pot quite a bit and nobody talks about it because everybody’s focused on having their head down. Before we end, I wanted to just talk about what makes this hard. You already talked about, there’s that emotional pull because we want to think the best of people. We don’t want to think this of people but what else makes it hard?
The two big things that make it hard is paper cuts. It’s tiny. We don’t consider how much that tininess adds up over time. I think that’s the number one issue. Very rarely does someone blatantly say, “Pay me for 40 hours,” and it’s obvious they are worth one. That’s not how this starts. It starts by, “Pay me for 40 hours. I took an extra half an hour off.” It’s a tiny bit and they may even tell you about it. You’re like, “That’s okay this time.” It grows over time.
It’s that tininess is the first issue. It’s so tiny that we don’t give it credit for being a problem. The other issue is we want to assume that we should be able to fix it. It’s our problem. If we were better at our job, if we were better leaders or managers or CEOs or fill in any blank that you want to put in there, this wouldn’t happen. One of my phrases, I don’t have this particular one in front of me, is people are problematic. It is the nature of being a people.
All people, me people, you people and every people is a problematic person because we’re independent. We have all of our own thoughts. We cannot be controlled in any normal way. All of the control that happens is self-control. When we start assuming that we could have done something better to fix it, that’s the same thing that we can change people which we can’t. Only people can change themselves if they’re willing to.
What you had said earlier, it’s allowing these thefts, whether it’s time, energy and money. Allowing them to continue hurts everybody in the organization including the person who is doing it. That clear boundaries, setting clear expectations as you described, holding people accountable to those expectations is what helps good employees or good team members thrive.
It’s how they end up feeling successful in their own job and occasionally, the reality is it’s a bad fit. They aren’t going to be successful. They’re not going to be successful with you as a contractor, an employee, and as a client. That’s okay. Not everybody is for every person and not every job is for every person. Sometimes it’s just not going to be a good fit and that’s okay. Go let them be a good fit someplace else.
It’s a perfect way to end the episode. Thank you, Gwen. I hope you still stick with us because in our next episode we’ll talk about how to spot energy theft before it drains your business. Coming up, we’ll talk about the time thieves hide in plain sight and finally, in the series when small theft becomes a big financial loss. If you are feeling, though, that your team is draining more than they’re contributing or you feel like you’re working harder than ever but seeing those profit margins shrink. You don’t have to figure this out alone.
Sometimes what you need is just someone outside the situation to help you see what’s happening, look and identify those yellow flags, orange flags, and red flags. That is what our clarity calls are designed for. You can book a call directly with Gwen at EverydayEffectiveness.com/Clarity and just have a thought partner to look at the situation. Is it just you or is this an objective problem? Whether you choose to work with us or not, you’ll walk away with an idea about what’s necessary to get your business to where you want it to be and what patterns you have that may need changing.
Mentioned in This Episode
About Your Hosts
Gwen Bortner has spent four decades advising executives and entrepreneurs in 45+ industries. She helps women succeed in business without sacrificing happiness by identifying their true desires and aligning their business functions. She spots overlooked bottlenecks and crafts efficient plans toward sustainable success that center your values and priorities. Known for her unique approach to problem-solving and accountability through the G.E.A.R.S. framework, Gwen empowers clients to achieve their definition of success without sacrificing what matters most.
Tonya Kubo is a marketing strategist and community builder who helps entrepreneurs build thriving online communities. As co-host of The Business You Really Want and Chief Marketing and Operations Officer (CMOO) at Everyday Effectiveness, she keeps conversations on track and ensures complex business concepts are accessible to everyone. A master facilitator with 18+ years of experience in online community building, Tonya takes a people-first approach to marketing and centers the human experience in all she does.
