When a business first starts, the founder is focused on getting customers. Once that starts to happen and cash-in starts to exceed cash-out each month, the founder is quick to shed bookkeeping, cash management, and other administrative tasks to someone else.
The person hired to take all of this on quickly begins to wear many hats – receptionist, bookkeeper, accounting clerk, data entry clerk, assistant to the founder, customer service support, marketing support, human resources, sales support, and sometimes they even come in and clean the office on the weekends for a little extra money. I have found that women are more often hired than men in this position because there seems to be an over-arching stereotype that women manage details better than men. I neither subscribe to or deny the stereotype - I am merely acknowledging that it exists. This person will end up with a title like office manager, meaning they handle a lot of the details no one else wants or has time for and they become a critical element of keeping the business running from an administrative stand-point.
As this person absorbs all of these activities their perceived value contribution to the business is high, although they wear so many hats and have to cover so many areas of the business that they really don’t master any of them. In addition, they usually lack the experience and education to handle certain tasks they’re expected to do, especially when it comes to accounting and finance.
As a business progresses in its life-cycle this person does their best to keep the books in a spreadsheet or a low-cost off-the-shelf accounting software package, like QuickBooks. While they have done their absolute best to make this effective, their lack of education and experience in accounting means that even with all their effort they are not able to provide much meaningful, timely, or accurate information/data to the people running the business.
This person becomes frustrated because they sense they are not doing enough, even though, considering the circumstances, they work long hours and care a great deal for the company. Nobody likes a job where they feel inadequate or incompetent. They may even try to get some training in accounting or the software package the company uses, but the training is usually so generic that it is hard to apply to the actual day-to-day operations and functions of the software in the business.
At this point the business owner is not getting the information he needs to run the business. So he continues to trust his gut and makes far too many decisions based on the balance in his bank account instead of his actual business performance. This leads to some bad decisions and the business struggles to grow as a result. Yes, bad accounting can actually hinder the growth of a company!
The collapse of the Office Manager position comes as parts and pieces of the their responsibilities are peeled off and given to newly hired employees with more experience and expertise in those respective fields. As this happens, the only work left is the low-paying duties like receptionist and data entry, and they are far over-paid for those functions. Their position is ultimately eliminated, and very few of the people initially in the role survive with the company. They were hired to be a "jack" of many trades, but the growth of the company has facilitated specialization and their master-of-none skills leave them without a job.
There is a way to avoid this tragedy, and I will discuss it in Solve the Mystery of Staffing Your Accounting Department on American Express OPEN Forum.