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As business develops, when a distributor's sales volume gradually increases and the team grows, many distributors begin large-scale reforms to adapt to market and management needs—not only in personnel but also in finance, internal affairs, warehousing and transportation, distribution management, store management, etc. Many distributors lack professional experience in enterprise management; often, after attending a few days of external training, they return and start making changes to their own companies. Some follow the manufacturer's guidance for internal reform. During the reform process, distributors encounter many problems. The following case is about a distributor, Lao Gao, whom the author once served, who experienced a collective business phone shutdown during a reform.

Event Details: Lao Gao grew from a wholesaler to a distributor for brands A and C. For better development, Lao Gao improved the company's internal management and responsibilities. He consulted staff from various manufacturers and borrowed from the industry's internal management systems to formulate systems covering warehousing and transportation, finance, internal affairs, and business operations. He also refined employee management systems, such as leave policies and job responsibilities. Additionally, he established corporate philosophy, business purpose, and development vision, which were displayed in each functional office for guidance and execution.

However, the problem was that none of these were fully implemented; the management systems remained decorative, and staff disregarded them.

Key Point: Distributor Lao Gao knew that to grow, he must weaken personal influence and strengthen institutional awareness—this is good, but it was not executed.

Analysis: When an individual business transforms into a distributor and the number of employees exceeds what the boss can personally oversee, internal management must shift from personal decision-making to institutional supervision. But for distributors accustomed to hands-on management, this is like taking away something they love, and their mindset is hard to change. On the surface, Lao Gao formulated very detailed management systems, but the belief that the individual is paramount rather than the system is the root cause of the systems becoming mere decoration.

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For Lao Gao to institutionalize his company, he must first overcome three hurdles:

1. Psychological hurdle: Balance between the individual and the system; weaken the individual and strengthen the system. 2. Kinship hurdle: Issues arising from nepotism, such as unequal pay and unequal punishment between relatives and regular employees. 3. Trust hurdle: Once management is handed over to the system, the distributor will inevitably have more free time. As the company grows, the boss cannot oversee everything; handing control to the system may cause unease. Doing everything personally increases employee anxiety.

Trigger: Going back on promises and failing to honor commitments. Lao Gao had made promises to employees in company meetings or privately, such as: 1. Employees who work for the company for three years will be provided with various insurances; 2. As the company develops, business staff salaries will increase by a certain percentage. These two promises were long overdue, severely dampening employee enthusiasm and creativity. Even Xiao Wang, who had been dedicated to the company for four years, had not yet received insurance. Xiao Wang raised objections. New employees saw Xiao Wang's situation as their own future and began to slack off and work passively.

Key Point: Violating the principle of integrity in business dealings dampened employee work passion.

Analysis: During the transition period, distributors inevitably face a trust crisis, and this common phenomenon recurred with Lao Gao. Individual businesses often make casual promises to downstream customers, like “I will support you in such and such ways; you should sell more of my goods.” But when customers actually sell well, the support is not fulfilled, and the typical response is, “Look at your high sales volume, so your profits are naturally high—isn't that the best support I can give you?” Stores, receiving substantial profit margins, do not pursue the matter. But employees are different; their earnings come from hard work, and unfulfilled promises naturally lead to demands for explanations. This is the root cause of slackness and passivity. To increase employee initiative, Lao Gao must follow the management principle that fulfillment should exceed promises, giving employees pleasant surprises—only then might the boss receive pleasant surprises in return.

Flashpoint: The promise to reimburse business staff's mobile phone expenses was not fulfilled, leading to various issues of non-enforcement of systems.

Xiao Wang, whom Lao Gao trusted most, eventually became the leader of the shutdown incident. The group turned off their phones and refused to answer any calls, causing Lao Gao's business to halt for a day. After the company received orders, the internal staff could not find the drivers or salespeople, and ultimately had to contact Lao Gao. When the third customer called Lao Gao, he only started to worry when he still could not reach any salesperson by the afternoon. Lao Gao's first reaction was, “This is rebellion! How could this happen? It seems we need a meeting.”

Extinguishing the fire: Stabilize personnel and find the cause. The next day, when everyone arrived, Lao Gao organized a company-wide meeting to analyze the shutdown incident. Everyone said they were busy with work in various places, didn't notice, or their phones had run out of battery. Lao Gao initially asked everyone to speak up about why all phones were off and what happened, and he commented on the loss of undelivered orders and the damage to the company's image, without blaming any salesperson. The salespeople then began to tell the truth. Xiao Zhang said he had no money to pay the phone bill; Xiao Li said that since they report to the company every day, he didn't want to answer personal calls, so he turned off his phone. The group was agitated, and the situation seemed about to get out of hand. To calm the employees, Lao Gao, in response to the unfulfilled management systems, immediately removed the relevant management provisions on the spot. He also used his trump card, stating the practical theory that the private enterprise boss is everything. He warned that if such an incident occurred again, the responsible personnel would be immediately dismissed.

After the meeting, Lao Gao kept Xiao Wang behind for a heart-to-heart talk. Xiao Wang finally revealed the truth: unfulfilled promises, unreimbursed expenses, unpaid overtime, and employees thinking about leaving.

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Key Point: Focusing only on profits without paying attention to the treatment of the operational staff; focusing only on personal preferences and making casual promises without fulfilling them will cause lasting damage to the company's development.

Analysis: As a distributor, Lao Gao is no longer directly dealing with downstream customers as an operational staff member. As a boss, when he makes promises, employees are overjoyed and look forward to their fulfillment. If personnel management is based solely on the individual, it will inevitably create serious obstacles to the company's development.

Result: After the incident, only a few nail marks remained on the white walls. The shutdown incident was hastily concluded. Lao Gao seemed to have won, but behind it, all employees were even more disengaged, going through the motions.

In response to the specific situation, after the meeting, Lao Gao privately met with employees and compensated them individually, but the employees could not regain their former work enthusiasm. Lao Gao was puzzled: “I've given them everything I should; why don't they have the same passion as before? Do I have to replace everyone?”

Solution: In fact, Lao Gao only needed to do two things to solve all the problems:

1. Base the system on actual business conditions, create feasible systems, and enforce them resolutely. 2. Manage employees through meetings; fulfillment should exceed promises. Even if there is a temporary loss, fulfill the promises.

In summary, the author believes that Lao Gao's development process reflects a common problem among currently growing small and medium-sized distributors. The shutdown incident he experienced can serve as a lesson for many distributors, helping them avoid similar incidents and providing a reference for the healthy development of the distributor community.

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About us: WeChat Name: FMCG Distributor Professional Consulting Management Account Introduction: 20 years of FMCG distributor operation and management experience, professionally targeting distributor internal affairs.

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