Tag Archives: Culture

Entrepreneurs: Learn to Delegate to Capable Employees

Delegation

The “take charge” attitude that permeates a builder’s very makeup is easily channeled and tempered with proper direction and focus. Avoiding “one man rule” tendencies is as easy as one word: delegation. The effective executive delegates rather than performing all critical tasks. However, successful delegation requires that responsibility and authority also be delegated. Herein lies a problem for the executive–“hands off” management.

An experienced founder’s abilities and characteristics relate to starting and preserving a good business idea. Chief among those abilities would be creating a vision for the company, which is usually unstated but somehow understood. While it may seem a chore for others in the company, projecting a confident and self-assured image that appeals to prospective buyers  comes naturally to the experienced executive.

Additionally, identification of market opportunities and provision of top notch service to meet customer needs are focal points of the founder’s vision. Unfortunately, the ability to create a workable organization to achieve company goals and objectives may prove more elusive. The business owner who possesses the innate skill to attract others to pursue an unwritten vision may lack the skill to build an efficient organization.

Employees

Clearly, employees are critical to the success of profit maximization in any business; it is their effort that keeps the wheels of progress turning. Most employees have spent careers in similarly sized (small) companies in the same industry setting–be that white collar or blue collar–with limited exposure to alternate environments. Consequently, their frame of reference in employer/employee relationships amounts  to that which the founder and, where applicable, previous employers have provided.  With limited cross-training in other professional disciplines, these members of the team have the least job flexibility and therefore generally welcome changes in work flow patterns that can make their jobs appreciably easier and more effective.

Job Specialization

While cross training or shared skill sets occur as a matter of necessity, job specialization is a focus of many small businesses. A certain “pride of ownership” can arise from this high degree of specialization. Fiercely loyal, most employees would rather sacrifice some temporary perks rather than leave a benevolent employer “high and dry” in a time of financial duress. Since the employees tend to be skill-oriented, they require a great deal of direction in defining work assignments. At the same time, they spend a lot of time observing the founder and mimicking his or her efforts; if the entrepreneur is a go-getter, they will learn to hustle on the job in order to meet production requirements. In short, employees can be extremely valuable in performing the legwork that makes the business optimization a reality.

Employee Responsibilities

Employees are required to adhere to schedules, commit to the strategic plan, be willing to work long hours, and be brand ambassadors of the company in the community. Schedules governing production, documentation, and reporting must be religiously followed to ensure optimal work efficiencies. Time, budget, and administration constraints are to be respected and emphasized among employees and their  supervisors.

Mindful of how they represent the company, your people are the “front line” experience that others have with your brand. Whether buying from suppliers, meeting with customers, or serving in a local non-profit, they have an opportunity to make you look great–or not.

When company plans cause inconveniences for employees, it should be up to the employees themselves to raise the issue with their superiors. Once they have been given the right to voice their opinions and concerns, they should be expected to fall in line with the plan. Failure to follow established guidelines should not be tolerated. Without respect of your core values, your employees should be replaced by those who can carry your banner proudly!

 

Owner as Entrepreneur vs Manager: Jekyll and Hyde

At the center of every small business management team is the owner, whose primary long-term responsibility is to manage the company effectively. While some companies have several people who function in this capacity, this discussion will assume that an on-site entrepreneur/owner runs the business. Traditionally, this individual oversees the entire operation and personally looks over most company work, both in the office and in the field/plant. Furthermore, the owner is commonly a jack-of-all-trades, wearing the hats of many different employee roles.

The “Jekyll & Hyde” Theory

It is often asserted that the individual who single-handedly runs a company has a certain, identifiable “Jekyll and Hyde” personality. In demeanor and approach to problem-solving, the typical owner ranges from brilliant to tyrannical. An effective strategic plan must therefor encourage brilliance while keeping the owner away from problems that transform him or her into an ineffective manager. The same qualities that have enabled the owner to gain insight into many facets of the business operations are the exact ones that force him or her to be involved in every decision, major or minor. Such overt  care and concern for the company is to be anticipated and applauded. When it results in ineffective management, however, a remedy must be devised.

Entrepreneur or Manager?

Efficient businesses require in-house management. Unfortunately, the skills that make an owner a successful entrepreneur can be at odds with those that make one an effective manager. Excellent entrepreneurs have great sensitivity to market changes. However, when they leave the daily operations to become managers, two things happen: 1) they stop using their innate skills, and 2) they manage ineffectively.

Though the owner may experience periods of fear or apprehension, as a group owners are generally optimistic and opportunistic. Good owners emanate confidence, motivating those around them. For example, by spotting a mismatch between market demand and supply, a good one can inspire employees to work towards meeting that demand. Uniquely able among executive team members  to downplay the importance of minor setbacks, savvy owners emphasize the company’s forward movement in a vision casting mode.

Finally, first-hand knowledge of company history sets the owner apart. Having founded the company, the owner as entrepreneur is an indispensable part of the management team. When questions arise concerning company history or past performance, as they frequently do during times of tension, who better to turn to than the individual who has owned or managed the company all the while?

The Owner’s Vision

In providing vision for the company, the owner is expected to identify opportunities to pioneer new markets and expand the company’s presence in existing markets. Thorough identification of precise product offerings and internal procedures to make the products is a large part of every owner’s job description. The interaction between market research (including trends, buying patterns, and demand) and company vision is a relationship that the effective entrepreneur manages on a regular basis.

The entrepreneur can help the management team by maintaining personal relationships  with key parties such as sales people and lenders. If links have been formed based on good rapport with these parties, it is only fitting that these relationships continue  when they cannot be successfully turned over to another manager. This scenario rings particularly true with regard to negotiations with suppliers. The owner’s involvement in handling these parties is essential to reinforcing profitability.

 

Management: Information, Structure, Mission & Goals

 

Thorough management information systems can also aid the company in gaining a competitive advantage. By monitoring job progress, collecting data about percent complete against target, a good system can help the organization adapt more quickly to changes in either the internal or external environment. In the financial area, a proper system can eliminate much busywork, thereby allowing office staff and managers to focus on priorities, such as customer service.

Therefore, management information systems should be designed to provide the meaningful financial and operating information necessary to plan a company’s direction. The costing, pricing, and scheduling systems produce information necessary to control expenses. Similarly, work schedules, purchasing systems (purchase orders or the equivalent), and supplier files establish the framework for orderly completion of work according to budget. An accurate reporting system is required to maintain financial controls. However, many of these systems take on characteristics over time that may not aid the company in achieving optimal efficiencies. Only through review and analysis of the documented assumptions behind the systems and the logic of the systems themselves can the executive team determine whether reporting can be improved.

An illustration of one area in which management information systems can shape corporate planning is in inventory listings for a manufacturing or retail company. Inventory classifiable as old or having low margins can be highlighted for increased marketing focus to increase sales turnover. As sales increase, interest carrying costs diminish. Carrying costs include the cost of capital, insurance, theft, obsolescence, repair, financing costs, maintenance, and loss of use of capital.

Management Structure and Characteristics

The structure of a company contributes to its strengths and weaknesses. In turn, the form of management, motivation techniques, and employee job skills dictate the structure of the company. If management and employees are not motivated to perform their jobs or lack the skills to do so, the entire business suffers. Every company must be based on three essential elements:

  • mission statement
  • goals 
  • objectives

Mission Statement

Many executives carry their company’s mission statement around in their heads but fail to share it with employees in a way that encourages them to share the enthusiasm and commitment. Committing the mission statement to writing in language understandable by all interested parties lays the groundwork for the joint development of company goals and objectives. This mission statement should explain the product, the operating focus, and the distinguishing characteristics of the company’s vision. The statement should remain valid for the life of the company.

Goals and Objectives

Goals that take shape through employee input usually result in shared dreams. If the goals, objectives, and tactics needed to accomplish the mission are agreed upon by all at the outset, they become a standard against which performance can be judged. An example of a goal would be to achieve 15 percent market share in the Gen Y demographic in a certain geography within five years. An objective would be to sell X number of units in one to three years. A tactic would be to sell X number of units in a given channel in a given price range by a certain date within one year.

A review of organizational charts reveals much about the work flow in a given operation. The actual flow of work needs to be compared against planned work flow and adjusted periodically to achieve efficiency. In addition, job descriptions need to reflect reality and effectiveness. Employees should be asked to write both what they have been hired to do and, additionally, what they actually do. After receiving the employee descriptions, the executive team can draft job descriptions that promote effective work completion.

 

Turning Around a Company Not in Trouble

Someone once asked John Whitney of Columbia Business School the question, “how do you turn around a company that isn’t in trouble?” John’s reply was classic–

“it is in trouble—it just isn’t in crisis yet. The idea is to avoid a crisis by changing the policies and procedures in the company so it can really compete globally, compete for the long term.”

John went on to say that waiting until a company is in trouble to fix it is management by exception. Over 20 years ago (before globalization and a worldwide economy became the hot topic it is today) Mr. Whitney observed that competition abroad to continuously improve would force companies domestically to keep focused on “management by review.“

Companies that have enjoyed success, however, can be reluctant to undertake change through what is termed an operational turnaround. It can be harder, though, without the threat of imminent insolvency, to change company culture and rituals. This type of management change relies far less on historical financial performance than on looking forward to what might be.

How to Know When You Need It

Sometimes, losing a big customer is the trigger point. But, losing one can be explained away. Losing multiple large customers and key employees should definitely raise your antennae. If you begin to take longer to take products to market and the competition keeps introducing new products faster, these patterns should make you consider getting outside help. Look to your customers and suppliers to provide industry feedback and “intel” on trends and patterns. 

While Others Cut Costs, Innovate

Suppliers know what’s happening and can advise how to improve your product. Eliminate layers in your company. Get back to communication in person. Lost time, will and energy to problem solve creatively is the biggest expense in most businesses. Regain respect for the people doing the work—respect their integrity, intelligence and commitment. Eschew over-control. Break down communication issues between departments. Cross-functional management focuses on running a system, each part dependent on  the other.    

John Whitney said that, when he watched Leonard Bernstein conducting Beethoven’s Ninth Symphony, he realized that Bernstein “did many of the same things a good manager does. There were parts of the score where he was deeply involved, working to make sure he got exactly the sound, the nuance he wanted. And he knew what he wanted. But he also knew when the orchestra had it going right, and he wasn’t afraid to lean back and just let it happen, let the musicians do their jobs and listen to the music all come together.”

How about you–are you willing to take a hard look at your organization and determine to become better, even though you are already good? Ever heard the expression, “good is the enemy of great?” Consider ways that you can improve information flow, creativity, problem solving and other soft skills. In addressing these seemingly minor issues while business is good, you prepare the way for an operational turnaround–innovation as some may call it in today’s vernacular!

 

 

How Successful Businesses Maintain Organizational Morale

 

 

Organizational morale builds quality products (and services). Employees who are well-paid, well-trained, and appreciated work harder than those who are merely trying to earn a living. Giving employees more and more responsibility as they develop skills and gain experience makes them feel wanted and valuable. training employees to do their jobs expertly teaches them the value of quality performance. Finally, rewarding an employee for continuing contributions to company profitability reinforces the company’s goals, mission, and objectives.

Some of the benefits to organizational morale include the following:

  • Employees are willing to work longer hours to ensure that a job is done correctly.
  • Customer service and sales are carried out with positive attitudes. As the company makes more money from these quick and repeat sales, the business can afford to hire the cream of the crop in employees. The appearance to anyone outside the operation is that of a well-oiled machine.
  • Rather than fending off mercenary plots and complaints all day long, management can plan for upcoming projects, ensuring the best use of employees’  talents.
  • Striving and bitter rivalries are easily ended when all employees are treated impartially and fairly.
  • Quality control is much easier to enforce with a group of hard-working, motivated workers than with uncaring employees who are simply filling a slot.

Training

Truly effective training and development programs make good employees out of average employees, and great employees out of good ones. When an employer takes the time and effort to teach employees how to perform their jobs better, employees usually respond with increased effort on the job.  Bonds between management and employees are created as an employee gains a greater sense of self worth. The employee begins to feel that his or her contribution to the overall business matters and is important.

Responsibility

Employees in successful companies have two types of responsibility–to their peers and to their bosses. Each is important to a smooth-running company. However, responsibility can prove an albatross around the neck of the employee who lacks the corresponding authority to make decisions. Good employers will therefore not only be creative in assigning work to employees, but also in providing the best possible environment for them–including adequate authority where appropriate–to help them succeed. Reporting to management helps employees feel they must do a good job and that someone is around who can help them if the going gets rough. Being accountable to peers in addition to bosses teaches employees to respect one another’s work and to learn how to work together to reach common goals.

Motivation and Reward

Bonus and incentive compensation programs are the rewards of excellent employee performance. Rather than threatening to discipline or even dismiss a problem employee, it is often better to motivate employees through encouragement. Fear of failing will not lead to successful work attitudes and performance–it will only lead to ultimate failure. On the other hand, building up an employee’s confidence has proven much more effective than criticism in raising performance levels. 

Once an employee has performed at or beyond the established level, successful management teams find a way to reward the employee. Not rewarding someone who has done everything requested and more makes the employee wonder a.) whether he/she has indeed done a good job, b.) whether the supervisor is a good enough manager to recognize the employee’s contributions, and c.) whether a “change of scenery” may be preferable. However, bonuses and incentives must reflect current and projected financial performance. A company experiencing financial loss must have a flexible plan to adjust employee compensation as necessary. 

A successful company becomes a self-perpetuating entity–the more successful it becomes, the more successful it can become. Executive teams who maintain high organizational morale and plan for growth will create positive cash flow from efficient operations. While your business may not be in a position to always do what larger businesses do, remember to run your organization in a professional manner any you will meet with greater success!