Building the Leadership Team
Our client businesses come with a variety of objectives for the sustainability of their efforts. Some just want to be more profitable. Some want to pass the business onto their family. But the ones who are the most exciting are those who want their business to grow in services and products they provide. Of course, that includes growth in revenue and profitability. These are building enterprises of greater value. Most start with a founder, who by their hard work and willpower have built a strong business, but somewhere along the line their progress is stalled.
When it comes to building a growing and profitable business there are four areas of focus; leadership, infrastructure, marketing and cash. Growth in leadership requires building a team. Grow in infrastructures involves having processes and systems which are scalable. Marketing involves understanding the purse of your customers. Cash is often the limiting resource for growth. Let’s consider the leadership element.
In his book, Scaling Up, Verne Harnish discussed “some natural clusters” of businesses based on size:
- One to three employees (the majority of home based businesses)
- Eight to 12 employees ( a very effective company with a leader and a bunch of helpers)
- 40 to 70 employees (a senior team of five to seven people, leading teams of seven to 10 in a company where you know everyone’s name)
- 350 to 500 employees (seven leaders, with seven middle managers each, running teams of seven to ten actually a very efficient company)
- 2,500 to 3,500 employees (more multiples of seven to 10)
So many businesses I know are now in the second category (eight to 12 employees). The owners or managers are reaching a point where they have helpers and need to look forward to developing managers. A helper is someone to whom you will assign tasks such as ordering supplies or maintaining equipment. A manager is someone to whom you delegate responsibilities such as sales or a crew leader. Helpers are great but managers help free up time business owners for important leadership functions such a marketing, infrastructure development, planning and team building.
The question is where you find that individual who you hope will become a manager. Note that the term used is individual, because your business at the beginning, may only financially be able to support one. The first choice might be a family member. That often proves to be a good choice, but never hire someone that you might not be willing to fire. Can you imagine what future Thanksgiving dinners would be like? The second choice might be to promote a current employee. Remember in this case you are usually taking a good worker and making him a manager. Experience has indicated that this can be unsuccessful unless you help that individual develop leadership skills. The third choice is to hire someone from outside your company. This is an equally risky choice in that you must find someone who’s personality will fit into the current culture of the business.
Our first recommendation regardless of the path you decide upon is to develop a criteria for the position you wish to file. The rush to fill a needed position can apply the type of pressure that will lead to a bad decision. By writing down the attributes of the person you want to hire, it will provide a double check on your decision to select a given candidate. The four components of a Job Specification are:
- Knowledge- What level of education or experience is required? For example; they must be a high school graduate and 5 years of successful experience in the business?
- Skills- Does the candidate have computer skills or an understanding of sales?
- Abilities- Must the candidate be able to work independently of direct supervision or work well with customers?
- Other- These are attributes that are specific to the position, such as have a driver’s license or have no fear of heights
This written tool needs to be developed before the selection process begins, but might be revised as a result of knowledge gained during the interviewing process. Everyone should be judged by the same set of criteria, KSAO.
Once the selection is made, next meet with the individual and develop a list of responsibilities associated with their new position. What are they responsible for accomplishing? What are your expectations? Many times we hear that the person did not perform as expected. Too often we hear that the expectations were not discussed beforehand. We never want to hear that someone was hired and “we’ll see how they work out”.
Business owners or leaders have some difficulty to transitioning responsibilities from themselves to a new manager. The secret is not to delegate their responsibilities all at once. Delegate a few at a time and when doing so follow-up frequently to assure that the new manager is exercising those responsibilities effectively. As you develop a comfort level with each delegated responsibility, the frequency of follow-up can be decreased and a new responsibility delegated. Give the new manager time and expect mistakes as part of the learning process.