“It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do.” – Steve Jobs
Many mid-sized business owners on the path to growth reach a point where the potential of their business exceeds what they can effectively manage alone. At this point, they must weigh the option of sustaining their company’s success by working 14-16 hour days, or taking the leap to create a management team.
Hands-on control or a shift to delegation?
When should you build a management team?
Long workdays, strained personnel decisions, slipping projects, or volatile revenue streams are all symptoms of a business that has reached its growth limit.
At this point, many business owners ask themselves, why is this happening? What could they do differently to prevent operational tasks from consuming their daily routine? What are successful entrepreneurs doing differently to build their businesses into companies?
In many cases, the obvious solution is to hire an external CEO or COO. These solutions are generally positive, but sometimes they end in failure. After a honeymoon phase, the relationship between the owner and the CEO wears thin, and results in separation.
Some business owners cycle through two or three CEO’s before changing their strategy, while others give up and return to manual control. However, this doesn’t have to be the outcome, as there is a better alternative for all parties involved.
Once a company reaches a certain size, it becomes unthinkable for the owner to continue growing the business or spending more time on strategic and business development tasks without a management team. This is not about individual skills.
Most business owners are among the most talented leaders in their field. The difficulty lies in the fact that their previous successes and way of operating have resulted in the – otherwise commendable – situation in which they face limiting factors for further development.
If you find yourself in a similar situation and have realized that you need talented, reliable leaders to achieve further growth, don’t get stuck with partial solutions.
Hiring an executive rarely solves this situation, but a well-structured leadership team can result in a tremendous leap in the efficient use of the owner’s time and the expansion of potential within the company. However, a management team is much more than just a solution to alleviate the symptoms of overload.
A management team is primarily an investment, and should not be viewed purely in terms of expense.
Successful business owners recognize the benefits of realizing their vision for the company and tapping into market opportunities that may not be possible with solo leadership.
For example, if you know that you can achieve two or three times your current revenue in a particular business area, but only with self-motivated, responsible, and skilled management members, then investing in a management team can yield significant benefits.
However, this investment must align with solid economic foundations, or else it may become an expensive mistake.
Two conditions to allow new leaders to give their best
To allow new leaders to thrive, you must provide them with the appropriate conditions. This involves having a well-constructed and easily communicable business strategy, and a transparent organizational structure where each management member can communicate clear expectations and responsibility limits to others.
For instance, you must define the organizational structure in advance, so that the new leaders responsible for overseeing areas will not overlap other areas, such as finance, manufacturing, and trade. As the owner, you must also define the expectations for each management position and assess whether candidates meet them.
Unfortunately, it’s common for owners to hire talented leadership candidates and then try to build a position around them, often with little success.
Once you have clarified the expectations for your management team, the next step is to regularly evaluate their work and provide feedback. Contrary to common misconceptions, even talented leaders can only perform at their best when they receive signals from the owner regarding the effectiveness of their work, particularly in relation to achieving set goals.
Without this, leaders who performed well in other environments may fall back to mediocre levels, while the best may leave the company. While having a well-practiced feedback technique is important, it is more crucial to have predetermined quantitative goals and indicators for each discussion.
This is only possible if you have established a control system in your company that provides a common, fact-based method for tracking performance.
However, there are two key questions regarding the control system that cannot be delegated to others:
- What are the criteria for good business performance (goals)?
- What data, indicators, and reports are required to assess how well a department is achieving these goals on a weekly or monthly basis?
If you want to ensure the reliability of departmental data in the future, it is crucial to invest your time in answering these questions. As the only person who knows every aspect of your company and precisely what it takes to be successful or unsuccessful with your customers from week to week, your knowledge can be exceptionally effective when translated into numbers, indicators, and a transparent control system.
Devoting energy to this endeavor is worth it, and your new management team will undoubtedly appreciate it.
