The Six Things Every Company Needs to Grow
That They Usually Don’t Know They Need
Getting to the next level and having smooth growth requires different methods of managing a company, or gear shifts in management style at least four times, as a company moves from startup to mature.
Each of the five stages has a different set of challenges and problems. Unfortunately even our best MBA programs cannot teach these Management Science and leadership skills and arts because they require many years’ experience, not academic learning.
Think about how the Captain of each of these boats, or ships, above has a very different job. A CEO and management team in organizations is no different. Their jobs change radically as the business grows. Complexity and the need for more experience increases drastically.
Here are just six, of more than fifty things every company needs to move from small, and seat of the pants management, to larger and professional management:
1. 1. A monthly goal setting process and staff meeting cadence to communicate and insure clear accountability for results (not activities). These are always put in writing and delivered by each person for their area of responsibility. There are several models and systems for this but they all have the same basic elements which are based on human behavior and are from the thought leading work of Peter Drucker, The Father of Management, in the 1960s. People have not changed. Research shows that companies that do this correctly generate 56% more value creation than companies that do not! Symptoms of not having this discipline include:
a. Poor progress in improvement of the business
b. Confusion on what priorities are and key deliverables, excuses not results
c. No solid schedule and accountable person for each major task
d. Always fighting fires and things falling through the cracks
e. Friction between people and departments and finger pointing
f. People are used to and expect to be micromanaged, training them to not grow
2. 2. A set of metrics used to define, measure and communicate results and success in objective numbers. These are called Key Performance Indicators, or KPIs. KPIs are needed for each i) department, ii) key process and iii) the company as a whole. The instantly and objectively communicate results and trends.
a. No objective definition of success, or way to measure and focus on improvement
b. Difficulty in knowing the exact status of a process, project or department which should be easily communicated with a small set of numbers in a few seconds, not long dialogs
c. You don’t know if things are improving or getting worse, except for revenue, and you don’t know why
d. Little focus on results, people just hide behind activities instead
3. 3. An appropriate mix of experienced managers relative to lower cost employees to manage productivity and work “on”, not just “in” the business. This ratio normally needs to be one experienced manager for each seven individual contributors but varies by industry, company and department too. This is called “Span of Control” and is key to maximize sales, growth and efficiency to be competitive. Symptoms of a poor ratio are:
a. The boss and senior people are overwhelmed and have no time to work on improving the business because they constantly needed, not delegating decisions
b. Political behavior and people are afraid to take risk and innovate
c. People only “do things”, they don’t constantly improve things (execution, not good management, planning and leadership)
d. A company goes sideways for years with only minimal (0% to 15% annually) growth, or up and down as growth creates crisis
4. 4. A Management Development (MD) program for your best employees to help them grow and be challenged, and to help them step up in responsibility and develop into managers and executives as the company needs this. No company grows without developing their people. You attract and keep the best people by challenging them and giving them a career path, not just a job. This program needs a mix of training and coaching to move people along fast enough to grow with the company. A budget of 2-6% of management salaries should be allocated to run this program and must include a mix of training and coaching. Symptoms of no MD program are:
a. The best people leave the organization due to lack of growth and opportunity. No growth equals constant turnover for the top people who want to move up in their responsibility, skills, pay and career path.
b. You do not get 70% of job offers you make accepted (acceptance rate) and the better the people are the more they reject your offers (they see something you don’t).
c. People think of management negatively and do not provide feedback to improve
d. You do not see innovation, creativity and growth in the business. All businesses must grow or die using innovation constantly to adjust to a changing world.
5. 5. A clearly communicated vision that all employees can use as a filter on daily, weekly and monthly decisions and to set priorities. Amazingly research has found only about 15% of employees understand this vision, or even annual goals, when asked. This is a failure of leadership. A company cannot have a strong culture and results without a clear vision everyone understands. There are many components and levels to this to present it to people in ways they can understand depending on many factors.
6. 6. Well defined key processes with metrics for each of:
a. Marketing - Lead generation of quality prospects
b. Sales – The act of closing deals in any venue B2B, B2C, online, retail, etc.
c. Operations - Delivery of your services and products to the customer for the best possible experience.
If you cannot articulate the goals for your company, departments and processes in a small set of numbers you are not ready to scale and are still using micromanagement instead of the more advanced methods of management that allow scaling.
The main challenge is not knowing these things but knowing how to train, coach and implement them properly. This is art, not science, because people are involved. Small differences in how these things are done makes a huge difference in the results. Change is hard for most people, and even harder for organizations.
Generally implementing these things takes 30-60 days each and only one should be done at a time. We have developed a library of videos and other tools to make this efficient and effective. We combine a weekly training session with a coaching session to help people shift their mental paradigm and reflex from what worked in the past to what will work better in the future as larger scale.
Organizational Change Management (OCM) is a specialty which requires vast experience and a combination of knowledge (training), coaching (customized for individuals) and consulting to design the program. We have been doing it since 2002 and learned a few things along the way.
We help companies grow and get to the next level by using proven best practices and management systems that make companies market leaders, not market followers.
Call (619) SCALE06 for a free business assessment by phone.