Many years ago my business was employing seven to eight people. At the time the trading climate was difficult so we weren't actively recruiting new staff. As in any small business some staff came and went during the year and that meant the company's total staff sometimes was seven and sometimes was eight. During this period I found the company straightforward to manage when there was seven employees however, when there was eight it felt like I was chasing my tale trying to manage the operation, effectively losing control. I still find it amazing how noticeable, and how much of a 'step' it was to move from seven to eight staff. It was clear that for our type of business to grow any further we needed to introduce layers of management and this began the long painful route of setting up a management team.
During my activities as a mentor I come across many businesses in a similar position, obviously for every organisation their size and situation varies but there is a glass ceiling that restricts growth until a working management structure is in place.
Now to somebody that has never been through this process it sounds easy but from my experience I can assure you that moving from a flat owner managed structure to a hierarchical management team that actually works is a real challenge. It took me the best part of three years to find the right people, put them in the right places and have the correct reporting systems and KPIs so I could overview the success or otherwise of parts of the business.
Now it doesn't have to take that long, I just made lots of errors and changes until eventually I hit upon a winning formula. I'd like to share a few bits of that formula with you now.
The first thing to realise is that changing from a single manager (ie you) to a management team is normally complete overkill so it's something that we want to phase in over a period of time as the business naturally grows to fit this type of structure.
Stage one is to imagine your business three or four times the size it is now, then break down your organisation into its logical sections, in a larger organisation these would often be their departments. For example, sales, marketing, finance, operations, customer service, R&D etc. It's best not to break it down too far (perhaps 4-5), but again if your business was four times the size which logical areas would you need to have someone managing?
The next stage is to simply draft the roles and responsibilities of each of these key management areas. It is never possible to get this right first time and is something that you will evolve indefinitely as your business changes.
Now back to the current situation, it's likely that you will only want to create initially just one management role and in my experience the best management role to free yourself from and farm out to somebody else is the role of operations manager. You then maintain control, for now, over all the other identified management areas, but it is important that you treat them separately as if you were wearing multiple hats, in this way as the business grows it easier to break off one of those roles and give it to somebody else.
Finding the right manager is tough and finding somebody who will put up with your natural urge to interfere is even tougher. In my experience I would only employ somebody who is a small company person, I have found employees with large corporate experience do not fit well into this environment.
When looking for someone to fill a management role you generally have two choices, firstly you can employ somebody with management experience but without knowledge of your operation. This can be good as it brings in new working practices, however it also has large risks in that you can't guarantee the loyalty of the employee nor fully evaluate their management skills until they've been in the role for several months.
The second approach is to promote somebody from within. This normally creates huge loyalty and commitment but you are left with having to teach that person to be a manager which can be very time consuming and difficult. However in the early stages of establishing a management team my preference would be to promote somebody from within but consider bringing in external experience managers into other roles later down the line as your business grows.
A management team will take your business to the next level. When running smoothly a management team will double the effective value of your company should you want to sell as now you are personally no longer key to every aspect of the business.
Setting up a management team and making it work is very tricky it requires clear definitions, documented responsibilities, clever financial reward techniques, key performance indicators, and formal communication systems to report back to you how that area of the business is performing.
I have developed many techniques to help in these areas, but it is not possible to discuss them in such a short blog posting, but if you're interested in more detail please have a look at the Grow The Profits Club where there are several detailed training videos covering this subject.