In the early days of running your own business, it’s natural to try to do as much as possible yourself. It’s the most cost-effective, comfortable, sensible way to do things in the beginning. But as your enterprise grows, you’ll find yourself stretched thinner and thinner. Eventually, you’ll find you just can’t continue to oversee operations, sales, accounting, fulfillment and marketing – and hope to continue to grow your business.
When you reach this point, it’s time to think about bringing other high-level managers on board to help you out. You need to build a senior team that’s able to manage all the critical areas ofyour business to take it to the next level.
Building your team demands matching jobs to people’s strengths. That means giving people responsibilities according to skill level, not based on how close a friend they are, or how closely related they are to you, or whether you just like their sunny personality. That includes you as well – don’t give yourself an impressive title and job unless you’re right for the job. The fact is, many smart entrepreneurs hire their own boss when they realise their skills lie elsewhere in the company.
When the time comes to hire an executive team, you’ll need to find people to fill the following roles:
1. Chief Executive Officer (CEO).
The fact of the matter is that the CEO is the boss of everyone and responsible for everything. They determine the company’s strategy. They hire and build the senior team. They make the final call on how resources (read: money) get divvied up.
The CEO’s skills must include strategic thinking, the ability to rise above the daily details and decide where the industry and business are headed. They must then be able to decide the company’s best route for navigating the future market conditions. They have to be able to make good bets.
The CEO’s key skill, however, is in hiring and firing. The right management team can cover a CEO’s shortcomings. A CEO maybe able to set strategy, predict the future and control the budget, but if they don’t hire the right team, they have to master it all themselves. So they need to be able to identify and hire the best, fire the ones who don’t work out, and run the show in between.
You know you need a professional CEO when you’re mired in the details for way too long and can’t pull yourself out. CEOs think about where the organisation is going, the people and processes needed to get there, and how they’ll work in the current market. If you like details rather than strategy, either shift your thinking or hire a CEO to do the job for you.
2. Chief Operating Officer (COO).
A COO handles a company’s complex operational details. Think about UPS moving three billion packages in the two weeks before Christmas: The company’s COO insures the business can deliver day after day. He figures out just what needs to be measured so he can tell if things are going well. Then his team creates the systems to track the measurements and takes action when the company isn’t delivering. In a one-location retail business, the store manager is effectively the COO. When you expand to multiple locations or when ensuring smooth operations becomes a big part of your business, it’s time to hire someone who revels in measurements, operations and details.
3. Chief Financial Officer (CFO).
Plain and simple, your CFO handles the money. They create budgets and financing strategies. They figure out if it’sbetter for your business to lease or buy. Then they build the control systems that monitor your company’s financial health. The CFO is the “bad guy” who won’t let you buy that really cool video conferencing equipment and makes you settle a commercial loan instead. While you mope about it in your office, the CFO will be busy figuring out which customers, business lines and products are profitable, so next year you can afford the really cool video conferencing equipment.
Believe me, you’ll know when you need a CFO. Do you lie awake at night dreaming about numbers? No? Then you need to bring someone on board who does. You want a person whose dream birthday gift is a calculator and a blank book of ledger paper. Money is your business’s blood,and in entrepreneurship, cash flow is everything. You don’t know the difference between cash flow and profit? Run – don’t walk – to the nearest head hunter and find yourself a CFO.
4. Chief Marketing Officer (CMO).
Recently, companies have been bringing in a marketing expert at the C-level rather than as just a vice chairman. The reason is simple: Many current business battles are battles of marketing, so corporate strategy often hinges on marketing strategy. The CMO owns the marketing strategy – and that often includes the sales strategy – and oversees its implementation. The CMO will know (or learn) your industry inside out and helps you position your product, differentiate it from your competitors’ products, enlist distributors, and make sure customers learn to crave your product.
If your business’s success depends mainly on marketing, you need a CMO. That might be you – but only if you have time to keep up with competitors, oversee the marketing implementation, and still do the rest of your job – and do it well. Otherwise, you need to look for the person with the sunny disposition, Blackberry in hand, keeping up with what’s hot and what’s not.
5. Chief Technology Officer (CTO).
I’m a techie from way back, so I’m pretty opinionated about CTOs: Many of them just don’t belong in the C-suite A CTO should keep up with technology trends, integrate those trends into the company’s strategy, and make sure the company keeps current when it’s necessary. They should not be buying new toys and leading-edge technology just because it’s the latest, greatest thing out there. You need a CTO if technology impacts your business or industry strategically. (If you’re in tech yourself, or your industry relies heavily on technology, that means you.) Here’s a quick test to find out if your CTO can link technology and strategy: Ask your CTO how a company’s chosen programming language choice affects strategy. If the answer sounds more sophisticated than “It makes it easier to find programmers,” your CTO just might know how to think strategically.
Finding Your Team Members
Unfortunately, good executives don’t grow on trees (and you wouldn’t want to hire the ones that do). Since their decisions can make or break your business, you want the best. Newspapers, classified ads and internet bulletin boards are not the way to go. And mass-market ads will attract exactly that – the mass market, people who have no other job prospects.
If you have the funds available, executive search firms are a good choice. Although they charge through the nose to find candidates, they do due diligence and present you with pre-screened candidates, so when you’re running around handling the emergency of the day, they can be a huge time-saver. They also monitor the pool of executive talent and are likely to reach candidates you couldn’t approach on your own. Search firms may specialise by industry, function, geography and level of job, so if you decide to hire one, make sure you know what you’re getting.
Networking is a time-honoured way to find new hires. Let your professional and personal networks know what kind of person you’re looking for. Then get one-on-one introductions, and take the candidate to lunch to test the chemistry.
When networking, avoid specific “networking forums.” Go straight for what you want. If you want a lawfirm CMO, spend a weekend at the Legal Sales and Service Organisation’s Raindance conference, which attracts senior marketing folk from law firms. Network, network, network – but make sure it’s targeted.
Once you’ve got a potential candidate, how will you know for sure they can do the job? Executives have great impact – on employees, on systems, on profits – so it’s worth your time to check them out thoroughly. Call each of their references, and listen between the lines (with labour law today, recommendations always glow). A CFO may have embezzled from his last company, but the employer still says “They did a good job”. This grade inflation means you need to listen for less-than-glowing opinions.
When you sit down with your potential C-suite candidate, there are a few things that will make your job a little easier:
- Make sure your candidate really knows the job. If your CMO-to-be doesn’t know the difference between marketing and sales or your CFO can’t tell you the difference between LIFO and FIFO, pass ’emby.
- Interview for chemistry. Do you trust this candidate? Do you want to spend time with them? Believe me when I say youdon’t want an abrasive team member, no matter how talented they may be. One COOI know, scared to make the hard decision, reorganised his entire company arounda highly talented, incredibly obnoxious executive that everyone despised. The exec’s talent got to shine – but everyone within 100 metres quietly subdued theirs.
- Talk to people from your candidate’s former company. Are the candidate’s claims of divine brilliance reflected in what their former peers and subordinates have to say about them? Find out if they got the work done and also how they contributed to the company’s culture. In a small business, cultural issues can be every bit as important as getting things done.
- Always hire really smart people. Here’s a good guideline to follow: Every new hire should increase your company’s average IQ. That means they should all be smarter than you. Get used to it.
- Look for evidence of learning ability.Will your candidate repeat mistakes they’ve made in the past? Or will they learn from those errors and adapt that knowledge to your company?
- Use “behaviour description interviewing” techniques. Don’t ask about principles, knowledge or “what if” stories. Instead, ask your potential executive team memberto share specific past events. Their stories will reveal their values, skills and abilities. For example, you might ask a CFO to describe a budget they setup and how they handled it when a manager exceeded their budget and asked for more.
One word of caution.
Be wary of hiring friends or family members. They’ll expect you to trust them and just assume they have a high skill level. What’s worse, you may trust them and assume they have a high skill level without any evidence to the contrary until after you’ve hired them. And unless you take care to be very clear about the boundaries between friendship and work, you may find your friendship in ruins over workplace disagreements.
Delegating to New Executives
Once the new members of your team are onboard, it’s time for the truly hard part: trusting them. Your gut will fight you every step of the way. You’ll assume your instructions are clear and misunderstandings are their fault. You’ll assume when you disagree that you’re right and they’re wrong. But you’ll sometimes be wrong. The key to successful executive relationships is changing what your gut tells you.
Remember how you interviewed for trust? That’s important because once you hire an executive team, you must let them take their responsibilities and run with them. That means agreeing with them about what their roles are, what deliverables they’re responsible for and on what time frame.
It’s also worth deciding in advance how you’ll handle disagreements. You hired this person assuming their judgement was better than yours. So when you disagree, if you did your job right, chances are that they’re right and you’re wrong. Discuss early on about how you’ll make the call, so you get the most benefit from constructive conflict. Just remember: If you agree on everything, one of you is redundant.
Entrepreneurship is about going for the things that are much bigger than what you could do alone. Your job isn’t to reach the goal; it’s to build a team that will reach the goal. If you really want to reach your goals, you’ll need to bring on others to help, and creating a good executive team means knowing what you need them to do, finding good candidates, and giving them what they need to do their jobs. If you choose well, they’ll be successful and make you successful as well.
How To Build Better Employee Engagement
Here are my 10 tips for managers wishing to build real engagement.
Everything begins with values; with the top three highest priorities in an individual’s life. These are the source of that person’s primary purpose and the underlying determinants of their perceptions, decisions and behaviours.
In the context of managers wanting to help their teams to develop mindsets geared towards connection, conversation and experimentation, within a healthy environment, the process must begin with value determination.
Advice for managers
Here are my 10 tips for managers wishing to build real engagement:
- Write down the job duties that your people actually have: Their current, accurate, and most up-to-date daily action steps.
- Spend some time determining what their values are. You can use the free online tool on my website – www.drdemartini.com
- Once you have determined your highest values (the three things that are most important to you in your life, where you demonstrate your greatest discipline, reliability, focus and productivity), you’ll need to find the links between employees’ job duties (Step 1) and their highest values. This is a very specific and detailed step, unpacked below.
- The question to ask is, “How specifically will performing this particular job duty help me to fulfill my current top three values?”
Let’s say one of your team members is a payroll administrator. Her job duties might include: checking how many hours employees have worked; calculating and issuing pay; deducting tax and other benefits; processing leave and expenses; calculating overtime; answering staff queries; and giving advice.
Let’s presume one of her top three highest-order values is her children. The way to connect what she does with what she values is to ask questions like these, in order to make links and help her see them in context:
- Does working with numbers help you teach your children to pay attention to detail?
- Does making calculations help you help your children with homework?
- Does knowing the art of fair exchange give you a lesson to teach your children?
- By doing your work, are you earning the income you need to fund your children’s education?
- If it’s tedious work but you don’t give up, is that good role modelling for your children?
- Does knowing about money management, and sharing this with your colleagues, help them to help their own children?
- Does advising others make you better at giving your children counsel?
- The magic number to shoot for is 20 links, not seven. Once you get to 20, for some reason, it ‘clicks’ and people can see that what they do every day is (or can be) valuable and meaningful. Be aware that some links are harder to find than others. Some are obvious; some, more tenuous.
- Look for fluency. If the employee hesitates or can’t answer the question easily or at all, this is a sign that the job duty is incongruent with their highest values and they are not going to be inspired about that particular duty. (In this case, keep asking them how that specific duty would or could help them to fulfil their highest values, until they can see a connection.)
- This is a big job. Value determination and link creation can take a whole day or more, the first time you do it, depending on the size of your team.
- To create better connections between your people, use the same process to cross-link others’ three highest values with your three highest values. Go through the entire team, making a list of values across everyone you manage. Look at the common threads. This will help you achieve more equitable leadership, better management and healthier relationships.
- For better work conversations, remember that dialogue comes from equal values (or else you simply have alternating monologue). Employees must know each other’s values. You, the manager, must master the skill of communicating your high-priority intentions, expectations and delegations in terms of each employee’s top three values.
- Intrinsically, people love solving problems that align with their values, so fulfilling their values will give them the courage to experiment.
Remember: People go to work every day to fulfill themselves, not for the sake of a company. For this reason, managers must enable their people to explicitly connect their own values with their everyday, real-world job duties, so that they become engaged, feel grateful for their collegial support system, and are inspired to go beyond the call of duty and to innovate.
6 Ways To Break Bad News To Your Team
We asked six leaders: How did you handle sharing the hardest news of your career?
Being the bearer of bad news is never fun. But there comes a time in everyone’s lives, when they’ve got to step up to the plate. This is especially true in business. When you’re in a leadership position at a company, knowing how to deliver bad news is a crucial skill. To help you out, we asked six leaders for their advice on delivering bad news to teams.
Here’s what they had to say:
1. With a promise
“After the economic meltdown of 2008, we couldn’t afford to keep everyone on staff. Picking who stays and who goes is one of the most difficult decisions you have to make as CEO. I delivered the news with honesty and empathy at an all-hands meeting. We gave some severance, referral to an employment service and a personal reference. We also gave the option to rejoin our team once things were back on track, and some did! It was a homecoming of sorts, a healing moment.” – Ori Eisen, founder and CEO, Trusona
2. With support
“In 2016, our office manager passed away. She was only 26. We called a mandatory meeting, let everyone know, and brought in grief counselors. The hardest part was controlling my own emotions in front of the company. This was a crucial moment, and the team needed a leader. We organised a memorial service to celebrate her life. It took time for the business to return to a normal cadence, but her impact remains at the company today.” – Rahul Gandhi, co-founder and CEO, MakeSpace
3. With transparency
“In New York, construction delays are as common as yellow taxis. But when you’re working to open a new restaurant location and have promoted staff to run it, construction delays don’t impact just revenue but your team’s livelihood as well. Delaying promotions for people who have worked hard to earn them is tough news to deliver. But we invited the team to the construction site to see the space and ask questions, and it helped everyone get on the same page.” – Otto Cedeno, founder, Otto’s Tacos
4. With community
“The worst news my husband and I had to share with our employees, and kids, was that we’d decided to move our business from New York to Los Angeles. We gave employees the option to stay with us and relocate. Some came west, and others did not. We couldn’t guarantee that those who moved with us would love L.A., but we promised to figure it out together.” – Cortney Novogratz, co-founder, The Novogratz
5. With a plan
“One of my first experiences as an entrepreneur was running a restaurant, which I closed as a result of 2008’s downturn. I knew this was going to be life-changing for my team. We did everything we could to ease the disruption, and I leveraged my network to place laid-off employees in new positions – nearly 90 percent had jobs in just a few weeks. As a business owner, failure is hard, but it’s an opportunity to prove yourself as a leader.” – Michael Wystrach, co-founder and CEO, Freshly
6. With reason
“After I joined Interactions as CEO, my team and I identified significant roadblocks in our product development. We had been on an aggressive growth track, but it was clear we needed to right the ship. I told my board and team that we were shutting down sales to double down on R&D. Hitting pause was an incredibly hard decision, but it was necessary to ensure we were providing the best product and experience for our customers.” – Mike Iacobucci, CEO, Interactions
This article was originally posted here on Entrepreneur.com.
Why Small Businesses Are Unable To Pay Staff Salaries
Let’s look at it from a different angle and see if we’ll arrive at that same conclusion.
We’ve heard countless times the constant conflict between employers and employees over non-payment of salaries. Small business owners complain employees don’t understand what they have to go through to ensure the payment of staff salaries.
The moment they’re unable to meet up with the payment of staff salaries, workers accuse them of being wasteful when business was booming. So the age old story of members of staff not being understanding comes up again. The cost of running the business which includes maintenance of machinery, rents, paying off loans; all these and much more which sums up overhead cost.
While it’s true that overhead cost is usually the main challenge of small businesses, it’s true only in part. Let’s look at it from a different angle and see if we’ll arrive at that same conclusion.
Usually a lot of small business owners don’t save for the rainy day, neither do they invest income generated by the business for the benefit of the business. Personal savings and investment isn’t the same with that of the business. Small business owners tend to save and invest income generated by the business in their personal names.
Let’s look at this scenario:
Mr A. is the owner of a grocery shop. People are patronising the business. Business is booming, everything seems perfect. At this point there is usually no problem paying salaries and overhead. This is the tricky part, what the employer does with the income the business is generating at this point apart from ploughing the money back into the business will decide whether he’ll be able to pay salaries when business is slow.
One would expect the owner of the store to not only save but also invest some of the income made by the business.
This is usually not the case because it’s at this point of booming business and perceived excess cash that the owner remembers he’ll pay himself more than he usually does (and that is if he pays himself salary), needs to move to a bigger apartment or better still, buy a bigger car.
The moment there is downturn in sales as a result low patronage, the problem of payment of staff salary begins. Mr A. makes it clear to his employees that the business isn’t turning in a profit and he’s using his personal money to pay staff salary. Therefore, he can’t keep on doing it and he’ll have to owe salaries.
This could have been avoided.
Do diligent – don’t dilly dally
What happened to the excess profit of years before? It’s obvious the employer hadn’t been diligent with the funds. Instead of investing the money to ensure it generates further income for the benefit of the business for the rainy day, the employer would instead use the profit for his own personal benefit.
If Mr A. had saved the money and income generated by his grocery store in preparation for the rainy day, the company wouldn’t be caught up in the quagmire it was put in.
A business is a separate entity from the founder, whether it’s a small or a large corporation they should stay so; separate. I’m not talking about the technicalities of whether it’s a company or business name. We have to realise that in order for the business to not only survive but also succeed, it must be separate from the owner.
This is one aspect small businesses must learn from large corporations with sound financial plan. There are times these corporations declare losses, yet they’re able to pay salaries! Money made by the business should be for the business. It’s not the time to buy that new car. If employers work with the mindset of paying themselves salaries (not excessive), it would go a long way to ensure the business is afloat even during uncertain economic times.
In fairness, some employers who own small businesses have been exceptional in this regard. However, the fact is, majority of small business owners don’t function with this mindset. Businesses, just like it obtains in our personal lives, have their ups and downs. The things you do or don’t do during the ups are equally as important as what you do during the downs. Save, save and save. You can’t go wrong with this. Invest, invest and invest. You can’t go wrong with this either.
That profit isn’t for spending; at least not yet. Invest the money like you would do with yours. Invest it in the name of the business. Let your business own shares in other businesses. This is sound business practice.
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