Management by Objective

Management by Objective is not a new concept. It has been written about in many books and articles over the years. If used properly it can be extremely useful to any company. I used this in a company I owned many years ago. It was so successful I continued using MBO in every company I owned after that.

The concept is very simple:

• Create a set of goal for your company. When you do this make sure you include your management team. This way they will buy into and take ownership of the concept.

• You will have the overall goals for the company such as increased profits, increased market shares, etc.

• Present the goals to the whole company

• You then set divisional goals

• You then set goals for each individual within each division

• Make the rewards whatever you think will motivate the whole team

• The rewards are only realized when all employees act as a team. If there are slackers on a team, the other team members will put pressure on them to produce or leave.

This is a great team builder. But remember, if the CEO and by extension the management team is not fully committed to this concept it will not work.

Benefits of a Board of Advisors

Most small and medium size businesses think an Advisory board is just for big companies. Nothing could be further from the truth.

I have owned several businesses during my career. I have made more mistakes than I could count. However, I think the biggest mistake I made was one of omission: not having a Board of Advisors.

The CEO/Owner of a business is the BOSS, the decision maker, the visionary, the person at the top. This person will surround him/herself with a strong management team presumably. As a team, they will create the strategy to take the company forward. However, the company/CEO may need more than that to reach both his/her personal and business goals. This is where a Board of Advisors could be of crucial importance.

Assembling a Board of Advisors is as much an art as well as a science. Each member should have skills/experience in an area of expertise that will be helpful in advising and guiding the CEO. They should also posses access to other outside people that the CEO in the ordinary course could not reach. Board members will have a fresh outlook of the company. Bring new ideas to consider, do not be afraid to criticize the CEO. Be available when the CEO has an issue to discuss.

Members of a Board of Advisors should be paid for their services. Asking them to take a half to a full day of their time for a lunch or dinner is not a way to pay them for their expertise, experience and advice.

I have served on many Boards of Advisors. The CEOs that take this activity seriously will benefit greatly from it.

What Makes a Good Business Leader?

There are all kinds of ways of defining a good leader. Therefore there are no right or wrong answers to this question.

I think the best leaders are determined by results. However these results can be measured both quantitatively and qualitatively.

Quantitative:

• Did he/she attain the stated sales/profit goals?
• Did he/she attain the stated increase in market share?
• Did he/she launch an important new product successfully?

However, in many cases, the Qualitative measurements are at least if not more important in certain circumstances such as in a “turn around” situation or a new company start-up in its later stages.

• Does the CEO (leader) have a clear vision and able to articulate it to management?
• Has the CEO (leader) recognized his/her weaknesses and hired people who posses those strengths to fill those weaknesses?
• Is the CEO (leader) able to “rally” the troops to get the job done?

Both of these measurements are very important. Although sales and profits ultimately define the success of a good leader, long term success relies on the qualitative as well.

Hey, no one said this was going to be easy!

Bad Bosses are Bad News

I recently read an interesting post on Harvard Business Review's blog, called How Damaging Is a Bad Boss, Exactly?  Having witnessed the ill effects of poor leadership in businesses throughout my career, I believe that is a significant determining factor in a business' overall success (or lack of same).

Bad bosses cost the company in so many ways:

• Loss of good employees - the better the employee, the less tolerant he/she will be of a bad boss
• Cost of replacing and training - for every good employee you lose, there are valuable resources used to try to make up for that loss
• Bad morale -  your service will certainly suffer with a bad boss, as customers will bear the brunt of your employees' unhappiness
• Loss of productivity -  your business' production will certainly underachieve, if not suffer, due to lack of motivation

It is incumbent upon senior management to recognize bad bosses early and to replace them with good ones quickly. If not a company will have nothing but trouble going forward.

If a good employee is honest at an exit interview he/she will tell why they are leaving. Management should investigate immediately, and act quickly and decisively!