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!

Decision Making

It has been my experience, both when I owned my own business and while working with clients, that the Decision Making process is arduous, difficult and sometimes gut-wrenching and very time consuming.

One example is the termination of long time employees.

I found this to be the most difficult of all decisions. People who had been with me for many years were just not able to perform as the business grew. They had reached their “Peter Principle”. They were dragging down their co-workers, slowing growth and causing co-workers and themselves not to receive bonuses. 

The decision to terminate comes after working with them for significant periods of time to get them to change were fruitless, but sometimes you still just can’t do it.

Well, you finally decide it has to be done. When it’s over and they are gone, you look yourself in the mirror and ask “why didn’t I do this a long time ago?” Everything is running a lot smoother. My team is happier, productivity has increased dramatically and teams are receiving bonuses again! Why did I wait so long?

There is no easy answer, and I am not advocating “pulling the trigger” too soon. However, putting off too long can cost you a lot on the long run. I know, I’ve been there.


Here are some tips on handling this unfortunate, but sometimes necessary function.

Family Businesses That Work Well Together

I recently read a good article on the FastCompany.com site titled How Great Family Businesses Skirt The Feuds, And Other Pitfalls, on how three different family businesses have managed to run successful organizations without the resentments and turf wars that often infiltrate such situations.

This article discusses the importance of trust and collaboration, and clear delegation of responsibility.  While these are not radical concepts in the business world, they often become more challenging within the family dynamic.  It's interesting to read how these businesses navigated these issues.

If you work in a family business, I'd be interested in hearing how you have dealt with the complexity of running an operation and keeping peace in the family.

“Delegate and Trust”

I recently read an article in the April edition of Entrepreneur Magazine by Christopher Hann, entitled “Control Issues -  as your company grows how do you transition from start-up entrepreneur to leader?" The online version is titled a bit more pointedly: Can You Evolve From Control Freak to Emotionally Intelligent Leader?

Mr. Hann quotes extensively from Professor Ed Hess and his book Grow to Greatness: Smart Growth forEntrepreneurial Businesses. Professor Hess’s research has shown that successful entrepreneurs go through stages: from owner to manager to leader to coach. In this process, Hess says, they often need to adopt personal qualities that conflict with their very makeup. That is they must delegate and trust.

I can identify very well with this. I owned several businesses in my career from retail, distribution, assisted living and others. I learned many times the hard way that delegation of responsibility and trust is the only way your company will ever become truly successful.

As an example, I once went away for a three week executive education course. I would diligently call in each day to check on what was going on. A few days after I left, a real disaster occurred. Certain industries, as you know, are bound by specific rules and regulations, and even one employee violating those regulations can injure the entire business’s standing. In other words, a disaster. And not a good time for me, the owner - the Boss - to be away. But my COO was ready for the task at hand, and handled everything to a satisfactory resolution. I didn’t even learn about the matter until after the fact! It was then that I realized the power and potential of delegation and trust.

I won’t kid you; delegation and trust is very difficult at first for most of us small business owners.  You really have to hire well.  And train well.  And communicate well. But once you’ve got the right people in the right jobs, you’ve got to get yourself out of the way and let them do their jobs themselves.  Once you break through that barrier it will allow your business to thrive.

Identify and focus on your strengths - this is where you will do your business the most good - and delegate those other tasks to trusted associates. Try it, you’ll like it. And so will your management team.

Best,

Jeffrey Ross

If you would like to discuss business & leadership matters further, please feel free to contact me. I would be happy to meet with you.