All businesses need a range of skills to be able to survive and grow. As the owner of a small business it is likely that you will be called upon to perform several roles out of necessity. You will probably find that you are better at some roles than others.
If you want your business to grow it will reach a stage when these necessary skills need to be improved and extended. Getting the right mix of people to complement and reinforce your business is essential. Having an effective management team helps you to create a more efficient and capable business.
This guide outlines the thought processes and methods that will help you when setting up a management team. It also highlights the advantages of developing an effective management team for your business.
The role of the management team
A single director or manager rarely has the combination of skills that a management team might have. Each member of a management team can concentrate on their own area of expertise. In addition, the business benefits from having its overall direction and goals viewed from different perspectives.
The rapport within a team is very important and can add further value beyond the individual talents and skills of each employee. Teams whose members relate well to one another contribute significantly to the overall success of their businesses. A disjointed management team could well put off anyone involved with your business, e.g. employees, customers, clients or suppliers. This could ultimately lead to corporate failure.
A strong management team is particularly significant if you want the business as a whole to grow and develop. As a business grows a management team is also important in spreading leadership responsibility. It is crucial if:
- your business operates in more than one location
- you are in more than one type of business/industry
- your business has different cultures, for example after a merger or acquisition
It is worth remembering that management teams can also operate at different levels. Consider establishing teams to help run particular locations or divisions. This provides additional opportunities for staff development and involvement and will benefit your business.
It may be helpful to find a training course that covers the ways a management team can support your business.
Management team skill sets
The skills required to run a business successfully include:
- sales and marketing
- procurement and buying
Not every business needs these competencies to the same degree or in the same combination. While all businesses need sales and administration skills, for some production will be critical, while in others buying ability will be more important.
A review of your business should identify skills that are important to it and those skills that your current staff, including yourself, already possess. Do these need developing with formal training or monitoring?
Some types of expertise might only be needed from time to time and it may be better to outsource as required, e.g. using a financial consultant on a short-term basis during a capital expansion phase.
Another option might be to use outside directors or non-executive directors, who can bring substantial commercial knowledge and experience on board.
One of your key tasks is to ensure that all roles and responsibilities are clear and that good communications structures are in place in both formal (management meetings, briefings, progress reports) and informal (team building sessions, general feedback) areas.
Building the team
You might like to consider the following stages in developing your management team:
- Review your business' progress to date and decide what direction you want it to go in.
- Measure your performance in the market against your competitors. Analyse any strengths, weaknesses, opportunities or threats - commonly known as a SWOT analysis - to identify what gaps there are between where the business is and where you would like it to go.
- Analyse what skills the business requires and consider what strengths and weaknesses you offer personally.
- Learn the skills, potential and ambitions of your existing staff and consider less-defined skills such as leadership qualities.
- Analyse the fit of existing skills to business requirements and establish priorities for the acquisition of missing skills.
- Establish where staff development could fill skills needs and consider reallocation of responsibilities to create a genuine team, rather than a group of individual managers.
- Re-examine any skills gaps.
- Consider other options such as consultants, outsourcing, contract workers, with a cost/benefit analysis.
- Look to permanent staff recruitment - where possible it is best to plan ahead by recruiting for future positions and anticipating any prospective skills gaps.
Training and development of managers
In developing a management team it is important to recognise that most people will need some help and training to be able to fulfil the new roles required of them - especially if they are being promoted from within an organisation.
Formal training may be appropriate to increase their specialist knowledge, but the main support will probably be to help them grow into their new management role with confidence.
There is a wide range of training options now available, including formal courses run externally or in-house. Internal, less formal training sessions can also prove useful, and individuals might benefit from on-the-job training, distance learning, or part-time college courses.
In addition to defined skills training, some thought should be given to developing team spirit and training managers in diversity and flexibility. Team-building exercises can play an important part in helping the management team to better understand and communicate with each other.
Professional performance measurement
Development of a management team is an ongoing process. Performance feedback should identify skill gaps, leading to training and future improvement.
As you delegate management responsibility and become more removed from the day-to-day feel of the organisation, you will need to have in place good systems to be able to monitor performance. A suitable balance has to be achieved. You need sufficient feedback from managers to appreciate the overall position of the business, but you also have to allow them the freedom to be able to manage their designated areas.
Performance assessment can usually be divided into two parts - measurement and evaluation.
Performance measurement concentrates on key performance indicators (KPIs), objective factors that can be clearly identified and measured, such as:
- sales figures
- production output
- financial performance
- machine downtime
Targets are the cornerstones of KPIs. Monitoring them should form part of a regular reporting system, perhaps in written monthly reports.
This should not replace more informal and subjective feedback - for example, at weekly progress meetings - to help keep you in touch. Take care to ensure that the team is not over-managed during this process.
Management experts are always considering ways of being able to quantify the less tangible factors of management performance. An example of such a tool is the balanced scorecard method.
The balanced scorecard method is a management tool that allows businesses to define their aims and put them into action. It then provides feedback that enables them to implement a program of continuous improvement.
Personal performance evaluation and rewards
In addition to measuring objective factors using key performance indicators, all managers should be part of a formal appraisal system to evaluate personal development.
A good appraisal system can be extremely useful in identifying support needs, and is also one of the best ways of judging performance, particularly in performance areas that are not so easy to measure. An appraisal allows personal objectives to be discussed and relevant tasks and targets to be agreed on.
An effective appraisal system should have four key stages:
- Set objectives - be clear in your own mind what you want from employees and make sure they know what that is.
- Manage performance - provide your employees with the tools, resources and training they need to perform well.
- Carry out the appraisal - monitor and assess your employees' performance, discuss those assessments with your employees and agree on future objectives.
- Provide rewards/remedies - consider pay awards and/or promotion based on the appraisal and decide how to tackle poor performance. However, be aware that there can be dangers as well as benefits to the linking of rewards to performance.
New assessment methodologies include the 360-degree appraisal, named from the all-round view it encourages - where input on a manager's performance is sought from as many relevant sources as possible such as managers, peers and junior staff.
Incentives at a management level need not always be financially related and can be tailored to different sorts of success. You should give thought to any major differentials between managers that might be created in any such incentive scheme.
Original document, Develop your management team, © Crown copyright 2009
Source: Business Link UK (now GOV.UK/Business)
Adapted for Québec by Info entrepreneurs