Libraries full of business books offer “best” management practices from professional gurus. Some books constitute wonderful resources, but others have been debunked.
Within two years of the release of “In Search of Excellence” by Bob Waterman, a third of the firms on the list of “America’s Best Run Companies” had declined, performing 22 percent worse than the average company on the Standard & Poor’s 500. If experts such as Waterman could get it so wrong; where should we look for credible sources on best management practices?
According to Larry Farrell, the author of “Getting Entrepreneurial!,” one reason companies struggle is what contributed to their initial success is forgotten — and that’s the entrepreneurial spirit of company founders. “Too much managing against too little entrepreneuring sets in motion the painful cycle of decline.” As markets change, so do businesses. The key is to recognize the company’s life cycle. Of the top 100 U.S. companies in 1990, only a small percentage remain. They fell victim to bloated bureaucracies and forgot the entrepreneurial spirit that helped them grow.
There are some solutions, though, to avoid becoming an oversized, over-managed bureaucracy rather than an entrepreneurial, high-growth organization. Here are two suggestions:
Keep it small. I’m not talking about profits or customer counts, but company culture and even core strategy. When Howard Schultz returned as chief executive officer of Starbucks in 2008, he took such drastic actions as briefly closing stores to retrain staff and redesigning the menu as a way of going back to core principles. Starbucks stock subsequently rose from $4 to $55.
Johnson & Johnson sets another example of a large company that follows the keeping it small philosophy. Employees work in what’s touted as a small company environment with big company effect. A staff of 127,000 is divided into 250 subsidiary companies, which equates to an average of about 500 employees a division.
Keep it honest. Possibly even more important than keeping it small is the notion of ethical leadership. Build trust through transparency. Be straightforward and transparent about the challenges of the business and financials without breaking confidences. Candor fosters trust and understanding among employees. In one recent job satisfaction survey, 64 percent of respondents described trust between senior management and employees as “very important.”
To build trust, it’s essential managers communicate the purpose of their actions as much as possible. Debbie Kukla, vice president of OI Global Partners, put it this way: “When the vision, goals and expectations are known to the work force, the message is clear: They are part of something bigger, their hard work pays off and they are valued and respected. In short, they count.”
By avoiding disingenuous communications, modeling expected behavior and not allowing financial pressures to result in lapses of ethical judgment, managers will gain the trust of employees.
Inculcating these two dynamics into company culture improves the organization. It took entrepreneurial spirit to start your venture and hard work and sweat equity to grow it. Don’t squander all that hard work by transitioning into the quagmire of middle management conundrums. Remember your roots. Think big, but act small. By all means, remain honest and forthright with your employees. Doing this will help you avoid headaches and allow your business to thrive for years to come.