When Your Organisation Overtakes it’s Staff

A new client of mine told me about a blog he’d read which had made him recognise a potential issue that lies ahead. It struck a nerve and had a very positive effect on my client by getting him to anticipate and begin thinking about handling this scenario. However, there are some important considerations the blog didn’t highlight. This is the blog he referred to- http://bhorowitz.com/2012/04/24/demoting-a-loyal-friend/.

This is all about how to deal with the scenario that during high growth, the competence required by the organisation may be above and beyond the capability of your current team- and more to the point, this can include co-founders, best friends or family members. There’s an obvious dilemma here- do you appoint the right person for the role, or allow someone who isn’t up to the requirement to continue?

The blog told of one business owner’s experience, when he’d realised that he needed to appoint someone else above his loyal friend. He had come to the conclusion that he needed to consider everyone in the organisation when to role had to grow, and decided on promoting someone else above his friend; the focus of the blog was on how to manage the transition and maintain the friend’s loyalty.

But, there are other things that should be considered here. First, you’d do better to widen your options beyond other employees- if there’s a job that needs doing, the right person might be already employed, but if the role is critical to growth, then you need to consider external recruitment too.

Next, one important strategy for handling the potential kickback from the loyal friend and other staff seems to have been overlooked. It’s essential  to communicate clearly the context of organisational development to all staff. To me, this seems better handled as developing the organisation rather than “demoting a loyal friend”. If the business owner considers it to be demotion, he’s missing the bigger picture. As well as creating new roles now, set and share a vision of how an enlarged structure may develop long-term, so that you and employees and your loyal friend can see what progression opportunities may lie ahead. Couple this with a commitment to support personal development too, and for some the reality that they need to play catch-up in the context of an exciting, fast-growing organisation can be highly motivational- they’ll step up to the mark given time, but can’t change overnight. If people don’t get excited by stretching and growing themselves, you have to answer the question “are they right for the organisation?”

Finally, the way a business owner decides to progress will depend on emotion. Does the ambition for growth outweigh sensitivity to other people’s embarrassment or feelings or betrayal? Only he can decide.

I’m looking forward to helping my client deal with these challenges and more as we begin a growth coaching project.

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A Style for all Occasions- Revisited

A couple of months ago I posted here about my new client John, who I’d helped identify the missing link in his application of leadership theory. He was going to try out the idea of situational leadership… so here’s how he got on.

John had tried to be more assertive and dominant in “telling” people what he wanted from them, and his own staff had been telling him that was what they wanted to see from him. He didn’t delegate enough. But he was perplexed when in practice he found resistance to his new, robust approach. What was missing was that John needed to CHANGE his leadership style according to the situation.

So, he’s now had a couple of months to adjust his style- and of course we’ve had a few more coaching sessions too. Bingo! After his initial worries about appearing to be inconsistent, feedback from staff and John himself is positive. Sure, not everyone is now getting an easy ride (why should they!), but respect for John as the business leader is at an all time high. What does this mean in practice- as we know, feelings can’t be measured as profits… or can they?

This is what John identifies as measurable outcomes of applying situational leadership:

1. Management meetings are on average shorter, now accounting for 6 hours a month compared to 10 hours

2. He gets far fewer interruptions from managers and other staff- he estimates now he’ll only have to spend time on 2 or 3 occasions a week with staff one-to-one on an unplanned basis (previously was three times that)

3. He spends much less time (about 1 hr a week down from 8hrs) chasing people up for results or feedback. He delegates well (always has been good, just didn’t delegate enough), and this hour is now all he spends hearing from his managers what they’ve done in response to delegated targets or issues.

4. His managers (there are only 3) now deal with almost all day-to-day stuff. They have weekly meetings with their staff, and he doesn’t even get invited- great! Result is, the teams he created now function as teams, and staff don’t bypass their managers by seeking out John as the soft touch.

5. John takes a day a week off- and enjoys it. Well, I say “off”, but it’s actually working from home.

6. The “killer” statistic? He’s had time to find, research and bid for 6 tenders (3 a month), and the company has heard they’ve won 2 (with 3 still undecided). Now that’s a result- or will be when he gets his managers to deliver on the contracts!

Will Government-Funded Support Ever Be Clean?

Stories of corruption and fraud within government-funded training and support programmes are nothing new. This an inherent training industry phenomema whenever funding is in the equation.

Despite presumably considerable efforts to clean-up and then hush-up bad and illegal practices on the part of government agencies and their contractors, we still hear leakages through the media of more allegations of falsifying beneficiaries signatures, pretending to provide employment, cheating on qualifications “tests”…  Yes, it’s the same old same old. And if eventually the rogues are brought to book, are they held aloft as scoundrels and publicised as a deterrent? Of course not! Quietly does it is the name of the game- you have to look hard to find out who’s been caught out.

Call me old-fashioned, but wouldn’t tough penalties and wide publicity for those who cheat be helpful in discouraging others who may be temptedt? So why is this cheating and swindling allowed to be swept under the carpet?

One reason could be that the responsible government agencies feel they’re an inherent part of the problem! Does political self-preservation and jobsworth mentality take priority over honesty and ethics? Is it more about avoiding embarrassment than assuring value for public money? Civil servants and contract managers shouldn’t go to ground when bad news leaks out- they should be jumping on the opportunity of free publicity and media interest to stamp out malpractice among their contractors and demand the toughest sanctions.

And will the level of fraud and ripping-off reduce? Of course not! The demands of cut-backs require contractors to do more for less, with a lighter-touch contract management… now I wonder what the effect of that will be?

First Signs of Realistic Support from Banks!

Well done RBS Group- I think you’ve managed to make a first small step towards winning back a little confidence from small business owners.

Here’s a government-backed scheme that understands what small firms need right now, and delivers it without complication. If you need to finance growth but struggle to raise the deposit for a loan or would find the repayments tough, how would a 20% grant help? Or if you’re in an Assisted Area, you could add another 15% to that. Not bad eh?

The RGF (Regional Growth Fund), which has previously been open only to major bids of £1m plus, has now found its way into the domain of individual small businesses, and RBS Group have a £70m fund to distribute- they’re going to do this by offering grants of £5k to £500k to businesses that they would otherwise have turned down for loans or Lombard lease purchase schemes. You don’t have to bank with them either. The process sounds simple, tucked away in the bankers’ back offices so SMEs don’t get drawn into the bureaucracy. It won’t slow down a loan or lease purchase application period, which could be a few days to a few weeks.

What are the catches? Not onerous actually. You’ll need to show your growth will create employment– this scheme overall has to create or safeguard just 2,000 jobs for it’s £70m of government cash- that’s one job per £35,000 of grant, so if you worked on one per £20,000 you should sound an attractive proposition.

You’ll need to use the cash to assist the purchase of an asset– so could be property (for your own use, not for development!), machinery, equipment, vehicles (not cars) etc. Someone asked me if they could use it to instal solar panels- and why not, so long as that purchase enabled the recruitment of at least one more employee.

Your finances must be tight enough that RBS would have turned you down under their normal commercial terms- bet that’s not difficult! And be based in England, excluding London and the South-East, with no more than 250 employees.

By the way, all the banks had a chance to run this scheme, and all except RBS/NatWest/Lombard, and a smaller similar programme run by HSBC (only if you bank with them) turned it down. Come on you lot, what else will you offer to get back onto our Christmas card list?

(more about government funding at phmc.co.uk/pages/funding.aspx)

Chicken or Egg?

I quickly discovered that my latest clients had been in a true chicken and egg situation for some time, and their sitting on the fence could have lost them a market opportunity.

Two owner-directors (husband and wife) had been getting more and more stressed and both knew they’d hit on a great new service linked to another part of their electrical services business. And initial uptake from existing customers to whom they could easily cross-sell was very encouraging.

So why the dilemma?

One was risk-averse. Not unusual, and not unhealthy. But that wasn’t the real sticking point. They and their staff (11 in total) were being run off their feet by the upturn the new service had brought. Mistakes were happening  but fortunately being found before customers found them. They knew this couldn’t be sustained. Wasn’t the answer staring them in the face?

Yes- and they knew it! Of course they needed to take on another member of staff- probably two, and certainly more further down the line. Neither was “up for it” though, and they didn’t talk enough to realise why. The unknown issue was that the other partner was unhappy about taking anyone on just in case it didn’t work out; not because of any financial risk to the business, but because it would be harsh on the new employee. Now that’s a concern I don’t hear too often these days!

A couple of hours later, and after much probing and soul-searching, I’m delighted to say the overly-considerate employer came to terms with the reality that people have to take risks, not just businesses. As long as a recruit knows there’s no guarantee, there’s nothing at all unfair about that; wouldn’t it have been more unfair to deny someone the chance of a new job?

Early days, but the new customer service assistant has already settled in well, and the pressure is starting to be relieved! We’re all optimistic the growth will continue, but if not- would it really be unfair to return someone to the Job Centre? Of course not!

A Style for all Occasions

One of the first issues for me to handle with a new client- let’s call him John as that’s his name!- was why his “new, improved leadership style” wasn’t working. John had attended a one-day seminar in Leeds when he learned much about how to lead and delegate. Sounds like he really took it in, made sure he understood, and then had the confidence to apply the new knowledge.

So what’s his problem? Well, John had often been criticised by his managers, and people outside his business, for not delegating enough, Some people told him he didn’t let go, took too much on himself, carried the business on his own shoulders. This isn’t a large business- just 39 staff in total, so John is pretty involved operationally, and certainly day-to-day; not a distant leader who sits in an ivory tower.

He left the seminar and reflected on his own leadership & management style, and made a determined effort to be more assertive- “started laying down the law” was how he described it. He actually enjoyed this change of style, at least for a while.

When we met last week he wasn’t convinced about “management theory”, and was losing confidence. “I’m getting so much resistance, even people who wanted me to be like this are retreating, not talking to me so much. This isn’t shifting the workload from me to them”

By the end of our session, the problem was identified and a different approach is being tried from this week. What John, or the presenter, had missed from the seminar was the essential principle of “situational leadership”. (For those who love management theory, look up Hersey & Blanchard.) There needs to be recognition that as a leader (or manger), you don’t just pick a particular style from the leadership cupboard and use it in all situations- you do however need to know what’s in the cupboard, and when to use it. This applies generally to a team as the team “matures”, progressively adjusting your style from “telling” to “selling” to “participating” to “delegating”. John recognised he wasn’t delegating well, but hadn’t realised that not all his people were yet ready for that. He missed that he needs to adjust his style depending on the team, and individual manager. Ah, the value of coaching! Watch this space to see how John progresses…

Funding Allocated to LEPs

LEPs around the country have been allocated funding of almost £500m by government from the “Growing Places Fund”. This money is to be used in projects that will create the local environments in which businesses can grow- in the main, developing brown-field sites, enterprise zones and business parks. This is the future of the present governments funding for business- less support for individual businesses, and more emphasis on creating the places they need to flourish. So get used to it- it shouldn’t be a surprise!

Local Enterprise Partnerships are inconsistent in their approach across the country. In this neck of the woods D2N2 (covering Derbyshire & Nottinghamshire) are letting us now what they’ve secured, and seem more proactive and communicative with businesses than most. They have fared better than most with almost £18m secured- well done, and here’s hoping it’ll make a difference! Greater Manchester LEP don’t realise it’s 2012 yet, and are still celebrating the appointment last year of their board members (come on, catch up!). Sheffield City Region have just over £12m, and Cheshire & Warrington LEP have almost £9m to spend.

Much of this money will used to enable some projects that had previously been put on hold to go ahead, and there’ll be some opportunity for new projects to be considered too. This isn’t your chance to cash in as an individual business, remember the focus is on business communities. So if funding is still important to your business, you’ll need to find ways of getting involved with the LEPs and business partners to encourage and support bids, think of ways of investing the money locally that removes barriers to growth of businesses, and ultimately reap rewards as a member of the business community rather than directly.

Keep tabs on PHMC for more information about business funding.