Cofounder of Advisability Group.
According to the Bureau of Labor Statistics (BLS), most CEOs are small-business owners who personally manage all company processes. However, in order to take your organization to the next level, I believe it is important for the owner to step away from operational management in a timely manner.
Often, at the beginning, you are the primary driving force and the engine of your company’s growth. But, as the company expands, the number of tasks and processes that require constant control also increases. If everything is dependent on one person, they can eventually create a bottleneck and hinder business development.
Reasons To Step Away From Operational Management
1. Focusing On Strategic Business Development: By relinquishing operational management responsibilities, you can allocate more time and resources to explore new markets, develop products and services, and engage in strategic company planning. This can enable your organization to maintain its competitive advantage and ensure its growth and development.
2. Making Deep Strategic Decisions: Operational management requires constant oversight and can distract from the long-term perspective and development of the company. Stepping away from it can allow you to concentrate on the development and implementation of strategic plans.
3. Developing Leadership Skills Within The Team: In my experience, the owner exiting operational management can create an environment for team members to develop their leadership skills, fostering a team capable of independently addressing tasks and making decisions.
Conditions For Company Readiness
There are several hallmarks that can indicate when your company is ready for this transition. One is a stable administrative and operational structure: Every team member should be aware of their responsibilities and possess the necessary competencies to carry them out. Your team should also consist of highly skilled and reliable employees who can effectively manage operations, execute your strategies and make decisions in your absence. Established relationships with clients, partners and suppliers should also be capable of continuing to work with the company even after you step back.
It’s also important to have a management and reporting system in place that allows for tracking and analyzing operational results, controlling processes and making timely decisions based on current data. Ensure that your company has financial independence and sustainable profitability so that it can maintain stability and functionality in your absence.
Steps To Success
The desire to create new projects and directions motivated me to build such a management system and transition to a different level. As a responsible manager, I devoted all my time to operational activities, realizing that there might come a point where I simply wouldn’t have time for the company’s development.
Like every business owner, I had fears: Would my company continue to operate as effectively without my constant presence in all processes? Ideally, it is necessary to establish a system where the business can continue to function and even thrive without the owner. With this goal in mind, we took a number of steps that I believe other companies can apply, regardless of industry.
1. Create a roadmap.
Bring in consultants to analyze the company’s operations, study business processes, identify what was missing for the organization to function autonomously, and create a roadmap. This should provide a clear understanding of the structure and functions of each department to optimize work and avoid overlaps and redundancies.
2. Define business processes and KPIs.
Visualize your company’s business processes using lists and flowcharts, and define and clearly establish the boundaries of key performance indicators (KPIs) for each process. Identify employees involved in these processes and appoint individuals who will be responsible for efficiency and performance. This data should be made accessible to the owners and the entire team. Consider also implementing a specialized enterprise resource planning (ERP) system to track and control business processes and an automated CRM system for effective customer management.
3. Create a development plan.
Create a company development plan and discuss it with the team, defining milestones and metrics for revenue and expenditure planning. I recommend monitoring progress throughout the year and making adjustments as needed. Make sure you, as the owner, have access to financial data and other managerial reporting of the company.
4. Outline values and culture.
Formulate an outline of your company’s values and corporate culture, including defined mission and organization priorities. These should be communicated to employees through HR specialists in order to help minimize conflict and foster a unified team spirit. Include these values in the system that you develop for hiring and training staff, as well.
5. Prepare new leadership.
Prepare a new leader within the company to act as CEO—one who shares the organization’s values and has been accepted by the team. Also, put a robust management system in place, with specialists responsible for specific processes in the company. Finally, establish a board of directors—these often consist of shareholders and top management representatives. The CEO should serve as the link directly connecting the board of directors to the business. Their role is to make high-level key decisions related to the company, participate in strategy development and monitor key metrics.
Mistakes To Avoid
As you make this transition, there are several common mistakes to avoid. One is continuing to interfere in processes through the head of the department when delegating to top management. This can disrupt the hierarchy, damage the authority of the new manager and raise questions among other employees about the need for a manager if nothing depends on them.
Another common mistake is when the owner merely “delegates” responsibilities (tasks, functions, processes, etc.) but doesn’t grant employees any actual authority. When employees lack authority, they may struggle to make decisions and take action. This can lead to low motivation, inefficiency and missed opportunities.
Similarly, avoid delegating authority without delegating responsibilities. This can result in the employee not possessing the necessary personal qualities, professional experience and skills for successful job performance. If the owner doesn’t ensure that the executor understands how to complete the task, it can lead to a situation where the owner says, “Do what you think is necessary; I only care about the end result,” and the employee responds, “I did everything I could, but nothing worked.”
Building a non-operational management system for a company is a lengthy process that requires continuous improvement and adaptation to changing market conditions and the company’s business needs. However, when organized correctly, it can enable your company to experience effective process control, goal achievement and business performance improvement.
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