Entrepreneurs love to talk about scaling their business.
They love to talk about growth.
The problem is they also believe that the existence of their company is dependent upon them. Without them this company would whither and die.
In the beginning, that’s true. They took an idea and manifested it into reality. Then they had to nurture it for some time before it proved it could live on.
The problem comes with the time span between when an idea is first brought into reality and when it is successful enough to live on. The longer that takes, the more the entrepreneur’s identity is wrapped up in the business.
As this company grows in revenue, entrepreneurs start hiring. Almost always they hire technicians first. People who have a sole job to do such as a developer to help code the backend of an app. Eventually, the entrepreneurs have more technicians than they can possibly manage and still do all the other things required of an entrepreneur.
The entrepreneurs then hire their first manager. Maybe they get lucky and can promote a technician to manager. Either way, they have formed the beginning of a leadership team — a requirement of continued growth.
What happens next no longer surprises me…
They don’t trust the manager.
The entrepreneurs continue to manage the technicians while taking on the responsibility of managing the manager. They treat the manager as if he/she were just another technician to be directed, not as part of the leadership team. They don’t trust the manager to lead his/her team.
Within a month or two, the new manager begins to act just like a technician — waiting for the entrepreneur to issue a directive and follow it.
Soon the business stagnates.
Revenue growth slows to a crawl.
What used to be 50% to 100% (or more) growth year-over-year, becomes 10%. For a large, mature company that’s pretty good, but for these entrepreneurial companies that stagnation tends to hit under $1 million in revenue. Meaning they’ve stagnated before they ever really got started.
This is typically when my clients contact me. They know they’ve got a $5 million or more business in them, but they’re frustrated because their team isn’t executing. The team waits around for the entrepreneur to tell them what to do next.
If this has gone on for several years, and for the people who hire me, it usually has. They don’t trust their team to do anything without their explicit approval. They have institutionalized themselves as the ultimate bottleneck.
Most of my clients, at some point, blame their team for the stagnation and “forcing” them to be a bottleneck. Though not so deep down, they know they did it to themselves.
How to stop being a bottleneck and trust your managers to lead.
The goal is to institute a trust-but-verify system that works for the team, but also makes the entrepreneur feel comfortable letting go of some of the reins. To continue growing, entrepreneurs must learn to trust their team and to do that they need a way to verify the company’s objectives are being met.
Elements of a Trust But Verify System
- Clearly defined responsibilities (desired results/outcomes) for team members
- Formal delegation meetings
- Formal communication channels
Clearly Defined Responsibilities: Most entrepreneurs don’t have a clear understanding of what they want their managers to accomplish. They don’t know the results they need from their managers to achieve the business’ vision. On top of not having clear responsibilities for managers, many entrepreneurs don’t let their managers have the authority to fulfill their vaguely defined responsibilities.
Formal Delegation Meetings: Instead of having a meeting when a manager is hired, or worse, the responsibilities were only communicated during the hiring process, formal delegation meetings must occur to set the manager up for success.
Let’s set a working definition of what delegation is and isn’t. Delegation gives responsibility and authority to complete a result. It isn’t an order to complete a task exactly the way the entrepreneur would do it. It isn’t abdication, either. The entrepreneur should not give an assignment to a manager, forget about it until it is due or something goes wrong, and then blame the manager for it not being done or done incorrectly.
Formal Communication Channels: “My managers ‘know’ they can come to me anytime” is not a good enough communication system. Define how and when management communication should occur. This doesn’t exclude allowing managers to come to you when necessary.
If a chat app is used, there should be a leadership team channel with guidelines for its use. If email, then there should be a subject line designation to define it as a leadership team issue. No matter the tool or how it is implemented, managers should know what to bring to the entrepreneur and when to do so. Weekly reporting and leadership meetings tend to work best for smaller companies (< 150).
There are two types of leadership meetings: management team and individual. Weekly leadership team meetings can focus the company on highest priority objectives and catch anything that isn’t working according to plan. Weekly individual meetings can make sure the entrepreneur and manager clearly understand what the other wants and needs. Individual meetings are a great time for entrepreneurs to coach managers to help them become better at their jobs — even preparing them for advancement in the company.
Reporting: A manager should know what key performance indicators should be tracked, measured and reported as they would have been discovered when defining the manager’s responsibilities. This report could be something as simple as a Google Doc or Sheet or as complex as a reporting dashboard.
A manager shouldn’t have more than 5 or 6 KPIs to report or he/she will be spending a lot of time just doing reports and the entrepreneur will be spending a lot of time reading reports. A good structure to follow is 1) this is what my team/department did 2) this is what we will do next week 3) this is what went well and 4) this is what we need help with.
The ‘Perfect’ Trust But Verify System
I’ve not found a perfect system to trust the team while verifying they are accomplishing their responsibilities. Team dynamics are complex. Not only does the system have to account for the entrepreneur’s personality, strengths and weaknesses, but also those of the leadership team.
Use the guideline above to develop trust-but-verify systems throughout your company. As the entrepreneur you need to look at yourself to see where you’re not trusting your leadership team. You also need to look at where you are trusting them, but not verifying their results.
Try not to make it complex. Complexity breeds non-compliance with the system for the leadership team, but also for yourself. Too many moving parts and too many KPIs and you’ll stop paying attention — you’ll abdicate instead of delegate.
You might even blame your team for your abdication of your role as the company’s leader.
Once you get comfortable with trusting, but verifying, your company will start innovating and growing. Ideas and initiatives will flow from the bottom up and eliminating the need for you to be a command-and-control leader.
You will be at the beginnings of a team-driven business.