In Friday’s post, we explored the first ’switch point’ in the life of your business. Let’s take a look at the second…

At the second switch point, at around the £5-10m+ turnover and 40+ employee mark, your business moves out of the consolidation phase. The leadership group’s focus needs to move away completely from day to day operations and become Directors, with their focus on strategic, financial and legal issues. The second tier of management should take over the day-to-day running of the organisation.

How will you know when this has happened?

  • Your second tier of management get frustrated if you remain too ‘hands-on’; they are itching to get on with managing the organisation
  • There is little or no business planning, or resistance to the process, and no accountability
  • The Directors still do most business development, trouble shooting and conflict resolution
  • There are no obvious future leaders in place
  • ‘Silos’ develop, and there is fingerpointing and blame
  • There’s a narrow focus on one or two areas of the business ‘scorecard’
  • People ‘go through the motions’ with performance appraisal
  • People talk about ‘the old days’ and complain about bureaucracy

What should be happening instead?

This is the time in the life of your business when you must become a Director, transferring ownership and accountability for the development of the organisation to your second-tier management, and letting them get on with it! Too often organisation leaders stifle the life, initiative and motivation out of the people below them. Now’s the time to delegate day-to-day work and instead provide:

  • Clarity of purpose
  • A clear organisation structure, with clearly accountable departments and roles
  • A unified culture, based on effectively communicated values
  • Rigorous measurement and management of performance
  • Effective business planning across the full breadth of a balanced ‘scorecard’
  • Continuous improvement
  • Succession planning, developing top performers and future leaders
  • Recognition and reward for great performance and effort

In phase 1, ‘start up’, everything is about ‘doing’. In the next phase, ‘consolidation’, you and your teams need to learn to ‘manage’ and ‘do’. In phase 3, you leave the ‘doing’. Now you must both manage and learn how to direct managers in your business. You must get to grips with the ‘corporate’ bits – roles, responsibilities, departments, specialist functions and specialist people – some of which you might not immediately know how to organise and manage.

Take an objective look at your business

Being very close to the business, it’s quite easy for you to miss the switch points, and only notice looking back months or years later that something has changed: issues to do with the ‘organisation’ – people issues, underperformance, conflict – are impacting your ‘business’. There are ‘cracks’ in the organisation which will ultimately compromise the effectiveness of the business and reduce its value.

But, if you spot the switch points in good time, there’s a lot that can be done to avert the problems they can cause.

At Leaders Lab, we can talk you through the lifecycle of your business, help you identify what’s happening and coach and train you in the skills you need to handle it. Give us a call!

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