Bruce, Heather, Brian, Pat and Tom all have one thing in common. They are business owners who one day want to reap the rewards of their hard work and commitment to businesses they created 20+ years ago. Every time we talk, they ask, “How do I build value in the Company?” “If one day I want to sell it, what do I need to do to get it ready?” They may be ambivalent about when, how and to whom they would sell, but they know they want their businesses to continue long after they are gone. They also want to be compensated fairly for their “investment.”
When I first started working with each of these owners, they had individuals in management positions but all were frustrated that these individuals weren’t acting like managers. The owners felt their businesses were still too dependent on them, that the managers relied too much on the owners to make decisions and solve problems in the managers’ areas of responsibility, and the owners didn’t know how to change that.
Any business cannot be dependent on one person. To be of value, an organization must have strong leadership team that drive the strategic direction and the day-to-day operations of the company. I’ve built leadership teams for years and know that, for the most part, managers want the responsibility and authority to do their jobs, yet the conditioned behaviors of both owner and managers keep this unproductive, defeating cycle of dependence in play.
So how do you create a strong leadership team? It takes hard work from both owners and managers. Owners have to decide who will be on the team, be clear about the role they want the leadership team to play, and who will make what decisions. Managers have to clearly understand what is expected of them as managers and as members of the leadership team, and be held accountable to fulfill those expectations.
The real work begins when the leadership team meets for the first time. I typically kick off the new team with an off-site meeting. The most important outcomes of that meeting are to 1) develop a shared vision for the company, 2) set company goals, and 3) establish operating agreements for how the team will communicate and work together, hold each other accountable, make decisions, hold honest and productive conversations with one another, and run their meetings. We also spend time identifying the conditioned behaviors that need to change for the team to work. This requires that both owner and managers commit to change, which is not an easy task.
It is, however, truly magic when a leadership team becomes a relied-upon resource for the owner. Managers do step up and take responsibility, and owners let go and begin to trust that the managers can and will run the business smoothly with or without the owner present. For owners, often they begin sleeping better at night, taking some time off and working “on” the business not “in” it. At the end of the day, a strong leadership team is the solution to making your business stronger and more valuable so that when and if the day comes, the return on your investment is realized.
By Theresa Gale,
PRINCIPAL, TRANSFORM, INC.