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As small businesses mature, their evolving human resource needs require filling key positions with employees who have different attributes than those who contributed to the company’s initial success.
A business’s first employees are individuals who follow the owner’s lead and work to realize his or her unique vision for the business. These employees are “helpers,” a term first used by Robert Scheer in his book Mighty Midsized Companies. For a start-up company, “helpers” are essential, but as a business gains traction and grows, it needs employees with a very different set of attributes. Scheer calls these workers “leaders” and posits that maturing companies need to focus recruiting efforts on them. The new hires should be proven leaders in their own right— self-motivated, goal-oriented — with a proven track record of accomplishments.
By hiring “leaders” for key positions, an owner can build a skilled management team — a back bench, so to speak — that can run the business in his or her absence.
Having a team in place pays off in several ways, explained Lise Stewart, Principal-in-charge of EisnerAmper’s Center for Individual and Organizational Performance. “First, it offers owners better work/life balance…which means the owner can finally take a day off! Second, it allows the owner’s focus to be strategic rather than operational, which can lead to greater long-term growth and a more valuable business. And third, it makes the business more attractive to potential buyers who are risk averse and want a turn-key business they’re confident will be successful from day one.”
Selecting leaders
Stewart recommends owners look for “diversity in thinking but cohesion in company culture” when making these hiring decisions. In other words, the fresh ideas and opinions of “leaders” are welcome, but their business values should match those of the company.
Of course, putting leaders in key positions may mean replacing or modifying the responsibilities of loyal “helpers” who have contributed to the growth of the business.
“In many cases, they’ve become friends as well as employees,” said Stewart, which means emotions can run high. That’s why Stewart recommends making the process objective rather than subjective. She suggests the first step is for owners to sit down with their relevant “helpers” and departments to go over the strategic plan.
“Let the strategic plan dictate what knowledge and skills are necessary,” she said. “When “helpers” recognize that they don’t possess those qualities and their opportunities for advancement have changed, they tend to self-select out.”
Stewart offers an example of this, describing one 12-year-old business whose weakness was marketing. To strengthen the department, the owner wanted to hire an experienced senior vice president of marketing. Stewart and the owner crafted a job description that called for a “leader” with a successful track-record of managing a marketing team and achieving measurable results.
When the “helpers” on staff saw the job description during a group meeting, they realized they didn’t have the skills and experience to do the job and self-selected out of applying for the position. Stewart said that the company wound up hiring an excellent manager who did an outstanding job. That experience led the company to hire “leaders” in other areas, including technology.
Passing over
Using an objective approach can also be successful when a business is family owned. After hearing the long list of necessary competencies, the adult child who always dreamed of being CEO may recognize that they’re not a match for the job after all.
“It spares the family from having to hurt someone they love by telling them they’re not qualified for the top job,” Stewart said. “Often, when the family member self-selects out of being the next CEO, they’re open to other positions they didn’t know existed and for which they’re a much better fit.”
The sayings “no one is an island,” and “it takes a village,” come to mind when thinking of the importance of a management team. While many owners readily embrace the concept, others do so only after seeing the downside of being without a team.
“An owner will come to realize that they can’t take time off because no one else even knows the computer password let alone how to run the company,” said Stewart. “And it happens more often than you’d expect.”
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EisnerAmper’s Center for Individual and Organizational Performance is not a subsidiary or affiliate of Massachusetts Mutual Life Insurance Company (MassMutual) or its affiliated companies.