The Small Enterprise Guide to Management
When we hear the word management we think of many different things – human resources, hierarchy, “the boss” – but for small business owners management is simply running the business. And it is often up to the small business owner to wear all the management hats – HR, finance, marketing, quality control, etc. The Giersch Group’s consulting practice is aimed at helping small business owners and nonprofit executives fill that management role in a way that is organized, comprehensive and effective.
On our News page of this website we have several papers constituting a small enterprise guide to accounting. Those cover perhaps the most important part of management – financial management. But in the consulting area of the Giersch Group we concentrate on all the other aspects of management, but primarily HR.
Perhaps the most important thing to remember about management is that it implies scarcity. When something needs to be managed, it is usually lacking in some way. You have to manage your money because there’s a finite amount of it. You manage your time because there’s never enough. The same applies to all areas of your business; resources are not unlimited, and therefore it is us to you to manage them in a way that will produce a profit.
The Giersch Group has produced a series of papers on the topic of management to bring clarity and guidance on this important topic.
Building Your “Company Way”
What is Your Company Way?
It is natural to believe that your company is better than the competition. It is healthy to regard your staff as superior, your products or services as exemplary, and your systems as more efficient and effective than that of other companies in your space. There may be times when you doubt these superlatives, but despite the challenges, you believe in your company and its ability to serve a customer.
You have a competitive advantage. There is a reason why the customer should choose you over the competition. And yet, articulating that advantage can be a challenge. It is the challenge that comes with all things which are overly-familiar to us. We can know a thing so completely and so instinctively that it is difficult to put it into words.
Being able to reflect upon and articulate what makes your company special is an essential step in creating a company that has enterprise value -- a company that can be sold. In order to sell a company, the value you are selling has to be identifiable and transferable. The best place to find a company’s value is in its systems. Systems are identifiable because you can see them being implemented; and the profits they produce witness to their efficiency. Systems are transferable because good systems transcend the impact that any individual factor by itself can have on a business. Good systems also create the ability to deal in volume, which is the ultimate method of reducing revenue risk. This is what we see in a franchise or a successful national chain. These systems are tested and proven to work.
These successful systems can be referred to as the Company Way – for example, the Starbucks Way, the Hilton Way, the Walgreens Way, etc. When the Company Way is successfully implemented it has a powerful effect on customers. The customer wants to conform to the company way. Witness the amount of people who can order a complex beverage at Starbucks, or put together their own sandwich ingredient by ingredient at Subway. The customer may feel that they are in charge, but the “way” has shaped their behavior within a narrowly defined set of boundaries. By staying within these boundaries, the customer allows the company to stick to its way, while still delivering a superior product. This ability to train the customer is another very powerful effect of a strong and successful Company Way.
Creating the Way
A successful Company Way has just two aspects: technical and relational. The Company Way is about how we do our work and how we relate to people. You’ll find these two things mentioned in the mission or philosophy of almost any company.
The technical side covers the entire process surrounding the delivery of a product or service. This informs how the company does what it does, and often why it does what it does. In technical matters the company often takes one side of some academic argument in their field, or even refers to an ideology or philosophy that underlies their motivation. The technical piece of the Company Way explains why, in the company’s eyes at least, they have a superior product or service – from the motivation that inspires them to the execution of how they produce it.
The technical side will often include such things as: craftsmanship, quality of materials, science, technology, method, patience and care, experience, training, philosophy, and environmental sensitivity. These are not features and benefits. The Company Way is not as much about the final product as about the process to get there.
The relational side is all about how the company treats people. This part of the Company Way is often expressed with a kind of golden rule simplicity, but is not necessarily virtuous. Plenty of companies take the approach that “there’s a sucker born every minute,” seeing the customer as someone to be manipulated. As many ways as there are for people to relate to each other, so there are as many ways for companies to relate to their customers and employees.
The relational side often includes phrases like superior customer experience, customization, an intimate connection, the importance and value of each customer, a promise that the customer is always first, the customer is always right, and that employees are treated as fairly or generously by their employer, or that we have a family environment.
In order to create your company way, it is imperative to reflect upon the technical and relational aspects of your company and put those into words, and ultimately into your mission statement.
Where is the Company Way Found?
In order for the Company Way to be truly helpful the mission statement language above has to be embodied in systems. Ask most employees where you can find their Company Way and they will answer, “in the owner’s head.” This is indicative of the fact that when the Company Way is not written down it is simply a reflection of the owner’s way of doing things, and the company culture is just a reflection (or a result) of the owner’s personality.
In order to create company systems that are identifiable and transferable, they need to be codified, recorded, and stored. They need to be found in some physical place that can be pointed to and referred to. And then they need to be instilled in the employees and lived out every day.
Below are some of the more important actions you can take to articulate and disseminate your company way.
1.) Organize Your Shared Document Drive
The shared document drive at any company is the single most important tool for creating the Company Way. The shared drive contains a great deal of work product, company history, administrative templates, forms, and more. This vast treasure trove of information could easily serve as a reference library for your Company Way. The problem is, the shared document drive is usually cluttered, lacking organization, and full of much material that should be culled and deleted.
Some secrets to having a usable shared document drive include:
a.) First and foremost, the shared document drive should contain the standard operating procedures, instructions, templates and forms that embody and codify your Company Way. When a new person seeks direction or a seasoned employee goes rogue, they should be pointed back to these documents to review the Company Way.
b.) Use consistent document naming conventions: All documents should be labelled in a similar fashion. For example,
“TYPEOFDOC projectorclient YYMMDD”
In practice, a presentation for Acme Shoe Company created on September first, might look like this:
“PRESENTATION acmeshoeco 170901”
It is helpful if you agreed upon acronyms and abbreviations across the company.
c.) Organize folders in a logical fashion for each area, and break folder sections down into sub folders so that different areas can control their own folder storage. The more one person is responsible for, the less organized it will be.
d.) Have reviewing of the folder filing system become a part of the review for the managers of each department. Only that which is monitored tends to improve, so it is important to review these folders on at least a quarterly basis.
e.) Most importantly, you have to use these documents. Build into the culture a habit of referring to key work product, or important templates, or helpful historical documents. Nothing draws more positive attention to the shared file systems than for co-workers to send each other to check out such and such a file instead of reinventing the wheel or trying something that might be beyond their skill level. It sounds counterintuitive, but the more people use the documents, the more organized they will be.
2.) Give Some Time to Your Employee Handbook
a. One of the most overlooked tools companies have to create their Company Way is their handbook. It gets treated like the WiFi usage disclaimer (check the box saying you’ve read it, even if you haven’t) when it could be like the playbill at a Broadway show (the more interested you are in the show, the more you refer to it). This is probably because most are as boring as the disclaimer. But that doesn’t have to be so. Nothing says you cannot include history, culture, org charts and all sorts of important and interesting information in your employee handbook. Moreover, it doesn’t have to be a bunch of eight and a half by eleven sheets stapled together. Have it professionally designed and bound, with a pocket in the back for addenda and edits as needed.
b. Some companies have chosen to separate out the boring HR stuff into a separate book, and create a “Company Manual” that becomes a sort of Bible for employees with everything from culture and philosophy to technical essays and procedures. Some companies publish an annual company manual with relevant and up to the minute articles about contemporary topics.
3.) Review Your Orientation Process
a. Orientation should only cover what happens in the first 90 days. Too often, orientation becomes a synonym for training and professional development. The latter happen over many years at the company, but orientation should be focused on solely the first 90 days.
b. Create a 90-day drill for new employees that will help them get to know the entire company and really learn your culture, who you are, and what you do. The 90 day drill should include some aspect of mentorship, along with a good deal of self-directed study of the company way, and some real hands-on work product creation. It is a challenge to make any employees productive in the first 90 days, but a good 90-day drill will get them up to speed much faster and set the stage for success.
c. Often employers will expect their new hires to “hit the ground running” but if you truly have a unique Company Way, as described above, something that makes you better, superior, exemplary, and more efficient and effective than your competition, then there is no way an employee can hit the ground running with your company. They’ve been working somewhere else. They may know how some things are done, but they don’t know how you do it. They don’t know your Company Way. If no special orientation is required to work at your company, it does raise the question of how unique, superior and exemplary your company can be.
4.) Focus on Ongoing Training and Professional Development
a. Your company way will be continually evolving and improving. For that reason, training and professional development needs to be ongoing. Often, the staff will train each other over time as senior people learn the Company Way in a deeper fashion and begin to shape some aspects of it themselves.
b. For the parts of your Company Way that do not change, ongoing training and development is especially important. People tend to forget, cut corners, and modify systems to suit themselves. Ongoing training keeps things fresh and retrains muscle memory to make sure that everyone is sticking with the program.
5.) Organizational Chart and Job Descriptions
a. No matter how small your company is, there should be some division of labor. In that case, you can make an org chart. For smaller companies to put a name in more than one box is okay. Over time, as the company grows, it will be clear what boxes need specialization and that person who just does one thing.
b. Job descriptions are hard because people so often remake a job in their own image. That’s okay, but if there is truly a division of labor as described above, then job functions should be clear – and at the end of the day this is what the job description is.
c. The job description (or job function) is an important document because it will set the agenda for that particular box on the org chart. In outlining the job functions, it will also point clearly toward the ongoing training, certifications, and technical expertise that this person will need to excel in that job.
6.) Conduct Annual Reviews
a. If you have put all of the above in place, annual reviews become the easiest and most enjoyable part of your job. It is not a time to sit and stare at each other and end by giving the person a slight raise. Rather, it is a time to discuss systems, policies and procedures.
7.) Embody the Company Way in Marketing Materials
a. This point is put purposely at the end of this discussion because you cannot put promises of the Company Way into your marketing materials until it is truly the Company Way. The author once hired a roofing company based upon the promise in the marketing materials that only true craftsmen who took pride in their work were employed at this company. When the shoddy workmanship became clear, the company brochure was shown to the foreman who said he had never seen that brochure and made no attempt to align his work to the promises of the materials. This is contradiction and inconsistency is worse than having no Company Way.
b. Ideally, you will be able to proudly display the Company Way in your materials and your employees will not only reflect that, but eagerly point to it as a reflection of who they are and who they work for.
8.) Create an Online Company University
a. Services like Thinkific and Teachable make it possible.
It is unfortunate that creating a Company Way is only associated with large companies. Everyone thinks of the Starbucks Way, or McDonalds and other franchises. Even Ron Wolf of the Green Bay Packers wrote a book called The Packer Way: Nine Steps to Building A Winning Company. These companies have the resources to create their own universities and complex training programs.
But this should not keep the small enterprise from creating systems and codifying their own way of doing things. While there are many papers that will help you build culture in your small business, they are mostly focused on soft skills and employee satisfaction. The ideas presented here attempt to present a more fully developed Company Way that is essential to the growth, success and succession plan of your business.
Questions for Consideration
1.) What is the 30-second version of your Company Way?
2.) What is the orientation period of a new employee like at your company?
3.) Is the shared drive of your company more like a closet or a search engine?
4.) What would the curriculum for your online university look like?
Articles for Further Reading
Corporate University: Wikipedia Entry https://en.wikipedia.org/wiki/Corporate_university
Though focused on large corporations, this article is helpful in outlining the typical content of a company university.
How to Build Systems, by Ryan Allis, from The Start-Up Guide
This article nicely outlines many of the templates, forms and procedures you should have in place to build your Company Way.
Preparing your Private Business for Sale: 10 tips to help you get ready from E&Y Publications
A very brief and high level overview that underscores the real value of systems: to create enterprise value and an exit strategy for retirement.