Blog written by David Lightfoot, B2B CFO
For a business owner to successfully grow their business, there are a couple of difficult transitions they need to make. The first is from “doer” to manager. Usually when a business is begun, the owner does everything. They must “wear a lot of hats.” If the business finds success and grows, the owner must start what I call “the shedding of the hats.” By this I mean they must start giving up some functions and delegating those functions to others.
The second big leap for an owner is probably even harder. That is the leap from manager to manager of managers. That means, managing people who have direct-reports of their own.
It is generally recognized that anyone can effectively manage no more than six to eight people. This is called “span of control.” If they are managing managers and each manager has six to eight direct reports, then you can see how the organization is able to grow.
But managing people with their own direct reports isn’t the same as managing doers. The headcount may now be 50 or more and the owner/CEO has to let go, not micro-manage, and let his or her managers do what they were hired to do—manage! This isn’t easy. Let’s face it, no one does things as well as the owner/CEO does them!
So what does the owner/CEO do at this level? There are six basic functions for a CEO:
- Communicating—An effective CEO must be an effective communicator. This breaks down into two areas: 1) Being an effective communicator and 2) Being an effective listener. The listening part is the harder of the two for most CEOs.
- Planning—This area deals with the development of strategies and goals for future action. A good CEO studies the current situation, considers the past and then designs the organization’s future. This includes things like development of the company’s mission, vision and values plus more tactical things like forecasts and budgets.
- Organizing—Once goals have been set within the strategy, the CEO must group work and resources productively in order to achieve the goals. The CEO has many resources at his/her disposal, including time, people, money, materials, technology and facilities. Organizing must be done down to the task level so that individuals can perform those tasks.
- Staffing—People are typically the most important resource at the CEO’s disposal. For most CEOs, people are their “stock-in-trade.” This includes recruiting the right people, training them, retaining them and, when necessary, terminating those who don’t fit or don’t perform.
- Controlling—What we’re talking about here is measuring performance and taking appropriate action. Peter Drucker said, “What gets measured gets managed.” This is all about setting the plan and budgets, measuring actual performance and taking action based on results and how they compare to plan.
- Leading—This is defined as inspiring self-motivation in people to achieve goals. This is the most difficult function to teach although there are many good leadership training programs available. A good leader has a clear vision, recognizes potential in others, has integrity and develops trust in people. To be most effective, it is good if the leader also has a bit of charisma. That doesn’t mean the leader needs to be an extrovert. It means they have empathy, humility, passion, confidence and courage. Two other “senses” are helpful: a sense of perspective and a sense of humor.
No one is the perfect CEO. We can always learn and make ourselves better. That’s part of the great challenge of running a business.