Loyd Rawls

A Case Study Look: Respect – A Critical Issue Impacting Leadership Continuity
October 18, 2007

When the successor candidate field is limited to family members, the winner of the sperm lottery usually does not score high in successor criteria: capacity, competency and commitment. Therefore, motivation and retention of key managers is critical to perpetuating your business legacy, making up for management and leadership short suits of family members.

Let’s consider a case study: Smith Electric.

Mr. and Mrs. Smith founded Smith Electric in the ‘70s with Mr. handling production and Mrs. managing the books. In the early ‘90s, Junior, a poster child for ADD without a high school diploma, came on board, and with hard work, matured into a very respectable estimator and project manager. Sissy married right out of high school, had three children, and impressively attained a degree in accounting through attending night school. She helped her Mom in the business fifteen to twenty hours a week, but readily contended that her first commitment was as a homemaker.  

Mr. Smith had impressively recruited six managers from competitors and the business had recently become very successful. In fervor of recruitment, he told each recruit that they could become partners and, of course, they heard that they would become partners. Consequently, Mr. Smith found himself in a challenging situation. There was open discord regarding Junior making more money than the rainmakers and two of the managers were threatening to quit because they had not been made partners. At age 66, and with a heart attack slowing him, Mr. Smith felt very vulnerable.   

“Loyd, what am I supposed to do with no capable family members and key managers about to walk out?” I responded, “The first rule of key manager interaction is don’t promise and not deliver. You need them more than they need you, so respect them by following through on everything promised or humbly apologize as you explain why you cannot deliver. And by no means try to feed them crap because they can spot a lie from 100 yards with the naked eye. They did not become key managers by being chumps.”

If disrespected, key managers generally begin thinking “new job” as soon as circumstances allow. Respect is not the biggest key manager issue - IT IS THE ISSUE. Pay plans, titles, golden handcuffs and fulfilled promises are just opportunities to show and earn the respect of those who significantly impact the business mission.

To avoid a situation like Mr. Smith, my next 2 postings we will be discussing the following 4 steps for developing a strong and committed management team:           

1. Realistically assess successors to understand future potential dependence upon key managers.
2. Realistically assess managers to confirm impact they are having upon business.
3. Pay competitively, based upon impact on business mission and profitability.
4. Establish key manager retention plans that are compatible with each classification of manager.

 Next posting: What is the value of your Manager(s) to your Business?

Posted by Loyd Rawls on October 18, 2007 | Comments (0)