Most people assuming managerial positions in their organization want more than just status and truly want to be effective in their roles and contribute to improving organizational performance. In order for this to happen it is necessary for managers to have some idea about the experiences of others and a sense of which management practices have been adopted and used by effective managers. Surveys conducted around the world are beginning to uncover universal characteristics of managers who empower their subordinates and strengthen their organizations: self-awareness; creative problem solving abilities; communication skills; effective delegation and ability to facilitate and oversee joint decision making; beneficial use of power to influence; conflict management skills; ability to monitor information and use and distribute it for continuous improvement; ability to set the right targets, monitor progress and take appropriate actions to make changes when targets and outcomes are not aligned; and a focus on hiring and keeping the best employees and promoting and reward employees based on their performance and contributions.
As part of their efforts to create a model curriculum for “teaching management skills” Cameron and Whetten took on the task of identifying exactly what those skills might be. They argued that “skills” are different from characteristics and activities often associated with management, such as personality traits and motivations and two other issues already discussed above: functions and roles. They believed that skills “include cognitive knowledge of how to perform and action, but they involve more than just knowledge itself”. They finally settled on the following definition of “management skills”: “[a] management skill involves a sequential pattern of behaviors performed in order to achieve a designed outcome”. Using such a definition eliminated personal traits (e.g., honesty and loyalty), since they are not defined by a specific, sequential set of behaviors, and also eliminated functions and roles because they involve a variety of patterns of behaviors.
Cameron and Whetten went on propose a list of the skills that are performed by “effective” managers, a process that began with their own study of managers at various levels of a number of public and private organizations and then was supplemented with a comparison of their results with the findings of other scholars who had proposed their own collection of characteristics of effective managers. The result was the following list of both personal and interpersonal skills that was limited to characteristics that had “trainable behavioral components”:
- Self-awareness (personality, values, needs and cognitive style)
- Managing personal stress (time management, personal goals and activity balance)
- Creative problem solving (divergent thinking, conceptual blocks and redefining problems)
- Establishing supportive communication (listening, empathy and counseling)
- Improving employee performance and motivating others (needs/expectations, rewards and timing)
- Effective delegation and joint decision making (assigning tasks, evaluating performance autonomous versus joint decision making)
- Gaining power and influence (sources of power, converting power to influence and beneficial use (not abuse) of power)
- Managing conflict (sources of conflict assertiveness and sensitivity and handling criticism)
- Improving group decision making (chairing meetings, avoiding pitfalls of bad meetings and making effective presentations)
Bloom and Van Reenen completed an exhaustive international study of patterns of management and productivity based on almost 6,000 interviews conducted at large samples of firms in 17 countries including the US, Great Britain, a number of countries in Western Europe, Brazil, China and Japan. The premise of their study was that effective management required knowledge, selection and use of “best practices” in three broad areas: “monitoring management”, which involves how well managers monitor what goes on inside their firms and use this information for continuous improvement; “targets management”, which involves setting the right targets for the firm, tracking the right outcomes for the firms and then taking appropriate action when targets and outcomes are inconsistent; and “incentives management”, which involves promoting and rewarding employees based on performance and trying to hire and keep the best employees. Using the dimensions employed by Bloom and Van Reenen in their survey, it is possible to suggest the following guiding principles for effective management in each of the areas mentioned above:
- Effective managers are enthusiastic about introducing and adopting the full range of modern manufacturing techniques (e.g., just-in-time delivery from suppliers, automation, flexible manpower, support systems, attitudes and behavior), and do so not because others are using them but because they can be linked to meeting business objectives like reducing costs and improving quality.
- Effective managers actively seek out process improvements for continuous improvement as part of a normal business process rather than waiting until problems arise.
- Effective managers continually track performance and communicate the result to all members of the group as opposed to relying on ad hoc and incomplete tracking systems.
- Effective managers review performance continually with an expectation of continuous improvement as opposed to infrequent performance reviews are based only on a success/failure scale.
- Effective managers ensure that in review/performance conversations the purpose, data, agenda and follow-up steps (like coaching) are clear to all parties.
- Effective managers establish and rely on a balance of financial and non-financial targets.
- Effective managers establish goals that are based on shareholder value, not accounting value, and which are defined in a way that works through business units and ultimately is connected to individual performance expectations.
- Effective managers avoid focusing mainly on the short term and instead visualize short-term targets as a “staircase” toward their main focus on long-term goals.
- Effective managers establish goals that are demanding yet attainable for all parts of the firm and avoid setting goals for “sacred cows” areas of the firm that are too easy to achieve.
- Effective managers establish performance measures that are well-defined, clearly communicated and publicly available.
- In well-managed organizations senior managers are evaluated and held accountable for attracting, retaining and developing talent throughout the organization.
- Well-managed organizations do a better job than their competitors in offering strong reasons for talented people to join them.
- Effective managers establish and enforce reward systems in which rewards are related to performance and effort rather than distributed equally irrespective of the performance level.
- Effective managers establish and enforce promotion systems that emphasize active identification, development and promotion of top performers and avoid promotion based mainly on tenure.
- Effective managers make it clear that failure to achieve agreed objectives carry consequences, which can include re-training or re-assignment to other jobs.
- Effective managers ensure that poor performers are re-trained and/or moved into different roles or out of the company as soon as the weakness is identified.
- Well-managed organizations do whatever it takes to retain top talent when they look likely to leave.
While many of the suggestions are not “new news”, the Bloom and Van Reenen study was important as a source of empirical confirmation that firms and managers that embraced the management practices described above would likely be rewarded with better performance on a wide range of dimensions: they were larger, more productive, grew faster, and had higher survival rates.
Sources: K. Cameron and D. Whetten, “A Model for Teaching Management Skills”, Organizational Behavior Teaching Journal, 8(2) (1983), 21-27; N. Bloom and J. Van Reenen, “Why Do Management Practices Differ across Firms and Countries”, Journal of Economic Perspectives, 24(1) (Winter 2010), 203-224. A full set of questions for each dimension appears in N. Bloom and J. Van Reenen, “Measuring and Explaining Management Practices Across Firms and Countries”, Centre for Economic Performance Discussion Paper 716 (2006).
Formation of a new joint venture as a separate entity calls for consideration of many of the same issues that must be faced when starting any new business. One of the most important is the governance structure, a topic covered in detail in the attached Primer.
Accepted notions of good corporate governance dictate the implementation of director education programs and regular assessments of the performance of the board of directors and each of the directors individually. This report outlines some of the key elements of an effective program for orienting new directors, providing continuing education to directors during their service on the board and conducting evaluations of board and director performance.
When forming a new joint venture as a separate entity the parties will spend a good deal of time negotiating and drafting a shareholders' agreement (or an operating agreement if the JV will be formed as a limited liability company). In order to assist in that process and make sure that all of the major issues are considered it's recommended that the attached checklist be used as a reference.
While it is understandable that entrepreneurs are primarily focused on identifying and developing their ideas for a new product or service, eventually it becomes necessary to nestle those ideas inside a legal entity that will serve as the structure for launching a new business. While entrepreneurs are often put off by the notion of having to deal with attorneys and “legal stuff”, those who are committed to building a sustainable company realize that finding and engaging an experienced, thoughtful and creative legal adviser is extremely important.
Many entrepreneurs rely heavily on suggestions of their peers for recommendations of prospective lawyers and the experiences of colleagues can certainly provide useful information. However, forming a strong and reliable team of professional advisers is so “mission critical” that entrepreneurs should settle on a process to follow that covers several key features: identifying and understanding the legal advice that the entrepreneur will need during the launch phase; orderly exchange of information between the entrepreneur and the prospective attorney to determine the quality of fit and sketch out the scope of the initial activities and projects if the engagement moves forward; several conversations between the parties to assess “personal chemistry” and the ability and willingness of the attorney and his or her firm to take on the engagement and structure the relationship in a way that fits the entrepreneur’s financial situation; and negotiation of formal engagement letter that lays out the scope and terms of the attorney-client relationship. If the business involves multiple founders, the attorney should be able to counsel the group on prospective conflicts of interest to ensure that the specific needs and expectations of each founder are taken into account upon formation and organization of the new business. Finally, the entrepreneur should get a sense of how the attorney intends to build and manage the attorney-client relationship and grow to become a trusted business counselor of the entrepreneur.
The Growth-Oriented Entrepreneurship Project (www.growthentrepreneurship.org) has put together a toolkit that entrepreneurs can use to intelligently navigate the process of vetting and selecting trusted business counselors.
Happy to pass along this link to the June issue of Corporate Counsel Connect, which include an article from the Business Counselor Institute on law department leadership as well as interviews with several GC's on how they address leadership issues in carrying out their duties.
There are entrepreneurs within the technology community who proudly trumpet the chaos in the markets in which they operate and defiantly announce the demise of old models of leadership and management. Their claims of change are reasonable; however, true to form, there may just be new theories to explain all of that. From a physics perspective, traditional organizational theories could reasonably be characterized as “Newtonian” as they were generally based on the assumption that all aspects of human life, including organizations, operated with mechanistic predictability. However, if leaders adopted so-called “new sciences”, including quantum physics and chaos theory, as their metaphor for organizational life and the work of leadership, they could be expected to shift their styles to emphasize different leadership technologies. For example, the new sciences’ view of organizations is an “open system” that can self-organize if the leader creates and supports the proper context through the free flow of information and feedback and maintenance of trusting relationships. The lessons of chaos theory require acceptance of uncertainty and ambiguity as a part of organizational life, thus undercutting traditional leadership tools based on rigid formality and predictability. Leaders can nonetheless overcome these challenges by “getting on the balcony” (i.e., removing themselves from day-to-day pressures in order to see the “big picture”), understanding the creative destruction cycle and, most importantly, proactively leading followers through the necessary transitions. Finally, leaders attuned to the new sciences understand that organizations thrive from clearly defined values that can be translated into a compelling vision and that a short and simple statement reflecting these values and visions can and should replace standard operating procedures and manuals and provide guidelines for autonomous action, delegation of authority, and development of future leaders.
Learn more about emerging trends in leadership studies, including the influence of the new sciences, by downloading this excerpt from the Growth-Oriented Entrepreneur's Guide to Leadership.
This report is intended as a practical primer on one very important aspect of counseling the board of directors–making sure that board meetings and other actions of the directors in the official capacity are conducted efficiently and in line with applicable legal requirements.