The business had started up long after the impact of a previous recession and was doing well on the back of a growing economy. From the outside, things looked rosy but inside, it maintained the same informal approach to systems and procedures, communication, control and more in the bigger organisation as it did in the start-up.
Somehow the previous management hadn’t reacted to the fact that the way a business is managed and controlled in one phase of its existence is often less or not-at-all workable in a later phase of its growth.
But it was more than this!
There was a disconnect between what the senior manager was aiming to do and what everyone else in the organisation thought was happening.
The previous incumbent was an entrepreneurial spirit spending a lot of time away from the office pioneering ideas on developing the business. Meanwhile the pile of debris left behind at the offices was getting higher and higher.
This is what I call the “Comet Effect”.
It can occur where the owner or senior manager focuses on growing the business virtually oblivious to all else in the operations.
The effect can emanate itself in some very negative ways.
Middle managers and staff can be left to carry out tasks and make decisions they are not comfortable with or out of sync with the direction of the organisation. They can become demoralised or maybe even leave. Costs can run out of control because no one is made accountable. Inefficiencies can lead to the same thing because appropriate processes and procedures aren’t put in place.
Poor control increases risk to the business with all kinds of negative outcomes. Poor communication and inadequate involvement of staff de-motivates employees who become less productive. Staff turnover increases with direct cost to the business.
It isn’t rocket science to know how to stop the problem but it does involve a serious injection of structure into the business.
Depending on the particular business and the maturity of its management framework, there are lots of things to consider to gain better control over the business. Here’s just a few examples of what we installed in this business to improve things:
- Three year rolling business plan were shared with staff members who were also kept updated on ongoing progress. Growth plans were designed to be seamless with other business operations.
- A skills gap analysis was carried out for business needs and appropriate training was subsequently introduced.
- Monthly accounts were revised vs budget with KPI’s agreed and included for team management and accountability.
- Performance incentive schemes were introduced to gain team ownership and buy-in with departments.
- HR policies and the Health & Safety system were updated and made fully compliant. (Yes – this did save significant costs and reduced worries about what could happen if non-compliant!)
- Closer relationships with key suppliers were developed to improve manufacturing performance and reduce costs.
Emphasis on business development plans is obviously key to growing the business.
However as the business grows, inadequate attention to installing the right structures elsewhere in the organisation, commensurate with the particular phase of growth can have a negative effect in many different ways.
Don’t let your business suffer from the Comet Effect!
Stuart Allcock – Owner of Applied Business Support