Nine tips for addressing the challenge to build a first-class management team--and when it's time for you to hand over the reins.
To begin, when you’re a $5 million business, don’t bring in $5 million talent. Your growing enterprise is already operating at that level. The right leaders have the track record for operating a larger enterprise and guiding a business though the challenges of growth. They’re there to prepare and lead a company into territory that they already understand. They’ve learned from their "beginner mistakes" elsewhere.
Don’t settle for talent that’s “good enough for now”. As the stages of a successful business demonstrate, “now” is temporary. Mediocre talent will generate mediocre results, and mediocrity is not an asset. In fact select leadership team members who, in their expertise, are better than you are; who will complement and extend your own skills and experience and stretch you to be the best business owner you can be.
As a leadership team begins to take shape make sure that, in addition to their business acumen, they also fit with you personally, with the culture you want to build, and with other leaders already on board. The positive multiplier of a cohesive team, compared to a collection of individuals, is stunning.
Assure that your leaders are organizationally committed, goal oriented, selfless enough to get the best from one another and to hire others of equal or better talent. (‘A’ players hire ‘A’ players; ‘B’ players hire ‘C’ players.)
In your hiring, don’t focus on a candidate’s pedigree (e.g., family or educational background; appearance; impressive yet unrelated activities), but rather on relevant and quantifiable accomplishments, how they were achieved and under what circumstances.
The value of your business, throughout its life, will be substantially bolstered by the caliber of your leaders. They’ll be evaluated by prospective investors and bankers, and by customers and suppliers who may be considering a long-term relationship with your company. Choose leaders of whom you’ll be proud.
At each stage of your company’s growth, be ready for the business and personal challenges that will come with needed leadership transitions. Map out the changes and the essential transfers of responsibilities beforehand. Build a supportive consensus with your internal team and your external stakeholders. Prepare yourself for some potentially difficult changes to your own role.
Remember that for any change, acknowledging the need may be the most painful element. It’s not easy. If it seems easy you may have placated yourself with a simple adjustment to your business rather than stepping up to the need for a more substantive change.
And when it’s time to replace yourself, prepare to pass the CEO saddle to an even more qualified candidate. If the company’s success exceeds the founder’s ability to manage it well, sustaining the enterprise may hinge on some honest self-assessment.
Stan Davis is the Founding Principal of Standish Executive Search, a New England-based firm that advises business owners, executives and boards who are positioning their companies for accelerated growth, change or succession.