Business GEM #9 The 3 BIGGEST Bargains in Business
I founded a management consulting firm,
GoalMakers, in 1993 following three years of being with a west coast management-consulting firm.
GoalMakers coaches entrepreneurs who have successfully grown their companies but grown them beyond their entrepreneurial, hands-on, management skills to continue the successful growth. Because of their high control style, these entrepreneurs are working harder than ever before, having less fun, are more frustrated and stressed, the morale of their employees is going down, and while sales are increasing profits are decreasing. We try to coach them through the transition from managers of “widget” businesses, to be leaders in people businesses. Most cannot make the transition and then we either bring in a new President or help groom the company to make it saleable, and sell it.
In the process, the three things that would help the entrepreneur successfully make the transition, would be:
- Audited financial statements;
- A Board of Directors with the majority being very capable outsiders; and
- A person at the Vice Presidential level in charge of Human Recourses, the hiring and firing; the person responsible for getting the right people on the bus, and in the right seats, and the wrong people off the bus.
All three of these are near impossible to convince the entrepreneur to do—the vast majority will not give up that much control. They seemingly would rather fail first, and some do.
Why audited financial statements? Every year, and in every company that I have been the CEO of, and with top caliber CFO’s, I have learned an enormous amount of vital information from audited financial statements. Information that if not caught could have been devastating. Additionally, when investors or lenders ask for your financial statement, they know, because it is audited, that they are getting the real facts. Lenders, in turn, give lower interest rates, the savings from which usually offsets the additional cost of the audit.
What a bargain!
Why a Board of Directors? You get fabulous advice and counsel at a bargain cost. This is talent you cannot buy, far better than consultants. And they make the entrepreneur plan and explain his plan, and they hold him accountable to his plan. It ends “seat-of-the-pants” type managing. Morale goes up. Profits go up. Wild swings in performance are minimized. And everyone is happier.
What a bargain!
Why an HR person at the VP level? Just ask any entrepreneur what his most valuable asset is. The answer is always, “my people.” Ask him what gives him the most headaches. The answer is always, “my people.”
He will have a CFO to control the second most valuable asset, yet he usually lets the accounting department handle the HR paperwork and the various department heads to hire their people. First of all, it takes a real pro and one who knows HR law, to recruit, to interview, to screen, to hire, to orient, and to review the progress of key people. It is not one of the strengths of a department head nor does he have the time, and the CFO and his accounting staff are numbers people, not people people. The position must be at the VP level so that that person has the authority to hire, promote, review, and when required, fire, without going to the department head unless he needs his input. If you want the best team possible, have a VP of HR.
What a bargain!