Archive for January, 2013

Family Operations – Letting go to Nonfamily Management Team

January 7, 2013

Family run operation had never shared information with employees other than the individual projects to be worked on. The owners had a hard time sharing what they considered personal financial information with managers & employees. The result – department managers did not have a clue of what it took to run the organization outside their small world and everyone was making their own purchases; there was no one looking at overall purchases and cost savings so expenses just kept going up and up. The owners realized that they could not grow any larger until they let go and allowed others to be involved in the management of the company.

I was hired mid-year to set up financial information on a departmental basis in order for managers to be held accountable. I analyzed all the information for the current year and reclassified expenses to their respective department. Next I prepared a current year budget for each department based on the current activity and the expected activity for the remainder of the current year. The owners and managers assisted int he finalizing of these budgets.

The next step was educating all the managers in how to utilize the reports and I sat down each month with each manager to go over their monthly P&L to show what actually happened versus what we thought would happen. Starting in October, together, we began the process of preparing each department’s budget for the next year. Each manager had a hand in creating the budget that they would ultimately be held accountable to. The first year they would still be learning so they would not be held accountable financially; but ultimately, they would get bonuses based on their performance.

The managers now get together monthly to review financial information, they know where the organization is going and they are helping to get there. They now feel as if they have some input into how the organization is run, the owners value their input and the company is on even more solid ground than it was before.

The company is now expanding internationally with the same management team in place all because they shared vital financial & operating information.

Moral: You can only do so much all by yourself. You need to trust others and educate them on the management of your company and then let them manage with you. When you get the right people in the right seat on the right bus… let them do what you hired them for!