Hiring a Manager

A long discussion of how to find a manager for a busy shop, and how to define that person's role. October 14, 2009

We're a small six man shop doing high-end products. I'm the owner, I handle product design, CNC programing, most of the CNC machining, a high percentage of process troubleshooting, spraying finishes, overseeing scheduling, most office duties except for bookkeeping, etc (yeah, I'm feeling a little burned out).

My heart is in design. As a result, our designs, reputation, brand image etc. are at the top of our field. Unfortunately our bottom-line is not and it's time for that to change. After some soul searching, I think I have to accept that the weak link is my management skills or aptitude.

It's a catch 22. I've held off hiring a manager because of limited cash flow, hoping that I could hang on long enough to be able to afford a good one. It's becoming clear though that an effective manager could be one of the keys to improving cash flow. As usual my fear is that a bad one could put us under fast. Any thoughts or comments from people that have been in this position and have learned from it and grown out of it? Thanks in advance.

Forum Responses
(Business and Management Forum)
From contributor J:
You are at the point all entrepreneurs that make the jump from small business to medium businesses have to make that choice - to bring in outside help. Here is what I did to get started, for me sales and product development were my strong points. I detest accounting and while I enjoy leading a team I hated and neglected the paperwork side of HR.

The first thing I did was to identify those jobs that I didn't excel at, could not delegate to anyone else on our team and could not outsource (to our accountant, lawyer, payroll firm, etc.) then I took my list and identified what skill set people I needed (in my case we needed two people) and I went looking for help recruiting. For our accounting manager/HR role I took my list to my accountant, she added a number of necessary skills I hadn't thought of and helped me interview potential candidates.

For the second position which is our operations manager I needed someone with manufacturing experience who was not corrupted by batch and queue, was willing to try new things, and could understand the financial side of the business as well. I interviewed heavily and had the top three talk to two of our equipment manufacturers CEOs’, guys with way more manufacturing experience then me whose opinion I valued and trusted.

I credit these two hires with saving my sanity and allowing us to grow significantly. In hindsight the owner who tries to do everything is like the guy who represents himself in court, he has an idiot for a client (or employee in this case). Work with people you trust to help you interview, hire slowly and fire quickly.

From contributor W:

Contributor J has a very good response. See if this adds anything. The best solution is if you can advance someone that already works for you. This helps make motivated, loyal employees, and avoids sudden increases in payroll. Out of the duties you listed, what is the one you feel you could most successfully pass off to someone else? Start with that. Then go to the next duty you can pass off to someone. Work on that. Eventually you may want to pass off all operational tasks to others, and you manage the people doing those tasks.

Look ahead: identify all the tasks needed to run your business. Now organize those tasks under job titles. Being small, you will probably have an awkward division of tasks among employees, but as you grow, you can clean this up by putting task assignments under appropriate job titles, under the right people, of course.

If your bottom line is suffering right now, then so is your cash, so absolutely avoid any significant increases in costs, which I think means holding off on hiring high-dollar help. I think you need to develop your own management skills before you go hire someone to manage your business for you. If you do what I suggested above, you will start freeing up time to start developing those skills.

From contributor Z:
Throwing money at a problem usually does not solve it. That is exactly what you are doing by so rapidly increasing your costs by hiring someone you will have to pay more than you probably take yourself. Promote from within first. Reasonable raise or bennies and you may pull it off. Most thinking employees have ideas about how to do things differently, not always better but you choose what you agree with.

From contributor F:
I agree with contributor Z's philosophy of promoting from within. I worked my way up into my first management job and interviewed my way into the second. There was definitely a slower transition with the second. It took time to learn the new system such as the area's that required attention and so on. It also took a fair amount of time (not to mention a few terminations) to earn the respect of the employees. By promoting from within you also are assured that the person is a team player, wants to work at your company, and has the respect of the other employees (provided you pick the right one).

From contributor G:
The two basic functions that have to be performed are to drive business in and to drive product out. These two functions are very difficult to perform by the same person it is sort of like driving down the freeway and putting the car into reverse. It sounds like you need someone to drive product out? I would look for a working foreman. You will need to have the functions that he is to perform well documented. I would also setup some sort of metric that is objective as to his performance. Be prepared to go through a few hire and fire quickly. A foreman can either be everyone’s friend or do his job. Be careful not to have the prior.

From the original questioner:
Thanks for the input guys. The one guy in my shop that I think could do a good job has refused the offer twice. He doesn't want the hassle, and likes what he's doing now. Plus I need him where he is. I'll be needing to bring someone fresh in for this. Even just someone to run the office would be a big load off.

From contributor J:
I think you’re on the right course especially if you have a guy that’s turned you down twice. Promoting from within is great, if they have the right skill sets to begin with. But that would beg the question why are they willing to do something below the skills they have.

I think promoting a top employee to a team lead position is a no brainer, however I do not consider a team lead to be a replacement for an operations or production manager. The team leader is a hands on working salaried employee who can manage the rest of the team and be your eyes and ears for morale, etc.

An operations/production manager is the guy or girl who understands how everything works and fits together but also truly understands business and can make the business driven calls that need to be made daily in a production environment.

Lastly, for accounting and backoffice, you cannot promote from within for these roles unless you are willing to provide the paid education to get your employee to the point they are competent and I would recommend against that.

A few posters refer to the economy and cash and how you can't afford to hire the right people. If that’s true for you or for them it’s time to reassess the size of the business and your business plan. I fully expect every employee in my organization to pay for themselves, either directly (sales or production) or indirectly (improved efficiency, direct cost savings, etc.) the role you posted that you are looking to fill should easily cover their salary by managing production to improve cashflow, reduce waste, reduce costs, and get the most out of your staff.

If the backoffice is the biggest issue and you truly cannot afford the new staff talk to your accountant or a temp firm that specializes in accounting pros. If you are under $5M/yr in revenue you can probably have someone in 2-3 days a week and still have the majority of that burden off your shoulders.

From contributor T:
I looked to hire a person for the same position and came close to the ideal candidate. We negotiated a deal that I thought would work - he was making about 60% more than I pay myself but wanted to leave his job because he was unhappy. I told him I would pay him what I pay myself, (after giving myself a raise) and that we would set production and profitability guidelines. At each benchmark achieved he would get a corresponding bonus and if the company reached the profitability level that I was aiming for he would be making at or more than what he was leaving. He was able to look me in the eye and say that he had the confidence and the ability to accomplish this. Alas, when he told his boss he was leaving they bumped his salary 40% and changed everything that he didn't like about his job!

The problem I have had with every candidate that came along prior and since is that they all are very eager to have a job, but don't seem to want much to actually work. Management seems to mean very different things to these people than it means to me. And those to whom I have made a similar performance related offer don't seem to believe in themselves enough to take the risk. I am not a cheapskate, I would love to be able to pay someone $120,000/year and get the results that would bring the company $750,000 in profits. This is achievable and I would do it in a minute. But it is a huge risk for me as an owner and I would not do it for anyone short of a proven superstar.

So in the meantime, or maybe instead, I am building systems and a high quality, high functioning team of lesser players. A consultant I was working with on the hiring process said words to the effect that it's easier to be a successful new coach if you come into an already working team and I took that to heart. I can wait for the right person, maybe the one I sell the business to, down the road. I am using some very good consultants on short term contracts to do the kind of specific management building tasks that I was unable to do myself, and that is working pretty well.

From contributor O:
I was hired as an operations manager at this shop about four years ago. Here is my story. I had no cabinet experience but had some woodworking experience from a small boat building business that I owned. I had over twenty eight years management experience in a mixed variety of businesses including, retail and manufacturing. During the course of my full time employment with larger companies I had also tested small business and hobby businesses at nights and on weekends. I did photography, videography, television production, nightclub, guitar building, wooden boat construction and repair.

My manufacturing and sales experience came mostly from Fuji and Kodak. Kodak trained me in Six Sigma. Best practices, quality control and lean manufacturing. All the companies that I worked for trained me in Human Resourses including, recruitment and selection, performance feedback, and disciplinary action. I also had training in customer service, inventory control, purchasing, marketing and sales. I also took nighttime college courses in Labor relations, Human Recourses, and Lean Manufacturing. When I turned forty-eight Kodak closed most of its photofininishing plants in Canada and the US. I found myself looking for work in a new city where Kodak had transferred my family eighteen months earlier.

When I applied to this position my biggest concern was convincing the owner that my skill set from Kodak was transferable to the cabinet industry. I agreed to start as a consultant for a six month period in order for the owner to measure my performance and evaluate my skills.

I too was ready to start at a smaller salary than I had been earning with the agreement that as I reached Key Performance Goals my salary would we re-evaluated. I now believe that I am an integral part of this team. My varied experience allows me to work with the owner in all aspects of this business.

In closing, I want to suggest that if you are hiring a manager, he should have the competencies and skills required. Your best worker in the shop most likely will not be your best candidate for a management position. In today’s economic downturn there are probable a lot of highly skilled managers whose skills would transfer well to your shops.

From contributor U:
To the original questioner: just a suggestion, but if you have a good handle on all the technical aspects of the business, as you seem to, then why not consider hiring a business manager from amongst the ranks of semi-retired business people out there? I am a recruiter, and can guarantee you that any number of folks who thought they were about to be able to kick back for the rest of their lives are now facing the hard truth of our "new economy." I would be willing to bet that you would be overwhelmed with applicants who could do the job, and would not be looking to get rich off of the position. In addition, older applicants are going to be more flexible in their salary requirements. While the technical side of our business is not nearly universal, the front office responsibilities translate easily from other arenas. I would be willing to bet next month's paycheck that you will be covered up with qualified possibilities, and you could focus your efforts on the part of the business that you enjoy most.