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.
(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.
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.
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.
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.
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.