In my last article, we discussed what the role of a General Manager is in a small, privately-owned business. Although the primary responsibility of the General Manager is to support the owner’s vision and make it a reality, the role goes beyond that. The GM spends a great deal of time reviewing reports, monitoring KPIs, and researching industry trends in order to make the vision a reality. This person also must hire, retain, and develop employees to foster the company’s culture. The GM often doubles as the Operations Manager, overseeing the day-to-day service delivery and quality control. Overall, the GM is the executor, making sure the business runs smoothly, operates efficiently, and develops and grows where the owner wants it to do so.
It may seem like the GM’s role is the same as the owner’s, and in many cases, this might be true. The GM and owner both work toward the company’s big picture plans: the vision, the mission, and the growth and development of the company. So why have a General Manager? What are the reasons for hiring someone to run your business? In this installment of the series, we will discuss a few reasons why many companies hire a GM and how the GM can help take the company to the next level.
The Right Reasons
In a Harvard Business Reviewarticle titled “Second in Command: The Misunderstood Role of the Chief Operating Officer,” Professor Nathan Bennett and Leadership Consultant Stephen Miles offered seven reasons why companies hire a COO or General Manager. While they stated that the reasons are not “mutually exclusive,” it is clearly evident that at least four of the seven pertain specifically to small businesses and relate directly to restoration and other service-based companies.
The most common and obvious reason is that the business has outgrown the owner’s ability to manage it. Most small businesses start with an owner whose strongest skillsets are rooted in technical ability or mechanical talent. They are great at performing the work and possibly even teaching the skills to others. However, they may lack the business acumen, education, or leadership skills necessary to move the business beyond where it is today. While entrepreneurs would be well-advised to develop themselves at the same rate as their businesses, it can still be necessary to add an executive to the team with competencies that complement the owner and meet the organizational demands of growth.
A close second is the need for change. Running a business is exhausting, and since a small business is a reflection of the person at the top, its performance will often mirror the sentiment of the owner. When the owner is tired, the business is tired. When the owner becomes content, complacency rules. When the owner checks out, the business is lost. Breaking a trend can often require a change in leadership. Since the owner cannot fire himself/herself, a suitable and effective solution is to empower someone with the desire and ability to champion a positive change. This can but does not always imply the need for a turnaround artist. Change can certainly mean taking the bad and making it good, but it can also mean taking the good and making it great.
The next reason on the list of why companies hire a COO or General Manager is the need for an exit strategy. This situation is becoming more and more common in the restoration industry. Considering the lifespan of this industry, it is understandable that first-generation contractors are getting to the age where they are thinking about the greener pastures of retirement. Small businesses are either passed down, sold, or dissolved when the owner chooses to call it quits. With this imminent situation now a reality for many companies, principals have a viable option: handing the reigns to a new generation and benefitting from the dividends of the GM’s labor.
Another likely scenario involves creating an opportunity for a worthy employee. Great business owners are always looking for ways to challenge and reward outstanding employees. Likewise, top performers are constantly exploring avenues for advancement and personal growth. This organic advancement is common when an employee becomes too valuable to lose. Business owners attempt to establish mutual loyalty through advancement. While most would agree that the best candidates for the General Manager position come from within the organization, this situation can be tricky if the loyalty of the individual to the company is not already fixed.
These reasons for hiring a COO or General Manager will exist either independently or collectively in a small business at some time during its existence. Knowing this, it is important to understand (and respect) the concerns that can go through the minds of owners when considering bringing a General Manager on board. Competencies, skillsets, and industry and trade knowledge are just a few. None of these, however, will trump the greatest concerns of trust and loyalty.
In part three of this series, which you can find in the April issue of R&R, we will explore the characteristics, skillsets, and competencies of a successful General Manager as well as how to find the right person. A seasoned “second in command” knows exactly what his/her role and responsibilities are, and small business owners understand the value of the GM position. The secret to making the relationship work effectively is the ability of both parties to pass the ultimate test of loyalty.