One of the topics we present to entrepreneurs through Violand Management Associates highlights five steps of management that small businesses owners experience as they grow. Based on the work of business guru Ram Charan, the presentation explains how the role of a business owner changes significantly as their company grows.

 At the outset, you manage yourself. You are the business. You’re the one finding customers, doing the work, collecting money, and paying the bills. As your business grows, you hire people to perform some of that work: technicians to provide the service, a bookkeeper to handle the daily financial transactions, and perhaps an office administrator to handle phone calls, routine communications, and organizing. At this point, you have shifted from “doing the work” to “getting work done through others.”

Your challenges at this stage of management include developing the systems, procedures, and policies that help to maintain the same quality and consistency in your company as you personally delivered when you started the business. Effectively measuring productivity and profitability is a necessity as cash flow for payroll and continued growth is critical. At the same time, you are beginning to develop the culture within your organization. This is the point in your personal development when valuing the function of management becomes key. You now find yourself spending time hiring and training people, establishing standards and tracking performance, developing trust in others, and planning and scheduling both work and people.

While this step in the evolution of your organization and your role as owner and leader can be challenging, many entrepreneurs successfully navigate these changes and grow their service businesses into the $300,000 to $1 million revenue range.

The next step in the development of your organization, scaling above $1 million in sales, is huge and arguably the most difficult for an entrepreneur to navigate. Doing so requires a different set of skills: effective leadership, organizing and balancing of priorities, and team building. To continue to successfully grow your business in the $1 to $5 million revenue range, you must effectively manage managers — those in your organization who are managing others — and build those managers into a cohesive team. Far fewer entrepreneurs are able to continue their personal development to this level.

Let’s examine some of the key skills and practices on which effective management and leadership of managers is based.

At its core, managing managers is not unlike managing “doers” in the sense that success comes from building a strong team, creating front-end alignment on goals and individual expectations, tracking performance and providing feedback along the way, and creating accountability. The key difference is that the focus of your efforts is on management responsibilities instead of work performed like you would for a technician, for example. Set expectations up front for what good management looks like, observe and give feedback on how the person manages, and provide training on concepts, skills, and techniques that will lead them to grow and improve as a manager. Here are four keys to help you do this well:

1. You teach by modeling, whether you recognize it or not. When you are managing sales people you’re probably not modeling selling skills in everything you do, but when you are managing other managers you won’t be able to avoid modeling management behaviors for your staff.  This can be good or bad! If you are hiring wisely, providing regular useful feedback, delegating effectively, and holding people accountable, you’ll be modeling exactly what they need to be good at themselves. Of course, if you’re not, you will be sending the wrong signals on how your managers should be operating with their own teams. How you communicate with, build commitment in, and help your team members envision their long-term future within your organization will provide a template for how your managers will do the same for their people.

2. Shift your focus for the time spent with your managers. This step in the management progression means that the one-on-one meetings and regular communication you have with your managers should be focused on how well they are managing versus how well they are getting things accomplished. A typical question to one of your managers might be: “How could you have better managed Joe to help him produce a better result with the ABC project he was responsible for?” Another area of focus for your discussions with managers is their communication. “How are you staying up-to-date with Susan on her progress with Project X?” or “Since your sales rep, Bob, is located two states away, how do you track his activity and give him feedback?” Remember to probe for how and how often your managers are delivering both encouragement and constructive criticism to their people.

3. See your managers in action. Just like you might drop by a job site to observe your workers, you need to find ways to see your managers in the act of managing. Some of the ways you might accomplish this are:

• Attend their team meetings (as an observer only!)
• Observe morning check-ins and job assignment sessions
• Go on job or site visits together and watch how they interact and communicate with their team members, customers, vendors, and subcontractors.
• Conduct job interviews with them
• Sit in on employee performance review and feedback sessions, perhaps as part of the training process where you are delegating to them the task of conducting performance reviews

Don’t forget that you will need to give your managers timely, constructive feedback on each of the actions you observe.

4. Get to know your manager’s teams. Getting to know the people your direct reports manage provides several benefits. First, it gives you much better insight on how things are playing out day-to-day where the work is being done. When employees know you, they are more likely to come to you when there’s a problem they feel you should be aware of. Perhaps most importantly, it makes it easier for you to spot high-potential talent that exists at lower levels in your organization (and that needs to be developed—more on that in a minute!) Here are a couple ways you might get to know your manager’s team members:

• Occasionally schedule lunch or have coffee with individual employees to get their thoughts on how things are going overall and how they are doing personally. This serves to keep you in touch with your employees, showing caring and a concern for their well-being, which should be an important element in the organizational culture you are building.
• Have an informal meeting with all new hires in your business. Not only will you get direct feedback from these new employees on their onboarding experience and how the job is matching their expectations, you’ll also get a sense of how they feel they are fitting in with other team members. On the flip side, you’ll be able to assess firsthand how well the hiring decisions of your managers are resulting in people who are bought into the culture and core values of your organization. These informal meetings also provide you, as the owner, with another opportunity to reinforce with new employees the core values that are at the heart of your business and that drive the day-to-day decisions and priorities.

Let me circle back to the point I raised about identifying talent and potential in people. As managers, one of our most critical roles is to train and develop our people to help them reach their full potential.  Your managers need to realize that there is a bit of selfish motivation in this. If you’ve ever heard a boss tell an employee, “I can’t promote you or give you this opportunity because you are too valuable to the company in your current position,” you know what I mean. Your job is to be sure that never happens!  Your managers need to know that part of their job is to develop people who are capable of replacing them. That’s not a threat. It’s removing a potential obstacle to their continued professional growth.

Leading your organization at the “managing managers” stage is a big challenge. You must continue to develop your own leadership skills and manage your own ego while you focus on building a team of strong managers. But when you do so effectively, the benefits will cascade down through the rest of your organization.

You can request a help sheet explaining the five steps of management by filling out the Contact Us form at violand.com.