Which instinct is stronger in one manager or business owner – to trust his employees and give them enough freedom or to maximum control what is happening in his firm?

The answer to this question differentiates the companies regarding their potential for growth.

Let’s analyze one case:

One middle-sized company has successful products and potential for growth. This company is usually managed by the owner, who has passed many issues to build, safe and develop the firm. The owner has developed his intuition to assess people and has found a way to check their honesty. However, the cases in which he was misled and disappointed by his choices are not a small number too.  Thus the blind faith is missing. How can one owner be sure that his employees are loyal, honest and competent and there is no need to observe/control each of them? And the answer is by creating rules, procedures and control mechanisms. So every step outside the path is registered and a possible problem might be prevented on time without loses for the firm.

What is usually missing? In the majority of cases there is lack of clear written rules and control mechanisms. The employees know in principle what to do but due to different reasons just don’t do it precisely. The suffering employees complain to the owner who starts to play the role of a detective to see who has not done anything and why. My observations show that the employees prefer to keep the status quo of no rules because:

• They ask the boss for everything. They feel themselves important and served by the most important person in the hierarchy.
• When there is a mistake from their site, there is no sanction. And this is so because “they have not understood, the colleague did not tell them, etc.”
• May spend their working time in smoking, chatting and at the end of the day to do some work and pretend for overtime payment.
• They hide their incompetence.
• They become irreplaceable – a big problem for many companies! The people that keep all knowledge in their heads and refuse to put it on paper create bottlenecks in the organization and block the working process. They entrench themselves in the position by hiding information from the colleague. If they are replaced the company faces quake.
• Evade their responsibility. In fact only the general manager or the owner takes the decisions and the other managers are fictive and they do not have any influence in the firm.

So the owner is overloaded to solve negligible cases instead of to be focused on the strategic company development.

What are the steps for getting out of such situations?

1. Analyze the current situation in the organization

The best option is to have an audit by an external expert who to point the problematic places and the ways, terms and participants for their overcoming. Every organization needs an external evaluation – this is the constructive critic which allows the company to shake off a lot of slag. An internal audit is also an option but usually the employees are immersed in their operational work and slowly-slowly put up with the status quo, which one external auditor would not accept. I’ve heard in many companies whatever logical and not so logical explanations why anything is not as it should be. And that the textbooks are one thing, while the practice is another. And of course that nothing else could be done. And it is impossible to think about any optimization because the titular has reached the perfection. The most interesting thing is that everywhere there are employees who consider themselves unique for the occupied by them position, that there are no analogues in the rest economic sectors because their company business is the only one on earth. Let’s just mark that in today’s world science and business walk hand in hand and whoever does not want to study leaves behind quickly. There are many examples about implemented improvements and savings by companies who has trusted the experts in the respective area. These are experts who come from practice and continue to learn.

2. Writing a detailed action plan

Once the target is fixed, it should be traced until its complete fulfilment. Of course nobody has time to make changes for years. That is why one tight schedule with targets, terms and responsible people can make miracles. This is so because the task has horizon and people know that after they make the change, their work will be smoother or will achieve savings or will overcome the competition, etc.  The schedule is necessary for planning the resources. If in the middle of the road we are out of resources, the project is fated either to delay or to oblivion. The schedule is also a control tool about the success and the obstacles.

3. The general manager announces what is the role of the external expert and requires full support from his employees

By announcing his intention, the general manager or the owner show to the employees the direction to which the company will move. And there is no question here if the employees want or not. This is the owner’s will. Such announce, presented appropriately and on time, melts the employees’ resistance and future sabotages. It even may ignite their enthusiasm. Alas, every change is accompanied by quakes and the weaker the quakes are, the better for the firm. In this way the manager declares to his staff that he trusts in them and they are the exact people who may do the change successfully. He points where the company should be and what is the road to the target. And give them a chance to build together one better organization.

4. Establishing procedures and polishing the process by the external expert

I’ve seen many rules and procedures. The value that one procedure, written by an external expert, brings to the company is that he offers a different view and fresh ideas which were successfully applied in other companies.  After the procedure is written, it should be reviewed by the employees who will use it. This makes the procedure a useful tool without gaps. And the most important, the owner shows to his staff that they are the people who contribute to the company progress – this is the faith in people. But the final decision is taken by the general manager or the owner after he is sure that the right control mechanisms are described – this is the control.  A common mistake is the procedure not to be spread for review and discussions. I had a case when one procedure was implemented after 3 months instead of in one week just because the manager decided to implement it without any check by his employees. The resistance was so huge and the manager spent a lot of time after that to control its adherence. Finally it happened, but by force, with waste of resources and nerves. And the procedure itself described exactly the process in the company.

5. Implementation of effective control mechanisms for every employee

Writing down the processes is one thing but if you want to extract the effect, the rules should be checked regularly. It’s the only way for effective change of habits – like the drop excavates the stone, so the control regulates activities, behavior, intentions. A simple example is the register of the working time by access cards. When the employees know that access control exists and someone is checking the records for coming to work, leaving the room for a cigarette, etc., it is easy to see who works 8 hours per day. And when the staff knows that nobody checks the records, there are pretentions for overtime payments and other simulations.

6. Change of organizational structure – from horizontal to vertical

I see how difficult is for many owners to trust someone who may run their business. Unfortunately they often have reasons because the hired managers are sometimes very weak. But let’s think who has hired these managers? Isn’t it the general manager or the owner? Often in small and middle-sized companies, the owners work with acquaintances – fact which has its pluses and minuses. However, key positions require professionals with high ethics. If you find such employees, don’t let them do – they are priceless. They will run your business and will unload the control from you. Even they will offer more control mechanisms by which to keep your faith in them.

7. Introducing cost limits per activity, e.g. every manager to lead effectively and responsibly his team

When the structure is build, the new managers must take over their roles as soon as possible. One of the ways the owner to discharge himself from operational work is to delegate thresholds for costs approvals. This is how the managers take the lead and often they also offer control mechanisms which to ease their work and to be sure that violations are minimized. So the spiral is moving – the owner trusts his managers but inspect them. The managers control the staff and report the results of the teams. And slowly but surely a strong team is built, this team trusts in its ability, in the colleagues and everybody knows that if an individual goes out of the path, he will be caught on time and will be forced to leave. Then the people will want to stay in the company not because of the salary but because they feel important and valued.

8. Hiring competent employees and releasing the employees who do not contribute to the company’s requirements.

This is a difficult but necessary step. I’ve seen managers who are afraid to release a useless employee because they’ve worked together since company’s start. I would accept such position if it concerned a charity organization. In the rest cases I compare such behavior as kamikaze. In business if you want to survive, you should have the mentality of a shark.

There is another side of the coin – the general manager hires his lover – who is competent in one area only and this area is obviously not related to the business. If the general manager is not the owner, he usually loses his job but not because he is incapable. It happens because the rest employees do not trust him and the company results drop down. The ethics in every organization is the basis for building a strong team where the word “trust” works more effectively than any kind of control.

9. Complying with hierarchy. The general manager clearly shows to the staff, by words and action, that he trusts his managers

Since the new picture is ready, it’s time to harvest. The new managers have to conquer positions in an environment where only the owner’s word was a rule. Here is the break even – if the owner steps back and takes again control over the daily tasks due to fear that the new managers will fail, the old status quo is coming back. The correct move is the owner to grant a 3-months trial period to the managers supporting them at any time and for any question. This is how he confidence his vote, transfers the control, demonstrates his requirements and fits the characters. In the same time, the owner holds all control mechanisms so that the company does not sink if anybody makes a mistake.

The most important during every change is the owner to keep tight the chosen line and act hard against any employees’ resistance. It is the only way the change to become effective in the planned terms.

The biggest problem is when the owner starts to hesitate in the middle of the change implementation. Or if he wants to change something but keeps the total control for himself. In such cases the employees always find a way to turn back to the well-known comfortable chaos.

Another problem is when the owner asks every employee to evaluate the work of the rest colleagues. This is how the firm becomes a detective bureau where not the work done is important but who will put a colleague in a bigger mess.

Growth is important for every company and in order to go ahead with big steps it is necessary faith and control to be dozed properly. But faith is a feeling fed by well implemented control. It is in the hands of the owner and the general manager to create and support the control mechanisms which ensure the progress with the faithful people.