How to prepare for the future leadership of your company Featured

3:39pm EDT September 1, 2012
How to prepare for the future leadership of your company

Years ago, a friend told William F. Hutter that every organization is perfectly designed to achieve the results it is getting. Hutter, president and CEO of Sequent, explains it this way.

“The easiest way to explain this idea is to look at a sports organization,” says Hutter. “As a spectator, it is really easy to see things about a play, a player or a team dynamic that the coach must not be seeing. Everyone has played the role of Monday morning quarterback or armchair coach. In that role, we see things that need to be fixed for the team to perform more effectively. Passing stats are off — ‘get a new quarterback.’ Two missed PATs — ‘get a new kicker.’ The armchair coaches will tell you, ‘The team is designed to get the results it is getting.’”

Smart Business spoke with Hutter about this analogy and how it relates to leadership.

How does ‘Every organization is perfectly designed to achieve the results it is getting’ relate to leadership?

To answer this, it is important to understand the difference between managers and leaders. In the most basic definition, leaders help define the direction, the culture and the belief in the yet-to-be-accomplished objectives for the organization. While managers execute directives and tasks critical to the operations of the organization, neither managers nor leaders can exist without the other.

Generally, leaders don’t manage well and managers often don’t lead. Leading and managing are different skill sets that are both necessary and that must complement one another. Now that the ground rules are defined, let’s look at a common mistake companies often make in selecting their next leader. It’s called the ‘last person standing’ rule.

What is the ‘last person standing’ rule?

Consider a common method for selecting the next person in leadership, the ‘last person standing’ rule. This is essentially what happens when companies choose to not be purposeful in determining the next level of leaders. Instead, a decision is made by default.

So why does this happen within good companies? The collective knowledge of employees is extraordinarily important to all companies. Any company that has suddenly lost a key, long-time employee knows how this affects the entire organization. As a result, seniority or longevity of service tends to justify to business owners that the employee who has been there the longest and/or is the most technically competent should be in a leadership role. These employees may also have a leadership expectation due to their length of service and contribution to the company.

Does every outstanding manager or worker have the potential to be an effective leader?

Consider this illustration of what can happen when a business begins to grow and evolve. The business owner of a thriving small business has relied on a key employee, Bob, for more than 15 years. The owner trusts Bob to manage the day-to-day aspects of running the business. Bob is also genuinely liked by the staff and has a good understanding of the owner’s goals. Due to the owner’s leadership and Bob’s ability to manage, the company grows and prospers.

Then, after years of working together, the owner decides to hire another person to help lead the company. Following the ‘last person standing’ rule, Bob is given the opportunity and is now focused on the overall business, not on operations. As a result, Bob needs to hire a new manager. Not wanting to disappoint, he, too, makes a decision by default rather than on purpose and hires his best worker to be the new manager. Unfortunately, the company is left without a good leader or effective manager and the best worker is now a manager.

Why does this rule continually play out in business?

Essentially this happens because it is easier to let it happen than to make a purposeful decision on leadership and address the difficult discussions with employees who will be disappointed when their expectations are not met.

Just because the key person is a great manager does not mean that he or she is prepared to be the next leader. Longevity and great results from an exceptional employee in a defined role could mean that the person is exactly where he or she fits best within an organization.

Every business has a key employee who works diligently, making sure the daily operation runs smoothly. However, the real challenge comes in knowing how and when to train key employees for natural transitions in the growth of the business. Unfortunately, businesses do not spend as much money training their employees as they do on keeping equipment running smoothly. Most entrepreneurs tend to think that everyone is blessed with the same leadership skills that they possess, but that is often not the case.

How can business be more prepared to avoid this situation?

It is imperative for any organization to plan for a transition by providing training for employees and helping them prepare for their next responsibility. As the leader, the business owner should work on the following:

  • Create a culture that emphasizes the importance of every function.

  • Acknowledge and remember the value of long-term employees.

  • Match the skills of individuals with the jobs to be performed.

  • Be honest with every employee about their potential and their fit within the organization.

  • Purposefully plan for transition.

  • Make the investment in training your most important people.

  • Don’t be afraid to hire people with the skills your organization needs to grow.

If you know you need to change your organization, you must change first. Do things differently than you have in the past. It’s not easy ... be a leader ... decide to make the change.

William F. Hutter is president and CEO of Sequent. Reach him at (888) 456-3627 or bhutter@sequent.biz. For more information about Sequent, visit www.sequent.biz.

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