Grooming a management team is a long term process with no guarantee of the results. The person that you think will be the next manager may not want to be a manager, may try the position and then decide that he doesn’t like it and leaves, his wife or significant other gets a job in another city and they move…anything can happen. But, from the positive side, you might find someone who can step up to the plate, take on the responsibility and shine…and create a great team who enjoy coming to work every day, take great care of your customers, and contribute to company success.
When choosing the next management team, don’t limit yourself to those who are already doing the work as a team member in the field (or in the office) rather than managing. Keep an open mind with respect to who might be your next managers.
The first thing all managers must have is a scorecard. They need access to the profit and loss statement for their department. They need to know when they are doing well and where the problems are if they aren’t so they can be corrected. Therefore, you need departmentalized financial statements…and they have to be accurate! If the person you want to be a manager has no understanding of financial statements, they have to go to school or you have to teach them how to read financial statements.
Decide how much financial information you are willing to give a new manager. Are you going to give the person detailed statements or just summaries? Are you going to start with summaries and progress to detailed statements?
What are you willing to tell your employees? Some companies keep all financial information secret from all employees. The field labor has no clue as to the profitability of their jobs or the company as a whole. Many of the employees in these companies feel that the owners are making a lot of money whether or not it is true.
Other companies share financial data with their employees. The owners have taught them about profits, how they are derived, and why they are important for company survival. These employees know the profitability of their jobs and the profitability of the company overall. They understand how they impact profitability. They don’t know the exact details with respect to everyone’s salaries, the rent cost, etc. However, they have an appreciation of how they contribute to the bottom line. In these types of companies, when profitability is an issue, the employees often come up with ways to increase profitability.
So, you as an owner have to decide how much information you will share with the employees and how much information you will share with the new manager. The person that you give the financial statements to must understand that you are trusting him or her with confidential information about what is happening in his/her department or the company. The person must learn how to give accurate but broad information to their department employees without revealing the details.
The best way to start training is to review the profit and loss statement with the potential manager each month. For the first few months you’ll have to lead the discussion. After a few months you should ask the potential manager to lead the discussion.
So, step one, for you the owner, is to determine how much information you are comfortable sharing with the new manager and your employees. Once you’ve made this decision, start teaching the new manager about financial information so that he or she can become expert at reading and understanding profit and loss department statements.
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