Operations management is not usually a glamorous or even popular position because most of the job revolves around implementing systems and holding people accountable. Yet operational professionals are often the unsung heroes at growth companies. They’re the folks who take a vision or business plan and create the support infrastructure to make it happen.
Entrepreneurs sometimes resist the idea of infrastructure because they associate it with bureaucratic red tape that will slow them down and stifle their creative juices. However, establishing policies and processes becomes increasingly important as you enter second stage. With only a few employees, you can get by without a lot of written rules because you’re in close communication with your team, working in the trenches with them every day. Yet as you grow from 10 to 20 to 50 or more employees, things become more complex. Structure becomes critical to supporting your staff and continuing to scale the business.
Here is a quick look at some common operational issues I’ve encountered over years… situations where a little infrastructure made a big difference.
Building the team — Entrepreneurs usually have a hard time letting go, as they are personally tied to their business and see it as an extension of themselves. This is especially true when it comes to bringing on senior managers and replacing themselves as the company’s technical expert in order to embrace the role of visionary and strategic leader. Once entrepreneurs finally admit they need help, what often happens is a rush to fill positions, a lack of clear job description and bringing on someone who is similar to themselves. In contrast, if entrepreneurs can honestly assess their strengths and weaknesses and then hire to offset their weaknesses, amazing things will happen.
Developing hiring procedures may seem tedious, but saves time, money and a lot of headaches in the long run. And there are some really effective tools out there to help you find talent — and get the right people in the right seats. Two I recommend are Predictive Index and AcuMax, which are science-based and statistically valid. In a nutshell, these tools enable you to devise an ideal profile for a position; then candidates complete a questionnaire that results in a profile you can compare to the ideal.
Monitoring performance — I once joined an organization where the salespeople were drawing large salaries without any processes to hold them accountable. In response, we worked with them to set reasonable goals and introduced “sales pipeline calls” to discuss their progress. These weekly calls were designed to provide support as well as accountability. For example, perhaps a salesperson had been trying to contact a large company, but no one was taking their call. Someone on our team was often able to point them to a potential door-opener at the company.
Within about six months, the pipeline calls achieved two things: an increase in revenue and a reduction in salaries. That may sound counterintuitive, but we had some very expensive people who weren’t producing results, and the weekly calls made their lack of effort obvious — there was nowhere to hide. We didn’t even have to fire these non-producers. They transitioned themselves out, which caused more than $400,000 of expenses to melt away.
Solving procedural pain points —This same company had cash flow issues in its early years, which generated concern among our outside contractors. They would submit invoices and expect to be paid right away, which put a lot of pressure on our bookkeeper. Not only did she have a steady stream of people interrupting her, it simply wasn’t efficient to run checks every day. To give her air cover, we implemented a simple policy: Checks would be run on the last Friday of every month. If their invoice was submitted by that day, contractors could count on being paid. If not, they would have to wait until the next month. This process resulted in both a happier bookkeeper and improved cash flow.
Another procedural issue closer to home: At the foundation, our retreat program didn’t have hard-and-fast cancellation policies for many years. This became an issue if: 1) there weren’t enough participants to justify the event, or 2) people cancelled at the last minute, causing group size to drop below our minimum requirements. As a result, there was confusion about whether or not to go ahead with an event — and a lot of last-minute decisions had to be made in the eleventh hour. In response, we’ve created a new policy. Whenever registration falls below a specific number of individuals within a certain timeframe, it’s an automatic no-go. We’ve also developed procedures for how to handle the participants who have already paid. Now our retreat coordinator doesn’t have to spend hours tracking down multiple people to get a decision. She knows the policy and has the authority to execute it.
It’s amazing how powerful infrastructure can be. It saves time in decision-making, increases profitability, and gives you empowered, happier employees.
Entrepreneurs start companies because they are good at something — but not usually infrastructure. Most often the founder tends to be the chief rainmaker, the one who has all the vision and key relationships. Skilled operations professionals can help entrepreneurs get what’s in their head onto paper, put structure to their dream, and hold the team accountable. From there, the magic happens.
(Published September 11, 2018)