How most manager fails to manage.
If you have experience outside of Multi-National-Corporation, a lot of us would be able to relate to similar experience of having to deal with plenty of of “bad” managers. I put it in quote, because it’s not possible to define in one sentence what constitutes a bad manager. However, it is much easier to define what makes one a good manager, and at the core of why so many manager fails, is mostly due to them not really understanding as a whole, what managing means. So lets get into the real issue here: What really is a manager’s job?
“A manager’s job is to drive the organization to act as a unit in order to achieve the one best possible outcome. If you are in finance, you want to derive to the best ‘Free Cashflow’ scenario, if you are in Sales the best possible revenue, if you are in Administration then proper support on documentation. If there are conflicting best scenario among different departments, a discussion of the trade-off must take place and the organization must decide on the best trade-off.”
There is always one best outcome
Any Enthusiast of this art or anyone who’ve done their MBA can relate to this. Decision Making is an art, is science, and it’s something that has been around for a while. Try googling ‘Science of Decision Making’. Decision Making has always been about designing a path of decisions that leads to the best outcome. Effecting parameters are things like ‘Alternative options’, ‘Optimization’, ‘Trade-off’, and ‘Probability of succeeding’. What this science tells you in a nutshell, is that your decision one by one leads to some outcome, but the way you design your decision should be reversing the decision tree. Decide on an objective, a set outcome, the designing the set of decisions to take you there.
The first objective for us to decide whether a manager is good or bad, would be to see if he/she understands this concept. People will argue with you that there is no such thing as a pre-defined best outcome, but people that have studied the science of decision making will argue otherwise. There is always one best outcome, whether you can achieve it or not is a discussion entirely on it’s own. Manager’s that don’t have a grasp on their own best outcome cannot even begin to fathom the thorn on the way there.
People have the tendency to take the path of least resistance. This is a recurring theme for most companies everywhere. The explanation is relatively straight-forward, when faced with uncertainly, we often look at it’s immediate resistance and assume that it will be difficult the whole way through. Lets apply some statistical concept here: When we look at ‘Sample’ and ‘Population’ we can observe that as sample size moves closer to the population size, that there is less variance between the two sets of data observe. An example would be to look at a population of 1000 people at the airport today. If you are asked to draw some conclusions about these 1000 people (whether they are mostly male / female, young or old, where they might be from) you can probably draw a better conclusion if you have the data for 800 people, compared to say 20. When you look at the immediate resistance to a path you need to take, more often than not most Managers will apply the immediate foresight and assume that it will remain that way the whole way through. The fallacy here lies within the assumption that a: “There is no one best outcome” and b: “The path to least resistance is the best path to take”.
Selflessness as a measure of your company’s health
What contributes to a big barrier of change in an organization is how change effect individual and each individual’s level of resistance to change. Change is made much more difficult when the Manager itself also selfish, and acting on behalf of his own interest rather than what the company want/need to do. Love for the company and loyalty have been increasingly rare in modern days, where Generation Y employees are the main propagator of ‘lets get a new job to get more pay’ type deal.
Let’s draw out a scenario: Today you are working in an Oil/Gas company, and the market price of Oil dropped 30% today in October and is expected to remain this way for this year and next year. Immediately following this news, your company announced that it will most likely not meet it’s initial year target, and the company will have to revise all commission policies, and bonus policy. You are the company’s Sales Manager, and this change in policy really hurts your earning. You already have your vacation all lined up in the Bahamas for New Years, and don’t want to fork the money out from your savings account for this trip.
The selfish way to go about handling this situation, is to resist the policy change and complain to the Executive Management about how this is not what was agreed upon when you took up this job. You can also threaten that with this policy announcement you and your team is ready to quit, which would leave the company in a bigger crisis hoping that the company would be able to cough up less profit and compensate for your hard work. Perhaps, this is the typical response of Manager to many of these types of crisis, but now consider same scenario with a selfless manager.
In light of these dire changes, the Manager decides to take it up upon himself to really understand why. He appointed a meeting with the C-suite Executives requesting for explanation in these policy changes. The CFO gave a clear explanation:
CFO: “It was a hard year from us, and based on expected price of energy we are running into our own skin for cash. As you may already know, the bank invest in our digging projects, and regardless of what we can squeeze out some profit were gonna have to pay them back in principle and interest period. We did the analysis on our expected revenue, and unless there is some drastic cost-cutting measure, pretty soon the bank will be confiscating all our assets”.
Manager: “But with this change of policy, it’s like we did all our work for nothing. There might be something bigger at play also, but the company needs to consider that we have family at home to feed”.
CFO: “We don’t expect the market price to stay this way for too long. If it does, you are probably better off finding a new job now anyways. But lets be honest here, we are in a market situation that is wrecking our company and industry. Either we work together, or this entire ship will sink”.
Manager: “I see, I promised the company that I’ll do my best to work here as the Manager, thank you for clarifying the reason behind the policy change and I’ll do my best to manage the situation.”
At the end of that conversation, a selfless Manager understands that more important than the policy changes are himself that needs to act as a catalyst of changes. A successful company here will be able to exert leadership, to provide his team to understand the critical need and bring his team together to give up a little of something in order for everyone to win it later.
This is not rocket science by any means, a company that have good selfless Managers are going to be able to adapt much better to dire situation (which let’s be honest, is not as rare as you might expected). Companies that can overcome adversities have Managers that are on the company’s side and will be able to compromise with the company’s real need. Now lets think about this company like a Ship. Your ship is sinking in the middle of the Pacific, because the ships is carrying too much weight. All we have to do, is throw away some of our belongings, and we can all survive this disaster together. Will you throw away your luggage to save the ship?
Understanding the Role in your Organization
Were all bounded by different issues in our different roles. Were all shackled down by our KPIs, and we see the world through our own eyes. Most of us (at least, where I am writing this article from) don’t have MBAs, have no clue about Finance and Shareholder value. One of the key values of a truly great Manager is to be able to micro-managed our team in light of how we are being macro-managed. I am not talking about Economics, but an organization is governed (especially in public and private business) in a structured and rigid framework. There are things you can and cannot do, but the significance difference between a good Manager is that a good one will know what his role is and the limit and sensibility of what he could and should be fighting for.
Let me start this part by laying down some facts. First off, I will argue that most corporate structure are not built to win. The core nature of a corporation is set so that you are very limited in what you can do, and it’s difficult for you to screw up and hence screw your company. If the structure is too rigid, sometimes you loose out on alot of opportunities because your company cannot accommodate it. An example would be a company that locks it’s gross profit margin on each SKU to a certain level in each of it’s billing. Lets take medical industry for example: A company lock’s it’s price ceiling, in order to retain at least 40% profit margin on their goods. They go into a new market, where specific projects from their customer requires that they discount their products further, resulting in 20% profit on their goods. The process to change the pricing in their system requires a signature from all Sales level, Regional Manager, Vice President, and the CEO of the company. Most do not even agree on this price reduction, and voice their opinion against it.
Here is where understanding your organization and your role comes in. Imagine yourself a Sales Manager in this situation. You understand that this account and sales might bring in less money, but when the marginal benefit is higher than the marginal cost it is only logical to go through with it.
