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> Lessons Learned > Management
Management
... Management
by Objective (MBO)
... Managing the Company
... Watching the Purse Strings
... Hiring and Firing
... Benefits
... Managing Employees
... Organizational Structure
Management by Objective
(MBO)
| 10 |
Clear, measurable objectives help
insure that every employee is working towards the same ends and
with the correct priority, that every employee is doing the right
things as determined by the managers of the company. |
| 11 |
Comparing results against objectives
is the only non-subjective basis for performance evaluation. |
| 12 |
Failure to meet an objective most
often results from its neglect rather than difficulty in performing
the task; therefore, regular, written reports reviewing progress
towards objectives aid achievement more than anything else I have
found. |
| 13 |
Peer pressure helps some people
meet their objectives, but not others. The same is true of bonuses
tied to objectives. |
Managing the Company
| 14 |
Managers should insist
on profit as the primary objective of the organization. In the
short term, a lean, profitable company can weather storms that
other companies cannot. In the long term, every company requires
profit for its survival. A requirement for profit also helps foster
discipline throughout the organization-so it is a good idea to
emphasize profit from the very beginning. |
| 15 |
Companies and projects
should have the appropriate scale at all times. There are many
one-person businesses that an ill-guided founder tries to turn
into a ten-person business. That is a strategy of failure, just
as it is to starve a large opportunity. Everything has its natural
size. |
| 16 |
Market focus is extremely
important, because independent of competitors' overall size, the
company that masses the most resources at the point of attack
wins. |
| 17 |
Fundamentally, sales
growth is a function of product creation. No products, no sales. |
| 18 |
For each order of
magnitude increase in the size of a company (1, 10, 100, 1000
employees), management must adapt and change its means of internal
control and communication. |
| 19 |
An accounting and
management control system has many figures of merit including:
accessibility, ease of modification, and integration of key information
sources. At Banner Blue, we found that local control of the operating
data, on a flexible, easy-to-use system that did not require special
training to access or modify, was more valuable than an integrated
system managed by remote experts. |
| 20 |
I contracted out things
that we could do more cheaply on the outside, that were outside
my management expertise or style, or that had a very uneven demand
for labor. On the other hand, I found it valuable to do our own
advertising and public relations because it made our managers
more effective communicators of our product plans, both inside
and outside the company. We also self-insured for employee dental
benefits because it was easy and saved money. Rather than following
the conventional wisdom on what should be contracted and what
should be done in-house, I examined each case on its own merits. |
| 21 |
Measure and track
everything. |
| 22 |
The board of directors
is an excellent source of business expertise. It should comprise
at least five members, with more outsiders than insiders. |
Watching the Purse Strings
| 23 |
A straightforward
way of managing headcount is to target an aggressive ratio of
sales revenue per employee as compared to other successful companies
in the industry, regardless of their size. Banner Blue targeted
$200,000 in sales per employee. |
| 24 |
Many people inside
and outside the company want to spend company money because of
what it does for them. You must ask what spending the money does
for the company. |
| 25 |
The best investment
you can make is to spend money wisely. There is no return on money
frittered away. |
Hiring and Firing
| 26 |
A startup is a great
place to learn, but no one has time to teach. Employees must be
self-starters and self-teachers. |
| 27 |
Every job requires
a slightly different personality. For example, the personality
of a successful salesperson is generally quite different from
that of a successful accountant. I found reputable, standardized
personality tests to be extremely helpful in ascertaining a candidate's
fit for a given job. |
| 28 |
Different companies
have different cultures and employees cannot always adapt. For
example, people who were effective working for me at Hewlett-Packard
were not always effective working for me at Banner Blue. |
| 29 |
Just because a job
candidate attended a prestigious school or worked at a successful
company does not mean that they contributed to that prestige or
success. You must ask what they know and what they accomplished. |
| 30 |
I always try to hire
the smartest people I can find who are also a good fit with my
other criteria. |
| 31 |
Giving unique privileges
or extraordinary compensation to a new hire engenders jealousy,
even at the executive level (perhaps especially at the executive
level). |
Benefits
| 32 |
Excellent benefits
compared to other companies in the industry are the quid pro quo
of demanding performance standards. |
| 33 |
Aggressive profit
sharing is one of the most valuable benefits to the company and
the employees, because when properly implemented it demonstrates
that everyone is in the same boat, increasing productivity simultaneously
with compensation. |
| 34 |
Benefits should be
easy for employees to understand or they lose their value, potentially
becoming counterproductive. For example, no employee, including
myself, knew how much Banner Blue's initial profit sharing plan
would pay until the close of the year. Although employees liked
profit sharing, they did not significantly alter their behavior.
I modified the plan to make the amount of the profit sharing award
more visible throughout the year and every employee adjusted his
day-to-day actions accordingly. |
| 35 |
You should increase
benefits steadily over time, because employees take last year's
new benefit for granted today. It is especially important to take
this into account when establishing the initial level of a new
benefit. For example, it is better to add coverage to a new insurance
plan every year than it is to provide full coverage all at once.
Avoid reducing benefits at all costs. |
| 36 |
Cash is the ideal
way to deliver bonuses of moderate size because of the additional
impact and favorable memory it creates. |
| 37 |
Providing every employee
a key to the office is a symbol of trust that pays back many times
over. |
Managing Employees
| 38 |
It is more important
for subordinates to respect a manager than to like him. Fortunately,
admiration normally follows respect. |
| 39 |
Managers should reward
employees based on market conditions and merit as measured by
performance against objectives, not seniority. This focus keeps
the top performers happy and reinforces a results-oriented philosophy. |
| 40 |
In spite of occasional
jealousy, internal promotions build loyalty among an organization's
top performers, but for every person promoted there is someone
else who thinks the job should have been theirs. As a courtesy
and in an attempt to obtain their support, I always privately
pre-announce promotions to those individuals likely to feel disappointment. |
| 41 |
When publicly announcing
a promotion, I always give a detailed explanation of why I am
promoting the individual. This lets others strive to emulate the
person's achievement rather than complaining about it. |
| 42 |
Some things are so
deep that they never change. It is better to enjoy and capitalize
on someone's personality than to make a futile attempt to change
it. |
| 43 |
Each person possesses
different skills and motivations; consequently, it is necessary
to manage each person differently. |
| 44 |
Subordinates working
extra-hard and extreme hours need their manager's moral support.
In this case the manager's simple presence at the job site is
his work. |
| 45 |
When a manager asks
people to make an extreme effort, it is good to have an external
enemy, such as a competitor, to justify the request. Otherwise,
the manager himself risks becoming the enemy. |
Organizational Structure
| 46 |
A flat organization
with low barriers between departments, staffed with well-rounded,
multi-talented people, enables small, flexible, and productive
project teams. |
| 47 |
Physical closeness
is important to minimizing barriers between departments. Distance
inherently creates differences and factions. |
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