thirteen important management principles to build a growing company
TRANSCRIPT
November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
1
Thirteen important management principles
to build a growing company and generate
profit
A lecture in Prof. Dov Zohar’s seminar for MBA course at The Technion, Israel Institute of Technology
Lecturer :
Ze’ev Ronen, Business Excellence
• Looking back over my 20 years of experience as
CEO and the dozens of CEO’s and managers I
have worked with after it,
• I have refined 13 important principles of good
management in building a growing company and
generating profit.
• Their order may change, but I recommend
sticking to all of the principles presented here:
2 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
A brief introduction
• First rule:
• The CEO/manager must stick to a path, and still
be open to change in the business environment;
he should not be afraid to run the company, and,
if necessary, to confront the internal power
forces that report to him.
• I have met more than a few managers who were
afraid to manage some of their subordinates
3 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
Leadership or management
• In extreme case, the CEO (and owner) closed
himself up in his office and watch anxiously as
the company spiraled down to insolvency.
• Although it was clear to him that they were
approaching the edge of a cliff, he was afraid to
confront his subordinates, primarily because
they were family relatives.
• This case was extreme, but a situation where
the CEO is afraid to confront his subordinate
managers is fairly common.
4 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
Leadership or management (continue)
• Please note: from now on the order of
preference of the following principles may
change; i.e. the order in which they appear does
not necessary represent their order of
significance.
• In addition, for convenience purposes, I will refer
to the manager as “he”, but of course, we
assume the possibility of both genders.
5 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
Prioritization of principles
• Establishing a vision determines the direction in
which the company will progress, and its values
should be defined accordingly. The lack of
establishing a vision often stems from the
absence of direction.
• Without a vision, company growth will be
random and may suffer along the road.
• It would be advisable to decide on the vision via
teamwork.
6 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
Vision
• Like the vision, this value has tremendous
significance in the development and growth of
the company in a clear, programmed direction
that avoids randomness.
• Here too, it would be advisable to define the
strategy and determine the company’s path via
teamwork.
7 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
Delineating a clear path, strategy or policy.
• When a company or CEO do not conduct
themselves honestly, the impression trickles
inwards and employees may end up not
conducting themselves honestly towards the
company.
• I have known companies to direct employees to
make false reports to the authorities, and, as a
result, the employees would steal from the
company.
• Harsh words, but believe me, that’s the way it
was.
8 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
Honesty
• The value of fairness within the company is of
the greatest importance.
• “No secrets” and information will travel among
workers.
• When the CEO discriminates or is unfair, this will
create bitterness and disloyalty at all levels
below him.
9 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
Fairness
• The CEO/manager must lead the company
according to set strategies. The concept of
leadership is included in the concept of
management. However, due to the significance
of this value, I have chosen to stress it
separately.
• Even when the vision is determined and strategy
is set, not all managers stick to their plan. A
CEO must stand at the front and lead the
company after him.
10 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
Leadership
• Every single manager and employee notes the
CEO’s conduct, not just what he says.
• If you don’t stand behind your words and
conduct yourself by the values you preach, you
can’t implement what you preach.
• When a CEO behaves disrespectfully, his
employees will treat him the same. This goes
for honesty, truthfulness and loyalty as well.
11 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
A personal example
• The more that employees are privy to company
objectives and information on company goals
and performance, the more you can enlist them
in the drive towards the company’s success from
a sense of partnership.
• Transparency gives a company great strength.
Concealing information results in a detachment
among employees from their managers and
company objectives; it also reduces the drive to
create profit.
12 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
Transparency
• Transparency doesn’t mean that everyone knows
everything. But it is true that sales staff will always be
aware of company objectives and sales volume, and can
therefore be enlisted to attain objectives and company
success, With this strategy, other employees will follow
as well.
• The more management keeps information close to its
chest, the more difficult it will be to obtain objectives.
• Concealing information primarily occurs in small and/or
family businesses.
• It is sufficient to observe successful public companies to
realize that transparency doesn’t hurt, it helps.
13 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
Transparency (continue)
• Listening to managers and to employees will
contribute valuable information and ideas, along
with generating innovation and motivation at all
levels.
14 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
Listening
• Nothing said above can replace discipline. We have all
been testing limits since we were kids, and we never stop
doing so.
• At one company, a rule was made that smoking was only
permissible in designated areas. One employee lit a
cigarette next to his manager and smoked as he operated a
lathe. The day after he was reprimanded, he changed his
clothes at the end of the work day, lit a cigarette outside
and toured the workshop with the manager.
• How should a CEO behave? If the manager or CEO
doesn’t enforce discipline and define clear limits, he won’t
be able to lead the company towards its objectives.
15 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
Discipline
• To realize your strategy and attain company
objectives, you must outline a multi-year work
plan (in greater detail regarding the oncoming
year) and set quantitative objectives accordingly.
16 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
Work plan and objectives
• The CEO cannot do everything.
• To effectively enlist his management, he must
delegate responsibility to them and rely on them
to be responsible and authoritative.
17 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
Delegating responsibility
• Finally, after we have set objectives, a multi-year
work plan and have delegated responsibility, we
must begin a routine of control with quantitative
K.P.I’s (Key Performance Indicators) that will
represent progress towards attaining our objectives.
• Instead of constricting himself and interfering in
his subordinate managers’ work, the CEO should
evaluate management in light of results (at least
once a month) and ask to see a plan of action
everywhere he notes a delay in attaining objectives.
18 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
Control
The CEO must lead and focus the company
19 November 17, 2014 052-4767531: נייד. מצוינות בעסקים B.Scזאב רונן
CEO: Improvement
in company profit
Engineering
Funds
Operation Marketing and sales
Human resources
Throughout the process we
mustn’t forget our objectives
and our means to attain them.
Our various objectives and
KPI’s create a balance
benefitting the main objective.
Work is cooperation while
maintaining balance; it is not
struggles.
20 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים
Thank you for listening.
Any questions?