Cranfield School of Management has been studying the behaviour of entrepreneurs and their relationship with key staff in some thousands of growing UK companies. Cranfield study has concluded that it is the entrepreneurs themselves who are the most likely to be the biggest stumbling block to the growth and development of their own company. Cranfield grouped entrepreneurs into four dominant types of relationship with their staff, mainly: Heroes, Artisans, Meddlers and Strategists. Past Cranfield studies shows that most small firms do not think very much about their future strategy.
In fact, less than a third of small and medium enterprises across Europe set their objectives in terms of profit and margins. This is somewhat surprising as profit and profitability are the key measures of business success. However, as over two-thirds of owner-managed companies with a turnover of i?? 10 million do not have a plan at all, it should come as no surprise that few entrepreneurs are strategists. Other research has uncovered the shocking fact that 60 per cent of senior staff in small firms leave within two years of their appointment.
Some of these early departures can be put down to poor recruitment. The researchers studied two important elements of this relationship. The first element studied was how much time the owner-manager spent on routine management tasks such as marketing, selling, analysing figures, reviewing budgets or arbitrating between managers. The second one examines what level of business skills has been attained by the key staff. Heroes Probably the Heroes undertake one management function such as sales or production.
The Heroes’ time is now spent on managing the business. As the level of business skill throughout their employees is still relatively low, the Heroes will take the lead in starting routine management procedures. They will introduce ideas from the courses they attend to the firm and be the only persons who really understand them. That is the reason why they will be considered as Heroes from the rest of the employees. Unfortunately, this leads to the Heroes taking the Herculean role on their hands.
In this case, allocating operations to the employees is relatively simple as the working skills in most businesses are either readily available in the local community or the people can be trained up without too much difficulty. On the other hand, passing out routine management tasks will almost always require that the owner or manager trains up his own management teams. There are few well trained managers available to the small company because of two main reasons. Firstly, the overall pool of such people is small as training in the small business sector until recently has been almost exclusively concentrated on the Entrepreneur.
Secondly, well trained managers usually seek jobs in larger firms with more opportunities for advancement and more resources to practice the “art of management” on. The Heroes have a high capacity for improving the firm performance but still have low growth prospects when compared to their market. They have no time for strategic thinking and no depth of management to handle growth effectively. Artisans In the Cranfield model, the Artisans are characterized by low occupation with routine management tasks. The reason is that most of their time is spent producing a product or delivering a service.
The level of business skills in the company is also low as most of the Artisan’s staff is employed helping in “production” or performing primary duties, such as book-keeping or selling. Artisans can include professional firms, such as architects and surveyors, manufacturers, sub-contractors or small building firms, owners of small retail chains such as chemists, video stores and proprietors of hotels and restaurants. Little time is available either for routine management tasks such as examining performance or reassessing methods.
Every hour that can be sold is sold and little time is left over to either improve the quality or profitability of today’s business or to consider strategy for tomorrow. The Artisans have low growth prospects in relation to their market. Their training and development needs are to raise their awareness of the management significance as a business task of equal importance with daily revenue earning. Meddlers The Meddler increases the level of management skills either by training or recruitment but then fails to delegate routine management tasks.
At this stage, according to the Cranfield model, the owner-managers probably have no operative responsibilities and have assumed the role of managing directors. Typically, they spend much time anticipating subordinates, introducing more refined, but largely unnecessary management systems. They also go on courses or read books that make them even more well-informed and sometimes better at routine management tasks than their own employees, who anyway are by now doing a perfectly satisfactory job of managing today’s business. They get in early and leave late and practice “management by walking about”.
The Meddlers’ problem is that they cannot delegate routine management tasks because they feel useless. They have been used to a 70-90 hour week with only 10 days holiday each year. Once their management team is in place and trained, they are out of a job. Until they reduce their involvement with routine management tasks, they will limit the growth capacity of this firm for two reasons. Firstly, their management team will not take on more duties if the reward for taking on the last lot of responsibility was being irritated and criticised. Secondly, they are too busy checking on people to develop sound strategies for growth.
Strategists The Strategists are the most desirable type of entrepreneurs to develop a growing business. They develop the management skills of their team to the highest appropriate level and in depth. They may introduce a staff duty to help their line managers in such areas as personnel and market research. This will free-up their key managers to think strategically too. They will dedicate roughly a third of their time to management tasks such as monitoring performance, co-ordinating activities, resolving conflict and helping to manage today’s business.
A third of their time will be spent motivating, counselling, developing management teams and helping them to manage change. This activity is aimed at improving the existing business. The final third of their time will be devoted on developing strategic thinking to form the shape of the future business. Their training needs will be to continuously update their core leadership and motivation skills and to increase their depth of knowledge on strategic issues, acquisition or divestment activity and financing sources. Relationship between the Owner-Manager and His Key Staff in a Growing Firm
The natural path of development for the relationship between the owner-manager and his team is to pass from Artisan to Hero to Meddler and for the lucky few to become Strategists. Why Family Businesses Die The family business is deeply rooted in the sense of pride of the owner like most of other forms. Schein (1998) said that this is reinforced by a desire for autonomy which forms part of the five “career anchors”. This becomes possible with the combination of vision, energy and dedication. Moorman and Halloran (1993) stated that there are more businesses that fail than they succeed in this competitive market place.
Twenty-four from one hundred start-ups fail in the U. S. , within the first two years and more than sixty within the first six years. This happens due to lack of planning and preparation which is the most common reason. The second is the lack of creativity which is important to survive. Some businesses offering the same product may succeed because they are doing something better and more innovative than competition. The “Copy Cat” approach lacks creative skills to turn its product into a unique selling proposition. This can be harmful for family businesses.