Leading A High Performance Company

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Leading a High-Performance Company
By Rob Fuller, Beyster Institute Staff

Many entrepreneurs are good managers. They start companies and develop great products or services; they utilize innovative technologies; they identify key target markets and raise enough money for growth. But the company fails to live up to its potential as a high-performance company. That shortfall is most often caused by a lack of leadership, rather than a failure of management.

One widely used definition of leadership is “the ability of an individual to influence, motivate, and enable others to contribute toward the effectiveness and success of the organizations of which they are members.” So, as your company grows, you (the entrepreneur) need to change your behavior from “start-up mode” to “growth mode.” If you continue to do all the things you did at start up and make all the decisions yourself, you will impede the growth of your company. Jana Matthews, president of the consulting firm Boulder Quantum Ventures and co-author of the book Leading at the Speed of Growth, says, “If you want to lead a growth company, you have to select the right people, delegate, recognize and reward high performers, plan, communicate, and lead by example.”

As the leader, you have many critical roles and responsibilities within the company. Selecting and preparing a top team to take on some of your leadership roles is a major one. For your company to grow, you, as an effective leader, need to set goals, delegate tasks, and expect your managers to do their jobs. Resist the temptation to micromanage people. Don’t tell them what to do and how to do it, and don’t make decisions for them. At first it may be difficult not to make all the decisions, especially when employees bring problems and ask you to solve them. But if you continue to make every decision yourself, you’ll become the bottleneck to growth. If you don’t delegate and then hold people accountable, your company won’t be able to grow.

You need to delegate in order for your company to grow. Smart delegation helps develop the next generation of company leaders, and frees the current leaders to grow the company. But most of us really do not know how to delegate, so we often end up abdicating our responsibilities, then trying to micromanage the results. This makes simple tasks more time-consuming and makes delegation more trouble than it’s worth. Delegating means giving an employee some level of authority to act on behalf of the manager—and the amount or level of authority can vary by employee and by task. Matthews describes a model for effective delegation that uses five levels:

Level 1 – The Report: “Report all the facts to me, and then I’ll decide what to do.” This first step puts the information gathering in the hands of the employee, but keeps the decision-making and control in your hands.
Level 2 – The Recommendation: “Identify actions, and recommend one for my approval.” After the employee has demonstrated proficiency in information collection and reporting, ask them to recommend the “best solution” to the problem. Their recommendations will provide you with insights into their decision-making skills.
Level 3 – The Action Plan: “Let me know what you intend to do, but don’t take action until I approve.” When you ask the employee to provide an action plan, you are testing their proficiency at Levels 1 and 2 – and their ability to devise an action plan. But at this level you still retain the right of approval before they can act.
Level 4 – Decision-Making: “Decide what to do, take action, and then keep me informed.” Delegation at this level requires a high level of trust and confidence in the employee’s ability to collect the relevant data, analyze it, choose the best option, and act. At Level 4, you delegate the decision-making to the employee – with the reminder that they need to keep you apprised of the outcomes – positive or negative.
Level 5- Full Delegation: “We’ve faced similar issues in the past. I trust your judgment. Take care of the problem.” At this level, you fully delegate the issue or problem to the employee and turn your attention to other issues. Based on past experience, you trust them to function as well or better than you would in this situation.

Begin every new employee at Level 1, including members of your top team. Move people to Levels 4 or 5 as quickly as possible. As your company grows, make sure your top team uses the same process of delegation. If you or your managers have problems delegating, get help from a coach or get training. Poor delegation is a major deterrent to company growth.

Companies that perform well will grow; those that don’t will fail. It’s important to set goals, measure performance, celebrate achievement of goals, and reward those who produce. Reward high performers, promote your best people, and be sure not to demotivate employees.

There are several ways to reward people; money (specifically salary and benefits) is only one of them. People need recognition for a job well done, successful completion of projects, or achievement of milestones ahead of schedule. Consider a personal note, a cash award, or some other token. Provide recognition publicly at company meetings. Recognizing outstanding performers reinforces their behavior and demonstrates to others that this is the behavior you want everyone to exhibit.

Dr. J. Robert Beyster, founder of SAIC, grew that company from a small start-up to a major multi-national corporation on the principle that “those who contribute to a company should own it, and ownership should be commensurate with a person’s contribution and performance.” If you truly believe that those who produce should share in the rewards, and you want to tie top performers to your company, you may want to consider some form of equity compensation package, such as stock options, stock bonuses, or stock purchase programs.

Promote your future leaders. Make sure they are good role models for others, that they understand your strategy, goals and values, and are able to explain them to others. Leaders of high-performance companies know how to lead by example, choose the right people, delegate effectively, measure performance, hold people accountable, and reward and promote the best.

If you build a company where people can perform at their best, growth will happen!

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