We all know that SMEs are the engine for growth and are an important part of the economy. However, while setting up shop is one thing, it is another to manage it. Elias Mazzawi, Managing Director, EMS MENA, gives his tips on SME management.
It’s what you do and the way that you do it – that gets results. A slight variation on the lyrics of the 1939 tune, but that is forgivable. The song was not composed with business management in mind, but is nonetheless a pithy reminder of a very real truth; how we manage our businesses is perhaps the single biggest determinant of how successful our businesses are.
Nowhere is this more true than in the entrepreneurial SME. Ask fellow entrepreneurs and they will tell you. Their biggest challenge is to find the keys to translating the skills, energy and dedication of the core leadership team, into a high-performing organisation and to do so pragmatically.
The correlation between the extent to which this is achieved and the level of success of the business is direct. In other words, it is crucial.
There are three lessons of note for every SME:
- Make the transition from directly controlling and managing everything, to empowering the wider team. It is the first step in building a virtuous spiral.
- Understand and actively invest in the associated skill-building, so that your organisation can accept the empowerment you are offering.
- Build simple, workable management and reporting processes, and use them. Allow everyone to understand activity and results, cause and effect, which will in turn allow you to co-ordinate activity.
Command and control doesn’t help
In many entrepreneurial SMEs, the core team is very actively involved in all the small details of the business. It is making all the decisions, being intrinsically involved in all resource allocation, fully taken up with strategy and day-to-day operations.
Entrepreneurs are passionate about what they are building and managing and it’s this passion that is often one of main driving forces; the hands-on micro approach is in part the very reason for initial success.
But it needs to be used to just the right extent, at just the right time, in just the right way and on just the right things. Otherwise, at some point this heavy micro involvement can begin to limit the potential for success. The challenge is to recognise when the time is right to make the transition and to have in place the tools and techniques to make it.
This is something I saw recently and it certainly illustrates the point:
Management set a rule that cars should be washed at a specific time on a specific day and this followed to the letter. In the middle of a sandstorm, a car was being washed as per the schedule. Consider the implications:
- It’s a waste of effort. The car will be just as dirty again in just a few minutes.
- It’s de-motivating. Consider the employee’s perspective – washing a car in a sandstorm is unlikely to deliver job satisfaction.
- It could destroy value. There is a high chance that the paintwork on the car would be scratched as sand gets into the cleaning cloth.
- It discourages initiative from the workforce.
No-one considered the changed circumstances. No-one considered the value added. No-one considered the opportunity missed. No-one considered the potential value destroyed (paint scratched). At the simplest level, the car washer could have been doing something more productive – perhaps something that there isn’t time for in the normal day-to-day routine. But there was clearly no mechanism to encourage, or allow this.
Looking at the less extreme but more complicated day-to-day and strategic business situations, how much initiative and talent is being ignored, and what value could it deliver for the business?
This common management approach very soon sets a low ceiling for quality, initiative, growth and improvement at a level at that already time-challenged and stretched core team can be involved actively in the day-to-day decisions. A major challenge for any manager is attaining and maintaining the ability to empower employees and to encourage initiative and independent decision-making, within the permitted remit of responsibility.
Train, develop, motivate
It’s all very well to say “I will empower the team.” However, the team needs to be in a position to accept that empowerment. That requires two things:
– Relevant and appropriate skills and capabilities
– A heightened sense of responsibility and duty to the company and to its customers
Training is critical in technical skills, in decision making, in understanding the range of possible actions, and consequences must first be established. The region has quite acutely recognised that this approach is key to enhancing future success and that businesses are investing noticeable and substantial budgets for training and development.
That training must be supported by a corporate culture that fosters learning, allows questioning, rewards success and learns from failure; Management processes, practices and systems must all contribute to fostering this trend.
Cause and effect approach
It’s all very well to say “I will take the right steps to empower the business and I will take the right steps to enhance skills, capabilities and attitude,” but there needs to be a glue to hold all of this together and to make activity flow in the same direction. A balanced scorecard approach, pragmatically designed and implemented, fits the bill.
The approach is not new – it has been around since the 1990s. Most recognise it as a scorecard covering a range of perspectives, typically financial, customer, internal processes, learning and innovation (these vary from company to company).
However, far more important in this environment, is the underlying principle of cause and effect underpinning the scorecard;
- Defining the desired outcomes across the four dimensions is a hugely valuable exercise.
- Drawing the cause and effect map to achieve those outcomes is a massive benefit. Explicitly stating the steps and actions (causes) that influence results (effect), and creating a shared understanding of these priorities and actions across the organisation.
- Defining the metrics that show progress towards the goals. This focuses attention.
- Ensuring that the metrics are things that the team’s actions can influence ensures. This provides an understanding of the actions that make a difference.
- Linking those metrics to departmental objectives, and cascading those to personal objectives focuses the team’s attention on taking those actions.
It doesn’t need to be heavy-duty – a simple spreadsheet based on a shared cause and effect map can make a very big difference. Using this approach to plan and manage on a daily, weekly, monthly and annual basis is proven to work, provided it is implemented pragmatically and not over-analytically. Add in an element of celebrating or rewarding successes, and it becomes a very powerful way to manage the business.
The approach of tomorrow
- As a small business leader, don’t keep all the pressure, responsibility and accountability to yourself, share it with the team. The business will benefit, provided you set up the environment for success.
- Take advantage of the training and development opportunities available.
- Put in place a simple, pragmatic, actionable cause and effect management and reporting approach, and use it.
There is no magic switch to flick to make this success happen overnight, but placing some trust in the tried and tested techniques outlined within this article should see benefits follow.
Elias Mazzawi is Managing Director of EMS-MENA.
EMS (itself an SME) works exclusively with mid-sized enterprises in the Middle East, driving higher performance in operations, sales and strategy.
The EMS approach focuses on quick wins, delivered through short, intense and highly focused project bursts of just a couple of weeks. This is supported by light-touch several days a month over a longer period to ensure that the change lays foundations and becomes more permanent.
For more information about EMS, visit www.ems-mena.com.
Rushika Bhatia Editor
Rushika Bhatia is one of the region’s leading commentators on business and current affairs issues. She is the Editor of CPI Media Group’s flagship title – SME Advisor magazine. In addition, she leads CPI Media Group’s infographics division – with special emphasis on data, research and statistics. Rushika has a Bachelor’s Degree from Indiana University, USA and is also CIMA qualified.