Failure rates for early-stage ventures are reasonably high, but most fail because they lack the fundamentals of a good business. This includes people management.
In order to transform your start-up into a world-class company, you need to inspire your staff to share in your vision. As the saying goes, you’re only as good as the people around you.
This may sound relatively easy to achieve – you’ve got a great idea, so what’s not to get excited about? But in reality, staff expect more from their leader than passion.
They expect consistency, direction, fairness, and the list goes on.
Dr Tom McKaskill is a professor of entrepreneurship and has spent many years as a mentor and coach to a wide range of business ventures. Here are his top tips for managing people.
1. Develop strong values
The most effective way to run a business is for every person in the business to be able to predict what the right strategy is when faced with a situation or problem.
Not that you necessarily want everyone making decisions, but the fact that they all understand how the business will react, and what decision is likely to be made, adds a degree of stability and predictability to the business.
You should not underestimate the micro decisions that employees make every day. Whether they are advising a customer on a service delivery or working on a project, they are all making decisions.
What you want is a consistent approach to these interactions and decisions. That can only happen if the values underpinning the business are understood, agreed and widely implemented.
You can then have confidence that the right decisions are being made across the business.
2. Build teams, not islands
You need to think of your business like an automobile where every part has a function to play and where the whole is much better operationally than the parts.
You need to work to ensure that everyone is part of the team and not just an onlooker.
The role of the entrepreneur is both leader and visionary. You need to create an environment where everyone looks forward to the rewards that come from their combined success.
The reward for success can be as simple as achieving industry recognition or having done something outstanding.
But without something which pulls everyone together around a common purpose, it is very easy for individuals to focus on their own goals, often at the expense of others.
3. Make everyone accountable
Business goes more smoothly when everyone knows what their job is, what they are expected to do and what targets they are to meet.
The advantage of assigning responsibility, and thus accountability, all the way through the business is that you have certainty as to where decisions are supposed to be made.
The person responsible has to collect whatever information they need to make a reasoned decision and be prepared to defend the decision they make.
The same person should have the best data or best judgment on what will be the results of their actions in the forthcoming planning periods.
Whether it is sending out invoices, making deliveries or making sales, the individual responsible is the best person to suggest how to improve their activity and to predict their results.
4. Reward workers who have a go
What distinguishes entrepreneurial cultures is that they chase opportunities.
If you want your staff to be motivated to consider the opportunities, submit them for evaluation and then actively participate in doing something about them, you have to allow some to fail.
When that happens, the people who participated can’t be blamed or passed over. The fact that they were willing to step up and have a go should itself be recognised and rewarded.
What you want is lots of ideas coming forward, no matter how bizarre they might seem. Subject them to the usual opportunity evaluation tests but be proactive.
It is only by having a go that the successful ideas will survive and contribute to your business. Make sure you reward those who participate, whether their idea is successful or not.
5. Keep staff informed
Employees are not stupid and they can put isolated bits of information together to create a picture of the health of the business.
However, their interpretation of what is happening, and how you are dealing with the various issues facing the business, might be wildly wrong.
A more proactive culture informs employees so that everyone has a comprehensive picture of what is happening and an understanding of how you are dealing with pressures on the business.
The advantage of this approach is that there are no surprises, and individuals who have good ideas can come forward to assist in the strategy.
While there are risks, keeping people informed and involved is the better strategy.