Pick the Right People and Make More Money

By Dr Andree Swanson

"If you pick the right people and give them the opportunity to spread their wings—and put compensation as a carrier behind it—you almost don't have to manage them."

— Jack Welch

HR talent and acquisition people tend to place managers in three different categories: Top (executive), middle (middle management), and bottom (supervisory) (Kaiser, Craig, Overfield, & Yarborough, 2011, p. 84). 

Top level managers have a long time span for service from 5 to 20+ years).  Their primary skills are conceptual in nature (Kaiser et al.).

Conceptual thinking, according to Buffalo State College, is the "[a]bility to identify patterns or connections between situations that are not obviously related, and to identify key or underlying issues in complex situations." For an organization to be successful in a globally competitive and complex environment, organizations must hire managers with the intellectual ability to visualize what may not be apparent, then delegate to supervisors the task of strategy execution. (Houston, 2014, para. Conceptual Comptence). 

Great conceptual leaders have great vision.  Consider Martin Luther King… Bill Gates… Steve Jobs… What visionary leaders can you think of?  Why were they top conceptual leaders?

You know there is an ad out currently that talks about all the businesses that started in a garage.   Well, these businesses did not start through osmosis in the garage.  A man or woman was behind these ideas.  What visionaries were they?  The were great conceptual leaders and managers.

Take a look at a few at the blog:

http://www.retireat21.com/blog/10-companies-started-garages

I am personally grateful for # 9 and # 10.  Without them, I wouldn’t have had any Barbies and my house wouldn’t smell like a lemon meringue pie or cookies for Santa!

Picture provided by Dr. Andree Swanson

Middle management are the workers who keep the operations going.  They are also the managers that implement change within an organization.  They have it tough at times.

“Middle managers, it turns out, make valuable contributions to the realization of radical change at a company—contributions that go largely unrecognized by most senior executives. These contributions occur in four major areas” (Huy, 2001, para. 4).

Middle managers:

1.    Have entrepreneurial spirit and intentions

2.    Better communicators with the informal networks

3.    Strong emotional intelligence

4.    Maintain momentum in a changing organization (Huy).

Supervisors keep the systems running, whether they are dealing with people and their issues or product and its issues or machines and their issues.  Excellent supervisors have a strong impact on the financial statements of companies.  “Good bosses are a good deal better than bad ones. Replacing a supervisor from the bottom 10 percent of the pool with one from the top 10 percent increases output about as much as adding a 10th worker to a nine-worker team” (Yglesias, 2012, para. 4). Yglesias wrote about a research study on supervisors.  The results showed that good supervisors not only motivate employees but impact their productivity. “Make sure your most promising workers are paired up with the best supervisors. … teaching and learning are the essence of an effective boss/employee relationship. Good bosses … deliver concrete improvements in workers’ ability to get the job done” (Yglesias, para. 8).

Have you seen a supervisor not only motivate employees, but impact the bottom line?

References

Houston, G. (2014). Why is conceptual competence more important for top managers than for supervisors? DemandMedia. Retrieved from http://smallbusiness.chron.com/conceptual-competence-important-top-managers-supervisors-18744.html

Huy, Q. N. (2001, Sep.). In praise of middle managers. Harvard Business Review. Retrieved from http://hbr.org/2001/09/in-praise-of-middle-managers/ar/1

Kaiser, R. B., Craig, S., Overfield, D. V., & Yarborough, P. (2011). Differences in managerial jobs at the bottom, middle, and top: A review of empirical research. Psychologist-Manager Journal, 14(2), 76-91. Doi:10.1080/10887156.2011.570137

Michael. (2014). 10 world famous companies that started in garages [blog]. Retrieved from http://www.retireat21.com/blog/10-companies-started-garages

Yglesias, M. (2012, Oct). Who’s the boss? Slate.com. Retrieved from http://www.slate.com/articles/business/small_business/2012/10/the_value_of_a_good_boss_stanford_researchers_show_the_economic_value_of.html

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Book Review: Learning from the Masters of Venture Capital and Private Equity

Venture capital and private equity are important components to societal investment. The book The Masters of Private Equity and Venture Capital by Robert Finkel delves into the concepts of what makes investment successful. Contrary to common knowledge the money is only one of the components while the factors of the market and the organization itself are equally important. Few want to invest their money in poorly run and sinking ships. 

One of the biggest steps in venture capital success is learning from mistakes. There will be some companies you make significant money off of and there are some that you won’t be so lucky. The key, like most other things in life, are to continue to learn from mistakes. Whether you’re Edison or the Rockefellers the process is the same. 

Investors often find a method to evaluate companies. They don’t just blindly pick some company and start pouring money into a deep hole. They use methods of analysis to ensure that the companies they are interested in meet certain qualities in the market, management, capitalization, potential, and methodology.  Without a proper evaluation it is easy to fall prey to wishful thinking. 

The authors also offer the need to turn research into commerce and foster innovation. Small firms succeed because they offer something unique. Their best changes for success lay in capitalizing on information and knowledge. Without research, innovation, and knowledge they will not be able to navigate the environment. All organizations should be learning organizations. 

Selecting the right CEO and ensuring you have management metrics helps to encourage proper decision making and accountability. When organizations have the right leadership and a methodology for navigating their environment they are more able to improve upon performance. Management metrics ensure that selected executives are actually doing their job. 

The book recommends a couple of analysis that is helpful:

Portfolio valuation: Looking at various components and choosing proper assets it is possible to understand the risks and potential rewards of investing in particular companies.

Waterfall analysis: A method of understanding preferred stock return with liquidation preferences compared to common stock return.

The authors do not discuss the concept of behavioral aspects of organizations. Strong organizations have strong core sense of purpose and exhibit the proper behaviors to succeed. These behaviors are based in inquisitive, collaborative, learning, testing, and civility behaviors that help ensure that the organization moves upward. Without these behavioral metrics to analyze the overall thinking process it is possible a single simple market success cannot be regenerated.

Finkel , R. (2010). The masters of private equity and venture capital. New York: McGraw Hill

Portfolio Analysis and S.W.O.T Analysis from Timothy212

Thanksgiving as an Example of How Business can Further Societal Interest

In 1620, a small ship named the Plymouth with 102 passengers landed on the new American shores. In 1621, the colonists and the Wampanoag Indians shared a meal together from the harvest. By this time, the 102 members were down to about half due to their first year spent on the ship trying to survive the cold. They were greeted by a Native American who spoke English after returning home from a slavery escape at the hands of an English captain. Without that Native American’s help, the Plymouth visitors may have perished.

I wonder what was going through this Native American’s head and why he took such pity on the European settlers. Regardless of the reasons, he decided that him and his band of people would help the settlers find a stronger footing. The peace seemed to have worked out.  Perhaps it was his familiarity with the values of human life that made all of the difference in his decision process. Certainly, he and his band could have made it difficult for the Puritans to get off  the ship. 

It is also important to remember that the Puritans would have stayed in Holland if they did not find some way of starting over.  They had a need to create their own destiny and the new land seemed like a great opportunity. The problem they faced was that they did not have the money or resources to pay for such a trip on their own. They needed the business community’s help.

An investment group by the name of Merchant Adventurers looked upon the Puritans who fled to Holland to avoid English persecution positively and decided to finance their operations. As the Merchant Adventurers were a joint-stock company that invested in fine clothing, trade, fishing, and other activities they thought the trip may someday prove fruitful. The Puritan group was seeking more freedom and the investors were seeking greater opportunities. It seemed to have worked out in mutual self-interest. 

Business and societal change are part of the same existence. We often view business as separate from these wonderful moments in human history. Yet they are the motivations, resources, and pressures that help create meaningful interactions. Business can be a problem solver or a problem creator and this depends on the person making the decisions and the environmental pressures they face.  Yet, when we think outside of conventional approaches, we may find that there are times when business can further human interest.

Other Reading:

Thanksgiving History

How Stuff Works

Pilgrim Museum

May Flower

Call for Papers: Foreign Direct Investment in the Aftermath of the Current Global Economic Crisis

Submission Deadline: May 2014

The level of globalisation in the contemporary business environment is indicated by the transmission and impact of the recent global financial, economic and sovereign debt crisis. International trade and foreign direct investment (FDI) are still the most important driving factors of globalization, and the latter has become more important than the former in the aftermath of the crisis.

 UNCTAD statistics indicate that in 2008 – when the crisis was a global phenomenon – world FDI stock was approximately 26 percent of world gross domestic product (GDP), at the same time as the value of merchandise and services trade was approximately 33 percent of world GDP. The most recent data available from UNCTAD statistics indicates that world FDI stock was approximately 30 percent of world GDP in 2011, while the value of merchandise and services trade was approximately 23 percent of world GDP.

 The aim of the special issue is to reveal the determinants, strategy and impact of internationalisation through FDI in the aftermath of the current global crisis. 

You may see a list of current topics and submission information HERE