This course focuses on the common human resource ("people") challenges faced by existing private businesses when they attempt to grow substantially. PART 1 OF THE GROW TO GREATNESS COURSE IS NOT A PREREQUISITE FOR TAKING THIS COURSE.
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Do curso por University of Virginia
Rumo ao Sucesso Empresarial: Crescimento Inteligente para Empresas Privadas, Parte II
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University of Virginia
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Building a Senior Management Team
The required reading is “SecureWorks.”
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Edward D. HessProfessor of Business Administration
Darden School of Business
Welcome. Wow, week 4.
I don't know about you, but it's gone fast for me.
It's been a great time. Let's just take a moment to review a
couple of things, all right? Let's review a couple of things.
Trying to give you concepts, okay? A way of thinking.
Something to sit back and for you to use as sort of a model, okay.
Can I give you the silver bullet? No, because you've already learned.
There's lots of things that you've got to balance and take into account when you are
building and growing a business and you've already learned that the solutions at one
size level don't necessarily work as you get even bigger.
You've got to constantly, constantly sit back, think, scan what's going on, people,
processes, controls, pace, work on culture.
And prioritize, what am I going to spend my time on today?
Well before getting to today's session, lets just go through a quick, a quick sort
of mental replay. Remember that?
Mental rehearsal before you go in everyday, mental replay every evening?
What have we done? Week one.
Well, have you figured out yet? Are you theory x or you're theory y?
Okay? I know Kyle behind the camera has figured
it out because he's talked about it. Two other filmings okay?
Theory x, theory y. The six transitions an entrepreneur makes
as a business grows. Delegations, not a natural act.
A good entrepreneur is a good teacher. Then that led us a discuss and think about
wow, If I gotta be a good teacher, should I be hiring good students?
And what I mean by that, should I hire people that are comfortable with change,
people that want to improve. Should I hire people who like learning and
then we talked about, well, how do we figure out who those people are?
And how do people learn? They read, they explore, they try new
things. They're, they're curious.
They ask why. They don't let obstacles get in their way.
And we talked about the Barbara Lynch case.
A fascinating entrepreneur. Week two, we looked at the secrets.
The secret sauce of the research of high performance organizations.
And the fascinating finding that every research project Is found, the same
characteristics, so we know what the secret sauce is.
And as we discussed, the problem is in execution, inconsistent execution and
doing it excellently. That's a hard word to say, try that,
excellently. Try that sitting there at your desk or in
front of your computer, excellently. Hard for me to say it at least.
Alright. We then talked about the relationship of
high employee engagement, to high performance organizations.
We talked a lot about what do employees want.
And were you surprised, they want the same thing you want.
Okay? We all want the same thing.
And remember I read 2 weeks in a row, the passage.
Okay. From the book of the former CEO of AT&T
and General Motors. We talked about meaning.
Yeah, meaning. What's the purpose of your business?
Why should it exist? And meaning for employees.
And looked at the Trilogy Health Services case, as to how Randy Buford created
meaning for his employees, okay, who had a most difficult job.
And we talked about this drawing. Okay.
High employee engagement leads to customer satisfaction, loyalty and all that leads
to money,money, growth. And I told you, that's just not Ed
talking. Research at Harvard, Case Western,
Michigan, Stanford. All support that, alright?
All support that. That, okay, is something too many
companies forget. This smiley face here doesn't happen if
you treat somebody like a fungible commodity to be used and disposed of at
will. We went to week 3, and I know you were
surprised, because I said you are an artist.
You're going to paint your own picture. Remember the slide were we said business
comes in many different flavors and we had the 3 ice cream cones?
Thank you Catherine, my IRA, for being creative and putting that in there.
Cool, really cool, cause it makes the picture.
It makes the point, you, as the entrepreneur, are an artist.
I'm giving you general rules and principles which apply, but your facts,
your context, your personality is going to basically give you the ability to paint
your own picture. And we studied in room, free room and
board where John Gaybor painted his own picture, a company which violated lots of
common ways of doing business in his industry.
And he created a high engagement, employee base and a high performance organization.
We talked about system and alignment. And how really growth results from the
right behaviors. And you gotta get culture, leadership
behaviors, HR policies, measurements and rewards, all aligned.
Remember the little ducks? Remember the geese in a pattern?
We talked about other companies. I shared with you stories of Starbucks,
Leevee Restaurants, Outback Steakhouse, Ritz Carlton, Southwest Airlines, the
Container Store. Remember the story I told you of my friend
Mr. Bill.
Well, today we move to the final class and the challenge of building a senior
management team. That means you've gotten big enough that
you need senior managers, okay? That means you have reached a plateau
which very few companies reach, but it's a plateau in which you can still implode at,
alright? Just because you got there, doesn't mean
you will stay there. And, what we're going to do today is focus
on the difficulty of hiring a senior management team, getting the senior, a
senior management team choosing the right people, what I called, play well in the
sandbox together. Okay, instead of go in and fight over the
toys and want to take them to one side of the sandbox or to their own sandbox.
And we're going to talk about the necessity of upscaling in your business
and what a research findings. The research finds that, as your business
grows, the people and processes and controls that work it say 1 million
probably won't work it say 5 million. If they it 5 million they probably won't
work it 10 million and we're going to talk about the difficult issue of having to
upscale people. Who had been good loyal employees, but who
can't function at a higher level. And we're going to use the secure work
story. And isn't that a fascinating story?
And I've exposed you to a different type a leader here in Mike Cody.
Okay? Think about it.
You've seen very different people Barbara Lynch, Randy Buford, John Gabert, and
today Mike Cody. And you can learn from each of them.
Okay? Because you can't model anyone.
You're going to put it together your own way.
You've got to be true to yourself. And that'll be the true test, as to
whether you can build a business. Okay.
Some good quotes to start out. You have to dump stars who are not nice.
You're going to hire really super, super employees or managers.
Okay? But if they're not nice, you got to dump
them, according to one CEO. It's very similar, if you will, to Andy
Lansing's comment from Levee Restaurants, don't hire jerks.
80% of people who started with me are no longer here, because they could not grow
with the business. That's the thing about up-scaling that
we're going to talk about. One negative person can impact 5, 10, 15
people in a small company. Yes.
That's why we're back to hire slowly, fire quickly.
The container stores, go read their foundation principle and read the
paragraph that says, one great person equals three good people.
My biggest mistake for hiring too quickly and firing too slowly.
I didn't make that up, the research taught me that.
I have yet to be successful in putting somebody on a different seat on the bus
and their ego being able to handle it. Yeah, you got to get the right in right
seats and then you got to deal with issues when the people don't want to change
seats. You should have also learned in this
course. Growth is change, as basically growth is
evolutionary, you've got to adapt and learn and if you're not comfortable with
change, because change is constant improvement, okay?
Change is innovation, things are just not going to be the same everyday.
Things are just don't work that way and basically the chaos of a small business.
Growth eventually requires you to build a management team.
And this is the sad truth and in that a sad face.
In most cases, the team that can manage a small business is not the best team to
manage a growing bigger business. People either have to grow quickly or new
people have to be hired. And that's where leadership comes in.
Leadership in how you deal with the people that can't go to the next level and
leadership in finding the right people to come in that can take you to the next
level. And then that raises the question of what
you can afford. Do I hire people that can take me to the
next two levels, who are more expensive than people that can just take me to the
next level? All things to think about.
How much can I afford? Where do I find people who can take me to
the next level? What kind of experience?
Should they come out of big companies? Should they come out of entrepreneurial
companies that have scaled, that have grown from 1 million to 5 million to 10
million, who have been through what I'm going to go through.
That's the type of questions and thought process I want to leave with you today.
Three big research findings, which quite frankly surprised me.
I didn't expect this at all, alright. Well, I knew hiring senior management is
not easy. But I didn't really expect, when I started
the project, to learn how hard it is, how really hard and a surprisingly large
number of CEO's in my study and I had 54 different companies, made a lot of bad
management hires. Okay.
And many of them works very experienced. Some of them had failed in their first
venture and had learned in their second venture, okay.
And some had failed, had, excuse me, had succeeded in many entrepreneurial
ventures, were a serial entrepreneur. Many CEO's in my study, it took them 3 to
5 hires to hire the right person in certain technical jobs.
A CFO, an HR person, chief of technology, a head of sales.
It all depended on what their background was the CEO, the entrepreneur.
And hiring outside his or her background, experience, comfort level, was very, very
hard. I wonder why, what do you think?
Remember, you got your paper with you, you got your pen, let's take a break.
Pull out that piece of paper. Why do you think hiring experienced
management people is so hard? Write down two or three things.
Just take a minute or two. I'm not leaving, don't expect you to.
I'll be right back to you.
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