Basics for General Managers

Nice coaches stress fundamentals—the essential skills and plays that make a workforce a constant winner. Nice general managers do the same thing. They know that sustained superior efficiency can’t be built on one-shot improvements like restructurings, large price reductions, or reorganizations. Certain, they’ll take such sweeping actions if they’re in a situation the place that’s mandatory or desirable. However their priority is avoiding that kind of situation. They usually do this by specializing in the six key tasks that constitute the foundations of every general manager’s job: shaping the work surroundings, setting strategy, allocating resources, creating managers, building the organization, and overseeing operations.

This list shouldn’t be shocking; the basics of a general manager’s job ought to sound acquainted after all. What makes it necessary is its standing as an organizing framework for the vast majority of activities general managers perform. It helps you define the scope of the job, set priorities, and see essential interrelationships among these areas of activity.

Shaping the Work Atmosphere

Each company has its own particular work setting, its legacy from the previous that dictates to a considerable degree how its managers reply to problems and opportunities. But regardless of the atmosphere a general manager inherits from the previous, shaping—or reshaping—it is a critically vital job. And that’s as true in small- and medium-sized companies as it is in giants like General Motors and General Electric.

Three elements dictate a company’s work surroundings: (1) the prevailing performance standards that set the tempo and quality of people’s efforts; (2) the business ideas that define what the corporate is like and how it operates; and (three) the folks ideas and values that prevail and define what it’s like to work there.

Of these three, performance standards are the one most important factor because, broadly speaking, they determine the quality of effort the group places out. If the general manager units high standards, key managers will usually follow suit. If the GM’s standards are low or imprecise, subordinates aren’t likely to do a lot better. High standards are thus the principal means by which high general managers exert their influence and leverage their talents across your entire business.

For this reason, unless your company or division already has demanding standards—and only a few do—the one biggest contribution you may make to quick outcomes and long-time period success is to lift your efficiency expectations for each manager, not just for yourself. This means making acutely aware selections about what tangible measures constitute superior performance; the place your organization stands now; and whether or not you’re prepared to make the tough calls and take the steps required to get from here to there.

Clearly one of the most important standards a GM units is the company’s goals. One of the best GMs set up goals that pressure the organization to stretch to achieve them. This doesn’t imply arbitrary, unrealistic goals which are certain to be missed and encourage nobody, however reasonably goals that won’t enable anyone to forget how powerful the competitive arena is.

I vividly remember one general manager who astonished subordinates by rejecting a plan that showed good profits on a superb sales achieve for the third 12 months in a row. They thought the plan was demanding and competitive. But the GM told them to come back back with a plan that kept the same volumes but cut base value levels 5% beneath the prior year’s, instead of letting them rise with volume. A tough task, but he was satisfied the goal was essential because he anticipated their chief competitor to chop costs to regain market share.

During the subsequent few years, the company dramatically modified its cost construction by means of a series of progressive value reductions in production, distribution, buying, corporate overhead, and product-combine management. As a result, despite substantial price erosion, it racked up record profits and share-of-market gains. I doubt the company would ever have achieved those results without that tangible goal staring management in the face every morning. The identical kind of thinking is clear within the feedback of a prime Japanese CEO who was asked by a U.S. trade negotiator how his firm would compete if the yen dropped from 200 to the dollar to 160. “We’re already prepared to compete at 120 yen to the greenback,” he replied, “so 160 doesn’t fear us at all.”

High standards come from more than demanding goals, of course. Like top coaches, military leaders, or symphony conductors, top general managers set a personal instance when it comes to the lengthy hours they work, their apparent commitment to success, and the consistent quality of their efforts. Moreover, they set and reinforce high standards in small ways that quickly mount up.

They reject long-winded, poorly prepared plans and “bagged” profit targets instead of complaining but accepting them anyway. Their managers need to know the small print of their business or perform, not just the big picture. Marginal performers don’t stay long in pivotal jobs. The perfect GMs set tight deadlines and enforce them. Above all, they are inconceivable to satisfy. As quickly as the sales or production or R&D department reaches one customary, they raise expectations a notch and go on from there.

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