Ever wondered how many individuals one person can effectively manage? Harvard Business Review suggests that experienced managers typically excel when overseeing a team of five to nine individuals, while Inc. suggests that the magic number hovers around seven. The manager-to-direct report ratio isn't just a random statistic; it's a crucial factor that distinguishes growing companies from those that hit a plateau. Every business's journey is unique, but you can liken it to a series of stages, each guarded by an invisible gate, preventing many business owners from advancing to the next level.
In Stage 1, you find yourself leading a small team of doers. These are the individuals who diligently follow your established procedures and get the job done. Your most valuable team members often possess a range of skills, making them generalists capable of handling various tasks. They thrive on diversity and the satisfaction of completing tasks.
However, many business owners become stuck in this stage due to their reluctance to delegate. A lack of trust in their employees' ability to perform without constant oversight hinders progress. But for those brave enough to hire managers, the path to Stage 2 awaits.
In Stage 2, business owners bring in a small team of managers, usually fewer than five, responsible for ensuring that their direct reports execute the established plan. The focus here lies in managing against the owner's provided plan. Effective managers possess a keen attention to detail and adhere to the outlined strategy.
While managers may contribute to the plan, they're not typically responsible for creating it. This reliance on the owner for the plan often becomes a stumbling block, causing many companies to stall at this stage.
In Stage 3, leaders emerge as individuals capable of guiding a team through multiple layers of management. Picture a sales leader overseeing two sales managers, each supervising five salespeople. The leader's role involves setting direction, providing a vision, and devising a plan for managers to execute. They lead a team of twelve, comprising two managers and ten salespeople, while simultaneously managing two direct reports.
Managing and leading are not interchangeable skills; leadership demands the acquisition of new competencies. Leaders must communicate effectively, delegate with precision, and formulate strategic initiatives.
If your company remains stuck at Stage 2, you face two choices: either recruit leaders to inject fresh perspectives into your organization (with potential risks to existing managers), or invest in training managers to become effective leaders. Both approaches are challenging and time-consuming, which explains why many companies struggle to advance beyond Stage 2.
Acceleration Partners, founded by Robert Glazer in 2007, serves as a prime example of a company that successfully navigated the transition to Stage 3. This agency specializes in partner marketing and places a strong emphasis on people-centric business practices, helping brands manage influencer relationships.
Glazer's journey with Acceleration Partners began with hiring individuals to assist with client management and project oversight. As the company expanded, Glazer realized a fundamental truth: "Every time your company doubles in size, you outgrow half your people and half your processes."
Over 14 years, Glazer nurtured Acceleration Partners, and when he sold it in 2021, he had a team of leaders overseeing a group of managers responsible for the workforce.
If you find your business in a rut, it's imperative to assess whether you have the right personnel to drive your company to the next stage. Initially, capable managers you trust are essential, but to progress to Stage 3, you'll require individuals capable of both managing and leading. Some managers may need guidance and development, while other areas of your business may necessitate new leadership to ensure a seamless transition. This strategic approach is critical in the realm of business succession planning, where financial planners can play a pivotal role in ensuring a smooth transition of leadership and responsibilities.
If you're in Johannesburg and seeking top-tier financial planning services, look no further than Olemera Financial Planners. With a deep understanding of the intricacies of business succession planning, Olemera stands as your trusted partner.
We are committed to excellence and personalized guidance throughout the process, ensuring that your business not only survives but thrives through every stage of evolution.
Contact us today to find out more about our business succession planning services.
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