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The 5 Ms of Management: Key Components of Every Business

Tanisha Achrekar — Mon, 25 Jan 2021 03:53:31 +0000

Cooking is an art and science at the same time. Even though two people are cooking the same dish with the same ingredients, the taste of both might be different. It is because the way the ingredients were used and the way the food was cooked has a personal individual touch to the dish. Management systems across organisations may function like that. Every organisation has access to a set of standard resources, the outcome of which depends upon how effectively they are managed. Management is the catalyst that plans, organises and directs all resources to achieve the company’s goal. It is the centre around which the factors of production revolve. The key factors of production that revolve around management are known as the 5 Ms of Management. They include – Manpower, Money, Materials, Machinery and Methods.

‘‘

If I have one skill as a manager, I can make things extremely clear.

- Ben Horowitz

The 5 Ms of Management

Manpower

Be it modern-day corporate high-rise or an ancient monument like the Taj Mahal, neither would be complete without the aid of manpower. To make the raw materials into a structure, an effective team of workers is needed. Similarly, an organisation can have the best of raw materials but without any manpower those fancy materials are useless.

Management is often referred to as the art of getting things done by people. Manpower is a vital component of any organisation as no other resource can function without it. Managerial and non-managerial people who are part of the organisation fall under this category. Having a qualified and competent workforce drives the success of any organisation.

A manager must ensure that his team is functioning smoothly by resolving conflicts promptly. Fair remuneration, work-life balance, sustainable working environment and adequate resources helps in gaining an employee’s loyalty in the long-run.

Money

Money is an all-purpose resource. A business needs capital to manufacture products or provide services. It is required for procuring raw materials, hiring staff, buying machines and the several other expenses that a business incurs. Availability of funds ensures smooth functioning of a business. A business requires adequate working capital and fixed capital.

Having inadequate capital can hamper the functioning of a business or in some worst cases, shut it down completely. Having enough money ensures that you can hire the best people, the finest quality raw materials and well-functioning machines. This, in turn, will ensure that your end-product or service meets the quality standards and offers value for money.

Several people quit their jobs when they are paid inadequately. Factories lose their orders if the machinery they have is outdated compared to its competitors. Lack of quality raw materials can cause a reduction in sales. For any start-up, it usually takes around two-three years to start making money. It is essential that a start-up has enough capital to cover all the expenses for at least two years.

Material

The materials are those products which are utilised for creating the final product. Materials can be raw or even semi-finished products that are used for making the end-product that the company sells. In cotton mills, cotton is considered as raw materials. Yarn or cloth sheets derived from these factories are then sent to the clothing factories. These sheets of cotton are viewed as raw materials in the clothing factory. The cotton is sewed, tailored and altered to make a desirable outfit. A final product for one factory can be the raw material for another.

Raw materials are the primary building blocks of any production process. The management has to ensure that the quality and quantity is enough to meet the demand. They also have to note the transportation and conversion expenses of these raw materials. Quality and inventory checks determine if the company has an adequate amount and desired quality of raw materials.

Raw materials can be direct or indirect. Direct raw materials are the ones that are a part of the finished product. While, indirect raw materials are those who were a part of the process but not directly included in the final product. The steel used for manufacturing kitchen units is an example of direct raw materials. While the oil used in machines from which the steel cabinets are made is considered as an indirect material.

Machines

Machines are used for converting raw materials into finished goods. There can be several machines involved in the production process depending on the products the company is selling.

Purchasing modern machines helps in improving the process of manufacturing. The upcoming technology in machines plays a key role in production. Having well-functioning machines leads to quick production and may offer a competitive advantage over others.

Method

The method, being a way of getting things done, definitely does revolve around management. Method is all about the time efficiency. There are several methods a manager can use to get the same thing done. Getting from point A to point B may have ten different routes, it is a challenge here for a manager to choose the best one. The best method usually is the one that is cost-efficient while meeting the quality standards.

Also, different methods require different time for the completion of the same tasks. Two managers can be given the same raw materials, machines, staff and budget but still, the result produced might be different. This is because every manager has his own way of getting things done.

For the smooth functioning of your business, you need to ensure that the best resources are hired or bought across all the 5 Ms of Management. These 5 Ms of Management are interlinked and dependent on each other. In order to make a business successful, all the five components are needed to be utilised to their maximum potential. That’s what a manager does.

Management does have its set of theories that back it up as a science but still, the execution varies from person-to-person which makes it an art as well. To ensure that the factors of production above are well-curated and established, management systems are set in place. These management systems monitor the entire process and conduct evaluations accordingly. To know more about it, read our article on the ‘Management Systems’.

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Management System: Know How To Go About Your Business

Tanisha Achrekar — Wed, 30 Dec 2020 05:58:16 +0000

Do you know that feeling when you finally clean your room after weeks and everything is exactly where it belongs? The way it soothes your eyes and calms your soul. Humans inherently love order and well-managed systems. The difference between how you feel in a well-organised grocery store compared to the other one where products are simply piled is quite prevalent. Having a system ensures the smooth and steady functioning of a business. An effective management system has that process thoroughly integrated and aligned with the strategy and objectives of the company. It acts as a map, guiding and empowering both employees and managers.

‘‘

Management is, above all, a practice where art, science, and craft meet.

- Henry Mintzberg

Five Stages of Management System

Building an effective management system is similar to creating a closed-loop system where all stages are interlinked and interdependent for a great business outcome. A closer look at the five-step process will help you understand how it keeps the workflow rolling without any glitch.

Objectives

Objectives remain the groundwork stage of a management system. A company’s objectives should be aligned with its mission, vision and value statements. While framing its objectives, a company should also consider its strengths, weaknesses and competitive edge. Once the objectives are in place, things can be conducted smoothly.

Strategy

After determining a set of objectives, business owners or managers devise suitable strategies to fulfil those objectives. Strategies are the pathway of how a company wants to achieve its goals. With the strategies mapped out, a manager will know what is needed to be done and how.

Apple executed its ‘followers’ strategy well in 2007 when it launched its first iPhone. The Cupertino company opted out of the ‘first-mover’ status and waited long enough for the technology to evolve. The tech giant realised that being the first in business would not always guarantee success. Instead, the product needs to be fine-tuned and the initial technical glitches must be ironed out to ensure the great customer experience. Once household names like Kodak and Yahoo, who were the first in their businesses were unable to succeed in the long-run. Their competitors like Apple, Google, and Nikon simply waited for the right time to execute their ‘followers’ strategy.

Validation of strategy

If you have ever played football, cricket or any other sport professionally for that matter, you would have come across trails. Similarly, trials are also held by organisations to test their strategies and analyse their performances. A trial run gives a good estimate of how the strategy is likely to perform in the long run.

Operations

Operations are created to achieve the objectives and strategies established by an organisation. It covers the different departments and teams of the business that are working towards the same objectives and implementing the same strategy. While conducting operations, the improvements in the process, the sales achieved through it, and the overall expenditures are targeted. We see banks conducting operations every day where the different departments work towards the same goal.

Execution

This is the final stage where the plan is put into action. Execution reflects how effective the strategies are and how well the objectives are being achieved. All the planning in the world will be useless without execution. Smooth execution is essential to improve one’s performance.

Management System Standards

Management system standards (MSSs) are guidelines used by organisations to ensure that the management activities are performed in a systematic, legal and formalised manner. MSS encompasses a wide range of business activities and the number of companies adopting MSSs has only been growing. Back in school, there were certain disciplinary standards accepted by students to adhere to. Similarly, there are certain management standards that businesses adhere to, to functioning properly.

The first MSS was created in the field of quality management. It originates back in the 1950s where the US Department of Defense felt the need to ensure that the products it purchases meet a certain quality required. It also leads to a decrease in dependency on the suppliers’ inspection programs. The first MSSs has created monitoring and inspection of the quality while further making purchases from the suppliers.

The ball got rolling after the first MSS, and different management system standards were developed by different countries for different industry segments. For instance, CSA-Z99 standards were announced by the Canadian Standards Association for electrical and nuclear industries. The U.S. automotive industry also came up with noteworthy standards such as Ford’s Q101 standard. In the late 1970s, several organizations created certifiable MSSs in the field of quality management. Another popular example is the BS5750 standard, developed by the British Standard Institution in 1979.

What is ISO?

The International Organization for Standardisation (ISO) is an independent and non-governmental international organisation. In 1946, delegates from 25 countries gathered to discuss the future of International Standardisation. The ISO was officially launched with 67 technical committees, each containing a group of experts dealing with a specific subject. Since the launch, the ISO publishes monthly information about its technical committees, its standards, and any administrative changes that are made within the organisation. The ISO is a globally-accepted management system standard. ISO standards are working in the background of our day-to-day lives. It helps in the betterment of things by making it easy and safe.

How Your Business Benefits from Management Standards

If a management system is well-implemented, it strengthens the organisation. The International Organization for Standardisation (ISO) being an internationally recognized and accepted management standard, it brings economic, technological and social benefits.

A strategic approach

The updated business standards compel companies to adopt more strategic based thinking. The system highlights how, where, and why actions are performed. It should define objectives for the improvement of its products, processes, organizational structures, and its management system through the analysis of data.

Growth and better returns

Standards derived from the ISO contribute immensely to an organisation’s growth and economic sustainability. Several manufacturers and traders are not willing to work or deal with products that have no ISO Certification especially in industries like automotive and healthcare. Having an ISO certification leads to an increase in the profits of the business and the company’s overall growth. If a company is growing overall, it will provide better returns to investors and lead to overall development.

Increased confidence in processes

The relationships are different among the reliability and trust in a business. An ISO certification ensures that your suppliers are following proper business practices. This leads to an overall boost in confidence in the entire process.

The business standards that a company adheres to keeps evolving as the business grows. When you start a business, the supply chain is quite simplified compared to when the same business goes international. With more steps involved in the process, the more business standards are there to be met. The strategies also evolve as your business develops and play a key role in determining the company’s future. Read our article on ‘business strategy’ to find more about how to strategise your business effectively.

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Team Building: Key To Organisational Success

Aakash Sharma — Tue, 29 Dec 2020 11:34:42 +0000

Any venture is as successful as the team members undertaking it are.

Be it a sport or a start-up; it is the team that leads to the successful completion of a project. It is worth noting the cliché – there is no “I” in teamwork. A well-coordinated, planned, and analysed strategy can only be executed when all the team elements do their tasks and assignments with utmost sincerity. The individual team members build collaboration, and getting the best team in place for your business or sport is what we call ‘Team Building.’

Let’s delve into the details of what team building is and how you can get the best people to be a part of your team.

What is Team Building?

Team building is a collective term for strengthening social relationships and defining roles in teams and often includes everyday tasks. It is different from team training, which involves strategies by a group of business leaders trained to improve efficiency, not interpersonal relationships in the workplace.

Many team-building exercises are aimed at identifying and resolving personal problems in a group. These measures improve the team environment’s efficiency, effectively improving the workplace culture and output by individual members. Team building is a crucial foundational value of any organisation and is continuously used for group purposes like sports teams, education classes, military units, or flight crews.

Theoretically, team-building exercises often include:

goal coordination,
forming effective work relationships,
reducing ambiguity in the role of team members, and
finding solutions to problems in a group.

‘‘

Team building is strengthening relationships between team members to achieve group goals more effectively.

Team building is one of the most commonly used team development activities in an organisation, usually undertaken in a team-building retreat or corporate excursion. In this retreat, team members seek to solve potential problems and build trust by participating in activities that are generally not of their forte.

Of all organisational activities, one study found that team development has the most significant impact on improving corporate performance compared to financial indicators. Meta-analytic studies have shown that team development activities, including team building and team training, can improve the level of objective performance and subjective supervision of a team. Team building can also be achieved through deliberate personal disclosure activities.

Effectiveness of a Team

The impact of a team-building varies from one organisation to another. The support of team members, their maturity, knowledge, and ability to cooperate are the most useful traits that are polished in an active team-building event.

To create a strong team that makes you more aware of team goals is key to effective team building. Teams shall work hard to define the goals, mission, and vision of their organisation. As a result, team building is associated with increased productivity and achievement of goals.

Team Building-Effect on Performance

Team building activities have been scientifically proven to be effective. Setting goals and outlining clear roles affect cognition, influence, action and team members’ effectiveness within an organisation. Such activities have the most significant impact on the process and results of tasks. They can help eliminate harmful elements in any team structure, such as lack of coordination or trust. Setting and describing goals are practical because they can increase motivation, reduce conflict, and help define personal interests, goals, and incentives.

Although any sized team can use team building activities, usually teams with at least ten members seem to benefit more from such activities. This is because large groups typically have a more significant bank of knowledge and skills than small teams.

Why is Team Building important?

Team building is necessary for the following reasons:

Achieving the aim

In building a team, members are explained the laws of the group’s activities in advance for establishing clarity regarding the aim. Assign tasks to members based on their abilities, experience and forte ensures everyone a fair opportunity. This helps members to strive to achieve the main goals of the group. This approach also improves work development and employees can learn to work together to achieve organisational goals.

Promoting competition

Weak teams are motivated to work harder when there is fair competition out in the field. Most team building activities involve different factions competing for specific goals. Whether the team wins or loses, members can perform better. This not only motivates employees but also encourages them to apply this principle in their work. Evidence shows that competition can increase labour productivity.

Establish direct interaction

Whenever employees have to work together on a task, they often communicate through email or online forums. Digital communication is indeed helpful, but it lacks the human touch of delivering emotions and the message and adding to the quality of a team member’s overall performance. In this case, face-to-face conversation is usually advantageous. Not only does it help decrease confusion, but also to be more social experience together.

How to build a team: Approaches and Methods

It is not enough to only determine the qualities that make the team successful. Leaders also have to identify and learn to incorporate these qualities into their groups.

When forming a team, some things need to be kept in mind, including the following:

Goal Setting: Explanation of team goals

Having clear goals is very important for the success of a project. This means that each leader must first explain how each group member’s actions will help them achieve their goals. In addition to the purpose of posting leaders, members must set specific priorities that must be considered. This way, each member knows precisely when and where they need help.

With clear goals, members can see how their individual professional goals align with the project’s purposes. Without this clarity, many employees might focus on team performance while overlooking their preferences. With open communication, employees can always ask about the relationship between their personal goals and their organisation’s goals.

Role Delineation: Choosing team members wisely

There are three main areas to explore while selecting a team member: personality, diversity and skill level. It is well known that some people strive to be a better member of the team than others. It is also true that individuals can learn to work purposefully as a unit if given the right space and time. Someone who prefers to put the team’s interests before their interests makes a great team member. It is distinguished by independent roles that people have to work on separately. Individuals who like to work together and grow better as part of a group are crucial for building an outstanding team.

Delegation of Tasks

Managers have to strike a balance among the different skills and experience of team members. It helps in understanding the productive division of work since the power and leeway is given to members. New members should also acquire skills to work as a fully functioning part of the team. Leaders may have to partner the new members with those who have the experience to mentor them.

Diversity in Team

Difference and diversity in a team are more than just a combination of experience. It also means how people from different cultures, races and races work together to achieve goals. Differences can be vital as they allow team members to see goals from different angles and find the best way to achieve them.

‘‘

Setting goals and outlining clear roles affect cognition, influence, action and team members' effectiveness within an organisation.

Applications of Team Activities

As we have established, teams building exercises in an organisation are a common way to improve performance. Leisure is an integral part of team building, but the goal is to increase productivity, focus, and unity. Pure recreational activities can help, but it needs to be done regularly and consider the abilities of team members (sports, for example, are not suitable for everyone). You just have to be more open with the help you render toward other people.

Employee collaboration exercises can create team solutions that make sense to them and directly impact individuals, teams, and the organisation. Practical teaching and branch methods are effective ways to bring new generation team members years into the workplace.

Staff participation is as effective as:

Employees love problem-solving activities,
Troubleshooting activities create a sense of ownership of tasks.
Employee’s capacity can increase and
Competitive activities encourage a results-oriented approach.

Outdoor activities can be fruitful to add to groups, but there are plenty of group building activities.

Ideas for Team-building activities

The most common activities can start with a small picnic. In the breeze, some quality time can be spent visiting nearby parks during the week. The purpose is to get together and share quality chat time over lunch. Fun activities can also be sponsored, like bowling, a store visit, a riverboat ride, going to a comedy club trip, and playing soft games. This is all eventually aimed at shedding the nervousness, which can be very painful to express in a team’s formal setting.

Physically demanding activities such as rock climbing and rope training can create fear and apprehension in the face of physical discomfort for people with disabilities. Therefore, in team building, some employees cannot participate calmly without being agitated and such activities must be avoided.

There are many benefits to team building, which is a positive impact for everyone participating. What must be kept in mind is that the best practices for making the team engaged should be viable, fun and useful not to mention local and easy to perform.

Challenges to Team Building

Assembling teams to address specific problems to identify and rectify underlying causes is now always easy. The most common challenges for team formation are as follows:

Lack of Teamwork Skills

One of the challenges that leaders face is finding enthusiastic staff. Many rely on educational institutions to bring these skills to students. However, students are naturally encouraged to work and succeed individually without the need for collaboration. It works against the behaviours necessary for teamwork. Studies have found that team coaching improves cognitive, sensory, process, and performance outcomes.

Virtual work environment and inter-organizational bounds

People who do not share the same physical space are more likely to join forces within the same organization. Members often do not have transparent relationships with people of other groups. Studies show that face-to-face communication plays an essential role in creating an effective group environment; it is the key to building trust. Group meetings guide members to identify group activities “through mutual agreement” while strengthening informal connections.

Globalization and virtualization

Teams are composed of members with different languages, cultures, values, and solutions. In some organizations, close-knitted physical discussions seem to resolve problems.

In a nutshell, team building is strengthening relationships between team members to achieve group goals more effectively. Successful teams can be more effective than individual contributors.

Read about other organisational topics like Leadership: Lift Your People Up, Bring Them Together and Management – It’s All About Getting Your Business Together on our website.

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To Every Problem, There is an Array of Solutions

Tanisha Achrekar — Sun, 27 Dec 2020 22:35:19 +0000

We go through ups and downs every day in personal and professional life. When it comes to launching your start-up, problems and challenges are an inevitable part of the grind. From raising funding to launching your website to accessing customers. The list is endless. Your role as an entrepreneur or a manager is to know how to tackle these problems and turn challenges into opportunities. Enhancing your problem-solving skills will boost your confidence to face these problems.

Problems faced by new businesses and start-ups

Starting a new business is courageous work. While some problems are a tough nut to crack others can be solved easily with some brainstorming. Even if you are planning to launch a large-scale business or to run a small store, there are some common problems you are likely to face. Being aware of them helps you stay on toes.

Raising funds

There is a time gap between when you start your business and when you start making money from it. It is essential to have enough pool of cash to sustain throughout that phase. There is always pressure regarding raising funds even if you are bootstrapping your way or raising capital through the stock market. Having cash reserves is important to ensure that the operations of your business are not affected.

Carving your brand name

Have you ever shifted to a new school where everyone already knows each other and you are the newbie of your class? Everyone is already aware who the naughty students are, the scholars, the monitors… and it is your time to carve your name and make a lasting impression. Similarly, in an industry, several businesses already exist before your entry. Here what you choose to do differently to create your brand awareness is a game-changer.

‘‘

If your only tool is a hammer then every problem looks like a nail.

Abraham Maslow

Hiring the right people for the right job

In a business, dreamwork is teamwork. The people you hire will be working towards building your dream with you from scratch. It is vital to ensure that they are on the same page as you are. Apart from their skills and qualifications, make sure that they have the same attitude and zest towards your business as you do. When people who are working for you have a different wavelength of thoughts than you, things can get difficult at times.

Getting customers

One of the biggest challenges a small business goes through is building its customer base. The art of selling is a skill that every business needs to master. Even the biggest brands in the world like McDonald’s, Apple, and Samsung invest tons of money in advertising and marketing to gain new customers. Getting new customers is one of the constant struggles of any business but more so initially. From giving their business a name to making it a household name is the ultimate goal of any entrepreneur.

Sometimes it is ‘too tiring’

The entrepreneur’s grind does have a fancy appeal to it but it all falls in vain some days. There will be days when hours and hours of work might not account to anything. During such times, it is okay to fall off the wagon due to emotional or physical fatigue. Take a break and allow yourself to relax before you start again. Being an entrepreneur is not a straight railroad but instead a rollercoaster ride. On the tough days, just remember that it is okay to pause.

Stages of problem-solving

Different teachers are assigned to the same noisy class. Some will punish the entire class; some might give remarks in the calendar while others might simply shout at the kids. Even though they all faced the same problem, they handled it differently. Similarly, in problem-solving, there are different approaches people use to solve the same problems. These problem-solving approaches no matter how different in nature, usually undergo the same stages listed below:

Defining the problem

You cannot find a solution to a problem that you do not know well. Clearly identifying what is the problem is the first step. Observing closely is important to know what problems your business is facing and in which area of it. Sometimes, some problems can be underlying while others couldn’t be more evident. Knowing vividly what the problem is will help you to know precisely where your focus is needed.

Brainstorming alternatives

Analysing your problems is important to come up with solutions for it. The way you brainstorm your problems will turn the tables. The best way to find a solution is to think about it in both logical and creative manner. Take your time to find several ways to solve the same problem that you are facing. The best solutions are usually the ones that are well-thought rather than impulse ones.

Time to choose a winner

After brainstorming for hours or days, depending upon the problem, now you will have all the possible solutions for it. From the list of solutions or even the top three, it is time to choose the one. Here your decision-making skills are being tested. Carefully evaluate all the possible solutions and then choose the best one. Choose the one which is best for your business and everyone involved in it – your stakeholders, customers, and employees.

Time to put things in action

Once you have selected the solution, the last stage of problem-solving is implementing it. All the planning done in the above three stages will be implemented here. Make an action plan, hire the people you need to implement it and the execution begins. Oversee that things are going as planned to avoid giving rise to another problem.

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We can not solve our problems with the same level of thinking that created them.

- Albert Einstein

Problem-solving tips for small businesses

Starting a business in itself is a challenge. The way you face your hurdles will determine how long you and your business lasts. No one is a born problem-solving genius. It comes with lots of practice and trail-errors.

Have a positive mindset

A person’s mindset directly impacts his approach to a problem. If you have a negative mindset, you are likely to fixate more on the problem instead of the solution. Having a positive mindset will help you when everything fails. Some days can be frustrating and tedious and those days are a test of your mindset. You cannot expect positive results while constantly thinking negatively.

Don’t hurry

An impulsive, rash decision is likely to have an unpleasant consequence. Take your time to come up with a solution after thoroughly viewing all sides. Analysing a problem from all angles takes time. Weigh all the insights and inputs and then come to a well-thought solution.

Better together

When you alone are looking for ways to solve your problems, you only have a tunnel vision. Consider taking opinions of your team, you will witness different perspectives towards the same problem. A collaborative approach goes a long way in problem solving.

Transparency earns integrity

When you are running a business, you are answerable to several people be it your investors, customers or employees. Transparency leads to less problems in any association. Don’t try brushing your mistakes under the carpet but instead accept it. Great problem solvers own up to their mistakes and take responsibility.

Focus on what can be done

There are several factors while running a business on which you will have no control whatsoever like the economy, weather, government policies, and currency rates. Even though they are problematic for the business, you need to remember that you have no control over it. Focusing on things that cannot be controlled by you is a waste of your time and energy. Instead, think about what you can do about these problems. Focus on how you can use such information as an opportunity or minimise any negative impact.

Problems are a part and parcel of life and very much so when you are launching your business. It can be daunting but remember to take one day at a time. When the going gets tough, the tough keeps going. As humans, it is easy to forget about the big picture at times and obsess over your problems. During such times, think about the long-term vision of your business. Read our article ‘vision statement’ to know more about the impact it has on an entrepreneur’s journey.

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Management – It’s All About Getting Your Business Together

Tanisha Achrekar — Fri, 25 Dec 2020 12:04:14 +0000

As working adults, we are no strangers to managing our time. Most budding entrepreneurs usually plan their day a night before or early in the morning. As individuals we manage our money, time, work, social life, and other commitments simultaneously. We are often in awe of people who manage to make time for everything including themselves. What is the difference between them and others? Both have the same 24 hours in a day, but how do they manage to juggle time so much better? It is all about their management skills.

The way you manage your business determines how the managers working under you will handle their teams. The environment of a business is contagious making it vital to create and maintain an environment where everyone can work collectively to achieve the business goals.

Evolution

Management exists since humans exist, so it has been there for centuries now. The only difference is that back then we chased animals and now we are chasing money. Whether it was the royal dynasties ruling their subjects or an officer directing his army, there was always a need for a leader to ‘manage’ the troop. As we have evolved over the decades, so did our approach towards management.

The definition and meaning of management have been shaped over several decades. It is important to know how management has evolved over the years for better understanding of it. A major transformation in the concept of management was witnessed during the industrial revolution of the 18th century. There are several management concepts that can be divided into three broad categories based on their timeline.

The Classical theory

Prof Babbage, Robert Owens, Henry Robson, Towne James, Watt Junior and Seebohm Rowntree are often considered as the pioneers of management theory. The classical theory of management was primarily focused on the job content, standardization and division of labour. It also led to the beginning of the ‘science of management’ where F.W. Taylor, Emerson and H.L. Grant considered a scientific approach towards managing an organisation.

The Neo-Classical theory

During this period, the classical theory of management began to evolve-an upgraded and improved version of the existing classical theory. The classical theory was focused on the job content but the neo-classical theory placed an emphasis on employee relationships in an organization.

The Bureaucratic Model

Max Weber, a German sociologist proposed the bureaucratic model of management. The bureaucratic model included a set of rules and division of labour as a management practice. It also takes into account the hierarchy of authority and placement on employees on the basis of their technical competence.

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Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall.

- Stephen Covey

The core elements

While managing a business, an entrepreneur has to handle its various resources. After the industrial revolution, it was found that a set of resources is utilised by every business as mentioned below:

Man
Money
Machines
Materials
Methods

These resources are also popularly known as the 5 Ms of Management.

Five key areas of management in a modern business

The above elements are usually a part of most businesses. Every business is divided into departments for effective functioning. Each department has its own set of responsibilities to cater. The key areas of a business can be numerous based on the size and type of a business. It is totally an individual choice as to how many departments they wish to have in their business. Usually, there are five departments that every business has nowadays. These departments have their individual management styles, techniques, making it key areas of management in a modern organisational setting.

Production

Production management covers the manufacturing of goods and services. It is the primary function where the goods or services that the business is selling are produced at the right time, right cost and right quantity. Usually, material, purchase and inventory management are also a part of production management. Key things handled in production management usually include:

Picking the location of the plant and maintaining it
Planning and development of the product
Handling the purchase of raw materials
Storing raw materials
Managing the machines and systems

Financial

A business cannot exist without money, without the right financial management, all the profits go in vain. The financial department looks after the money aspect of the business. The numbers derived from this department directly impact the operations of other departments. Handling the capital, preparing and following a budget, portfolio management and handling the sources of investments are all a part of financial management. The finance department manages:

Capital budgeting and expenditures
Handling the profits and losses (Both short term and long term)
Distribution of dividend to investors

Human resource

An employee in your office, be it any human who is working for you, plays a crucial role in your business. The human resources handle the ‘man’ element of management. They ensure that they hire the right people for the right job at the right remuneration. It is a huge responsibility as the workforce is a foundation of any organization. The duties of human resource management usually include:

Recruitment
Placement
Induction and training
Wages and salaries
Appraisals
Employee welfare

Office

Office management is also referred to as administration or general management. It is usually responsible for functioning and coordinating between all the other departments. They take care of the paperwork of the company. Collecting data, overseeing reports and coordinating with clients, communicating between different teams – that’s all them. The usual responsibilities of office management include:

Conducting meetings
Collecting and managing data
Organizing the events and conferences of a company
Managing everyday correspondences
Coordinating with staff, suppliers, and clients

Marketing

Marketing management is one of the significantly growing areas of a business. It focuses on marketing the products and services that the business is trying to sell. Marketing directly impacts the sales and revenues of a business. In the past years, marketing campaigns have managed to change the fate of an organisation.

One of the most popular marketing strategies used by Fast-Moving Consumer Goods (FMCG) companies in India is the sachet packing. The strategy literally exposed the product to a whole new demographic. The affordability of sachets made it available to millions of people in the country. The components of marketing management are:

Tracking consumer behaviour
Marketing mix
Estimating price of the products
Marketing mix
Conducting marketing research
Coming up with promotional and advertising strategies

Functions of management

Functions of management are quite a debatable topic on the internet. There are several management theorists, who came up with their own set of functions of management. According to them, a management requires a set of functions for smoothly conducting their business. The most popular acronym for the function of management is POSDCORB. It stands for Planning, Organising, Staffing, Directing, Co-ordinating, Reporting, and Budgeting. It gives a systematic framework that aids a business to ensure maximum efficiency.

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Good management is the art of making problems so interesting and their solutions so constructive that everyone wants to get to work and deal with them.

- Paul Hawken

The 14 Principles of Management

Henry Fayol is known as the ‘father of modern management’. To regulate and organise the internal activities of an organisation, he came up with a set of 14 principles of management. Each of the principles mentioned below can be applied to any and all levels of management –

Division of work

Division of work simply means segregating the work and assigning tasks to the employees on the basis of their specialisation. In a bank, you will always see that each employee is given a specific task and section to handle. This ensures that an employee can lay his full focus on the task assigned to him. Division of work increases the focus of an employee, leading to better productivity, accuracy and overall efficiency.

Authority and responsibility

Authority and responsibility are the principle that goes hand-in-hand with each other. Using his authority, a manager allocates tasks to his employees. However, he is responsible to get the task done from his employee as well. The performance of subordinates is impacted on how a manager handles his authority and responsibilities.

Discipline

Discipline is needed in any sphere of life where you wish to achieve something. Discipline is all about being consistent. In order to have a healthy work culture, discipline is needed on both ends- the managers and the subordinates.

It is not the goal that is a game changer. All the runners in an Olympic running race have the same goal to win the gold. However, what separates the winner from others is his skill set and discipline. As Swami Vivekananda rightly said, ‘The whole point is to discipline the mind.’

Unity of Command

Unity of command simply means that an employee should be answerable and accountable only to one manager. This helps in avoiding conflict and confusion that may arise by receiving multiple directions from different managers. As the popular saying goes, ‘too many cooks spoil the soup.’

Unity of Direction

Unity of direction means that the managers and the subordinates, all those who are working on the same project should be on the same page. They all should be directed towards the same goal and be involved in the same plan.

Subordination of Individual Interest

The principle of Subordination of Individual Interest refers to keeping the interest of the organisation over and above your personal interests. Simply focus on the company’s goal rather than the individual ones. This works exactly like the theatrical play, where the overall play matters more than the individual performance.

Remuneration of Personnel

Money is a huge motivator, be it an employee or an investor. The principle states that the remuneration should be such that an employee and an employer both are content with it. For an employee, it is all about getting paid well for his efforts. For an employer, it is about getting his money’s worth.

Centralisation

Centralisation is all about striking the perfect balance between hierarchy and division of power. It is all about making decisions that are not biased and neutral in nature. Centralization is subjected to the size of an organization; bigger the business, bigger the chain of hierarchy.

Scalar Chain

Scalar Chain is the principle that promotes clarity of authority. The scalar chain model indicates there is a clear line from the subordinates to the highest management. The clarity helps the employees to be aware of their hierarchy and whom they are reporting to.

Order

Order is having things arranged in an optimum manner. Be it products, people, or activities, having an order generates better results. An order works in favour of the company and also those who are working for it. It sets a positive and standardized tone of getting things done in an order. Just like most of us have a set way of style in ordering food at a restaurant. The usual drill being first the tasty starters, then the filling main course and we do always have a room for dessert, right?

Equity

Equity here neither refers to the capital of your business nor has anything to with shares. Here, equity is basically equality. It simply means treating everyone with equal respect. It discourages employees and owners from behaving in an entitled manner. Instead, it encourages them to connect with each other on a human level.

Stability of Tenure of Personnel

Job security is one of the key factors that any employee looks for while applying for a job. Having job security takes the stress-off an employee’s head and allows him to focus on his work. That is the reason why even though freelancing is a pretty lucrative career these days, most people opt for a stable full-time instead due to the volatile opportunities.

Initiative

A good manager walks with the employees rather than ahead of them. Encourage your employees to take initiatives by creating an environment where they can voice their opinions. An enthusiastic and dynamic culture will get the employees more involved and encouraged.

Esprit De Corps

There is no ‘I’ in the team. Working together as a team creates an uplifting and motivating environment. The unity of an organisation can be one of its biggest strengths. Communicate openly and focus on group achievements rather than individual strengths unity.

Management is all about an entrepreneur’s vision. We all are managers of our own life. Knowing the above elements and key areas gives us a better understanding of management. Applying the principles and functions of management in your business will only make it more efficient and successful. Your leadership skills and management skills as a business owner will impact your business the most. Read our article on ‘leadership’ to know about its impacts on an entrepreneur’s journey.

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Business Goals – What Sets Apart the Doers from The Dreamers

Tanisha Achrekar — Wed, 23 Dec 2020 06:37:51 +0000

The more we read about successful people in various fields, the more we find that most did not “just get lucky.” Most of them had set goals for themselves and worked relentlessly towards it. It is not just in business, even back in school the topper usually didn’t accidentally top the class. Even though the toppers may have studied differently, they all had one thing in common: the same end goal.
Goals can literally be anything. People set different goals for themselves in personal and professional life. Getting a promotion, losing weight, investing better, having an emergency fund, or getting married are all examples of goals.

What are business goals?

As an entrepreneur, having business goals is like having your priorities straight. Your goal will form the basis of how, when, and at what pace you get things done. It is a primary step as without goals a business is directionless. What planning would you do if you don’t know where you want to be?
If the business goal of a clothing brand is to have a five crores turnover by the end of five years. You can take steps from the start on how you plan to do that. As the goal is pretty specific, you can plan accordingly how you will increase the sales, how you will cut down the costs, and how you will get more customers to get the turnover to five crores in the future. Without goals and going with the flow you wouldn’t know how to go ahead. Even a simple goal to make a certain profit is still a goal. Going with the flow is what leads some businesses to bankruptcy. Goals are a fundamental part of the business.

There are several ways to establish your business goals. The two popular ones being – SMART and FAST. Each having benefits and setbacks. Know about both of them below and make your own choice.

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The trouble with not having a goal is that you can spend your life running up and down the field and never score.

- Bill Copeland

What are SMART goals?

SMART goals are one of the popular frameworks used to establish business goals. It is a very careful manner of planning your goals and tracking progression.

S – Specific

The business goals you want to establish and achieve cannot be vague. The clearer and more specific they are likely you will plan and execute better to achieve them. Saying something like, “I want to make more profit.” is as vague as it can get. It needs to be more specific like “I want to focus on increasing my sales to make more profits.”

M – Measurable

How do you track your progress when you don’t know where you were? Measuring the progress on your goal gives you a reality check of where you are. It keeps you motivated and is also a sign that you are on the right track. You should know when you are reaching a milestone in your business.

If your business goal is to simply sell more. It should be specific. How much more sales do you want to make? What is the time frame to achieve it? Having a target to increase sales by 10% within twelve months is a measurable and specific goal.

A – Achievable

People who tend to over-commit end up exhausting themselves and even having breakdowns. This is because when they had established their goal, they did not think how realistic those goals were. It is essential to step up your game but in a realistic manner. You cannot expect yourself to run a marathon when you have been jogging only for a while. Similarly, in your business also your goals should be realistic and achievable.

Say you are running an event management business. It is unrealistic to expect to be flooded with clients within the first year or two. When people set unrealistic goals and fail, it breaks their motivation to go ahead further.

R – Relevant

The goal and vision of your company should be on the same page. Your goals should be relevant to how you want your business to function. It should be also tied towards the core values of your business. Your goals should have a meaningful impact on your business and contribute towards its growth.

T – Time-based

Time is a limited resource. Setting deadlines in allotting yourself a specific time to achieve your goal. This ensures that the business decisions are accordingly made proactively and with a sense of urgency. It eliminates the option of being laidback. If you fail to achieve a goal within the time frame you had allocated, you need to consider what challenges did you face? How realistic was your deadline? What challenges hinder your progress?

One of the most common goals people generally have is to lose weight. Most people tend to set unrealistic deadlines for it. Expecting to lose 10 kgs in a month, can happen also sure but not in a healthy, sustainable manner. It is important that while setting deadlines we do not overestimate or underestimate ourselves.

Smart goals will help you know exactly what to do, how much to do, and within what time to do it. It works for many entrepreneurs as it helps them know exactly what they want to achieve, how much time they want to achieve it, and how far they have come.

What are FAST goals?

Different things work for different people. The same goes for business goals as entrepreneurs have a different framework of setting the same business goals. It simply depends upon what works for you. FAST goals are one such way to go about it.

F – Frequently discussed

It is always important to keep discussing your goals to remind your mind constantly of it. If you don’t often tap on your goals, you are likely to lose sight of it. That is why many people also practice having a vision board or a list of their goals in a place where they see it every day. This is a constant reminder of what is the end goal and a motivating factor on those tough days.

If you are frequently discussing your goals, you will know what is working for you and what isn’t. It will help you to make alterations right in time and look for alternatives. Frequent discussions also provide everyone involved in the goals a better idea about what they are doing, why they are doing, and how they are contributing towards it.

A – Ambitious

Business goals should have a zest and a rock-solid ambition. Ambition motivates you to be on your ‘A game’ and give your best performance. Especially, when you are starting your business, you are yet to achieve things to feel motivated. Your ambition and drive is your motivation.

A new business requires commitment and relentless hard work. Without being ambitious towards your goals, how can you passionately work towards them? People who usually have a list of why they want to achieve their goals are quite passionate about them.

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If you don’t know where you are going, you will probably end up somewhere else.

- Lawrence J. Peter

S – Specific

Goals should be tangible and measurable. This can only be achieved when you specifically know what you want to achieve. Any person is more likely to be focused when they know exactly what they are working towards. The more specific your goals are the easier it is to track them and measure your progress. To achieve any goal in life, undivided attention is needed and that can be done only when you know exactly what is your goal.

T – Transparent

It is vital to keep your business goal as transparent as possible. The more clear and vivid it is, the more it can play a motivating factor for everyone involved in achieving it. If an employee knows the significant impact of his/her work, it will motivate him/her to give the best performance. Transparency promotes the trust and integrity of any organization.

Transparency of your business goals as an entrepreneur will also give you an overview of the things you are working towards. Keep your long-term goals in your office on a board or as a poster will keep everyone on their toes and uplifted.

What next after framing your business goals?

After you have your business goals all figured out, the next step is having things mapped out. It is the time for execution by first planning how you are going to achieve your goals. Some of the popular brainstorming techniques being –

Mind mapping

Mind mapping is a liberating brainstorming technique. Simply write your goal in the middle of a paper. Now simply start surrounding it with anything that comes in your mind regarding it. Be it any words, images, random thoughts. Do not overthink this. Just simply map everything out.

List-making

List-making is a simplified and effective technique for brainstorming your goals. All it requires you to do is write your goal on the top and a list of things you need to do to achieve it.

Brain dump

A brain dump is the least structured way to go about brainstorming. It is as raw as it can get. It is basically writing your goal on a piece of paper and then just dumping all your thoughts and feelings regarding it.

Brainstorming is a great way to empty your mind especially since goals can feel overwhelming at times. Business goals give clarity to your dreams and are the roadmap of your vision. It is much more than just wishful thinking. Read our article on ‘SWOT Analysis’ to get a better understanding of how your business is doing and how it can progress further.

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Project Management in the Modern Workplace: Building Towards Something Better

Kiran Kennedy — Wed, 23 Dec 2020 03:18:06 +0000

Ever hear of the ‘Seven Wonders of the World’? Well, you know that most of those are man-made, that does not take away from the wonder of it, rather, it adds to it. There was a time in history, long ago, when we did not just build office complexes and skyscrapers. There was, in fact, a time where we built monuments to civilisation and human ingenuity with nothing but the most basic of tools and our bare hands. How was this possible you ask? Simple; we were great at project management. It may seem like a term to be thrown around the office, but it is much more than that. It lives in our DNA; it is who we are. We build things together; we always have and probably always will.

Understanding What Project Management Is All About

The definition of what it exactly means has varied over the years. The common origin is agreed to be one that originates in the 1960s, when businesses were looking to unify their workflow into something more compound and efficient – a project. Despite the different forms it has taken over the years, communication and collaboration are key elements in a project and essential to the project management approach.

If you want to get scientific about it, it can be described as a combination of practices or steps that have been taken to deliver a final work output. It is a scientifically-proven approach to executing a certain task or set of tasks for the business or a certain goal. It is not to be confused with running the business itself.

This modern-day definition allows it to include other theories and methodologies in parallel, such as leadership and management approaches. In fact, project management is simply a very niche management style that takes care of very narrow but important business functions.

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Though it may have its origins in business and science, it would serve well to keep in mind that at the end of the day, it all comes down to human communication.

What Is The Point Of It?

Like any other business model or management concept that was developed over the last two centuries, it was meant to increase efficiency, to be frank. This approach allows the upper management to have more control over the business processes and gives them a clear view of the goings-on.

As mentioned earlier, it is not the business itself, just bits and pieces, individual projects that together make up the inner machine of the company’s beast. In that sense, it is a tool rather than a full-on plan, thanks to its defined nature of having a fixed beginning, middle and end. A step-by-step guide if you will. In today’s economy, a clear-cut path to success is a valuable commodity.

Where It All Began

The concept of managing projects has been around since early civilisation and has contributed to many great monuments throughout human history. One such example is the construction of the Pyramids of Giza, an undertaking so massive in comparison to the level of technology available at the time that it defies reason. One thing that historians do agree on is that it serves as a prime example of what can be achieved if human beings get organised.

As for the modern rendition of project management, that was born around the 1950s. In 1956, ‘The American Association of Cost Engineers’ were formed and they formulated project management to help run cost estimates and schedules. Later down the line around 1958, the U.S. The Navy invented ‘Program Evaluation Review Technique (PERT)’. It was formed to analyse the different tasks involved in completing an overall project and the minimum time needed to do so.

This is as far as the early forms of the project management went, purely used for its efficiency in saving time and money, as well as some degree of coordination for tasks. Then in the 1960s, the moon landing happened – the first large-scale modern achievement of humanity. The successful execution of this brought people to the realisation that large-scale project management skills were a benefit to society.

With the advent of globalisation and technological development in the 1980s and 1990s, like e-commerce and the internet, it became much easier for businesses to readily integrate project management as a working principle in a more widespread manner.

The Different Phases Of Project Management

As a project manager, you need to ensure certain steps are taken in the setting up of the project and how it is going to be approached. Here are some of the building blocks and stages you need to address moving forward:

Initiation

Before starting, show your organisation and higher-ups that there is, in fact, a need for the project and that they will see a return on their investment should it be launched. You need to build a ‘business case’ – a fancy term that tells them why the project is needed and do an assessment of the project in terms of the cost needed to achieve the goals.

Planning

This is where you make sure you have all the schedules, payment systems, communication modes and reporting formats are laid out for easy access after the launch. Make sure that you have the funding ready and in place before-hand.

Execution

Getting started on the project won’t be easy. You will have to track and assign tasks to team members and different departments, do all the paperwork and account for any initial slip-ups. Call it, ‘growing pains’ if you will.

Monitoring & control

Just observing and fixing problems over the duration of the project. It is just maintenance if you think about it.

Close

Once the goals of the project are achieved, plan the next one. Project management does not end with one project, it ends when the business has what it needs. This could mean multiple projects.

‘‘

Project management is a role of supervision and dialogue, It is not a dictatorship.

Best Practices For The Best Chances

Communication

In business, it is never a monologue, or rather it should never be like that. Yes, there needs to be a hierarchy in the company but keep in mind that your employees have just as much invested in the company. Keep the channel of communication open for any and all feedback from your team. It not only brings a sense of equality and involvement in the business, but it also helps you identify which are the weak spots in the workflow that you need to fix.

Analyse

Going over your initial plan and revising it over and over, for the course of the project benefits the end goal as it refines the quality of work. This is where all that feedback is helpful. Another good way to do the analysis is to make use of tracking and business management software. There are so many on the market these days and they need only the basic understanding of technology.

Flexibility

If you have ever worked directly with the clients in your line of work, you know what it is like. Some tend to push for an earlier deadline, trying to save money and time, but all it ends up doing is affecting the result and the quality of the process. Push back against premature deadlines, as a project manager you have to maintain that quality till the end. Convince your clients to try to be a little more flexible so that the project can happen as it is supposed to.

Goal setting

Set realistic goals when you start a new project. Don’t try to overachieve. If there is time later down the road, you could attempt something more. It is best to avoid overwhelming your team right out the gate as this can put unnecessary pressure on them. Goals should be set as an indicator, not as a work instruction. Not every step of the work process has to be micromanaged, so long as the final result is on track to be completed.

Using IT

Make full use of the digital and IT resources at your disposal. The IT department has the best understanding of the business’s layout and how the project fits into it from a digital and technological standpoint. Rely on them to regularly assess your efficiency and allow them to automate as much of the project as possible.

Remember, these are just broad guidelines as to what you might want to consider doing, but as the project manager, it is your call. That said, there are a million ways in which management can be done, but only a few ways in which it can be done right. Check out our article on ‘management’ to learn how to be all that you can be in business.

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Leadership: Lift Your People Up, Bring Them Together

Kiran Kennedy — Mon, 21 Dec 2020 05:29:40 +0000

What do Henry Ford, Mary Barra and Jack Ma have in common? They are transformational leaders – people who changed forever the way businesses are run. Ma has revolutionised digital retail/e-commerce in China. Barra played a pivotal role as the CEO of General Motors and pulled the company back from the edge of bankruptcy. Ford, the legendary carmaker, was an empathetic leader who never failed to empower his people and embrace diversity. He had broken ground in labour policies by nearly doubling the wage of an average auto worker and enabling a five-day, 40-hour working week.

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Leadership balances between doing what is right for the company and what is right for the employees. Finding the right balance is the hardest part of any leadership role.

What Makes A Good Leader?

Despite countless dictionary terms, the best way to describe a leader would probably be how John C. Maxwell put it, “A successful person finds the right place for himself, but a successful leader finds the right place for others.” A leader is someone who puts the needs of others above their own, actively listens to his team and has the foresight to achieve certain goals. No two people are the same and the same is true for leaders. Everyone has their way and style. So now the question is: What makes a good leader?

Integrity

Maintaining the company’s values while still delivering what you promised to the public as a business is a tough line to walk sometimes. You need to be able to uphold these values in such a way that it reflects the core beliefs on the brand in the eyes of the public. Show your team, employees and your customers that they can count on you.

Vision

People believe in people more than they do in mission statements and that is why a leader should have a clear vision as to what it is, they want the company to achieve. They should inspire confidence in others and show them that it is doable.

Decisiveness

Vision is not enough unless it is implemented. Do you have the courage and the decisiveness to make things happen the way you want? Decision-making comes with the territory and proves to be crucial when there are hard choices to be made.

Empathy

A good leader should be able to interact in a humane way. They need to consider how others view their goals and send across a clear and empathetic message in a way that will get people on the same page. People respect empathy and having their point of view considered.

Empowerment

We have all heard it many times by now, but here it is again – Delegate the work. A sign of a truly great leader is one that takes a hands-off approach. They empower their team to do the work and trust them to get the job done. Only step in when there is a problem and only to offer solutions, not to make the problem worse.

Lewin’s Psychological Case Study

In 1939, German-American psychologist Kurt Lewin, conducted a study on the different types of leadership to find out which was the most effective model to follow. His early studies were revolutionary – they established the three main types of leadership from which all other types were born. Let us take a look at the three primary categories:

Authoritarian

It is not a democracy. This style of leadership adopts a top-down input method, which means that there is little to no input from the team, while the leader maintains total control. It leaves no room for trust and is not very applicable in this day and age.

Democratic

A company that gives its employees an equal voice is one that is under a participative leadership. This includes work culture, workflow, the policies, the pay and even the hours. People are more committed to achieving a goal when they have a say in the matter.

Laissez-faire

The French term for ‘leave alone’. It emphasises on the need for a hands-off approach where delegation is key. One should keep in mind that being too hands-off can have its downfalls. Employees may find it confusing or lack the motivation to reach an end goal. A healthy balance control and delegation is needed in this approach.

The experiment involved school children who were separated into these three categories and put to work on an arts and crafts project. The researchers observed that the children following the democratic model performed more effectively as they seemed to collaborate better and seemingly inspired each other to meet the end goal. This shows us that at all levels, regardless of age or work, one thing is a constant – we are all human beings and allowing each other to voice ourselves lends more value to the workflow.

Having said that, the other models of leadership are not to be looked down upon. Like the authoritarian style, it may not be the most widely applicable format in the modern workplace, but it has its advantages. Say for instance you are training a team of young interns for a very important job, the initial interaction will have to be authoritarian, as more of one-directional guidance is needed. With all this taken into consideration, the best form of leadership is one that maintains a healthy balance between all of these styles.

What’s Your Leadership Style?

Leaders don’t always have to be born, a lot of the time, they can be trained and taught. What is leading if not a learning process. Let us have a look at what kind of leader you could learn to be:

Transactional

A carrot-and-stick approach where employees get one or the other for the quality of work. This works well for corporate houses but fails to establish a relationship of trust.

Agile

Modern problems require modern solutions, and situational leadership fits that bill. It emphasises the need for flexibility and adaptability. It allows a lot more freedom and creativity when it comes to problem-solving. For example, say you suddenly find yourself short-handed while working on a big project for an important client, an agile approach lets you quickly find a replacement who can fill that role and keep the team moving forward.

Transformational

They are the ones who encourage and motivate others to move forward through their own example. This type of leader concerns themselves with upholding the moral standards of a company and nurturing a positive work environment.

The Mentor

As the name suggests, this refers to a type of leader who acts as a guide rather than a boss. They take the time needed to grow the skills of the people on their team and teach them the best way to tackle any specific problem within the bounds of the company. It works very well for establishing healthy workplace relationships and for skill growth.

The Bureaucrat

He/she is more concerned with maintaining the norm in the company. They fixate on the rules and regulations of a company and prevent others from deviating from it at all costs. This has its advantages from a business point of view, as it is a business-first approach but is not so great in terms of establishing a working relationship with the employees.

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The type of leader you are will determine the quality and methodology of the organisation, so choose wisely. Contrary to popular belief, it can be learnt like any other skill in management.

The Bottom Line

Practise what you preach

All this is well and good in theory but implementing it in the workplace is another question. Every leader needs the right team, so start there. Recruit the right combination of people to perform specific roles and invest in your vision for the business.

Be Transparent

Next would be to make your goals, intentions and instructions crystal clear. Miscommunication is not an option and if there is, it is your responsibility to correct it. That said, it is not a one-way street. Listen as much as you talk and give the team a chance to openly and without consequence, criticise the workflow. This is how you will find the faults in the system.

Invest your time

You can be hands-off, but that does not mean you can relax. If you expect your employees to work hard, you should too. The very essence of ‘practice what you preach’. As the saying goes: ‘Lead by example.’ Above all, show appreciation and support. The mark of a truly great leader is one who takes a moment to make sure people feel valued.

For example, when a Starbucks store in the U.S. was robbed in 1997, three employees were killed. The CEO Howard Schultz – Instead of making a statement or calling a legal team – flew down to Washington D.C. and spent the week with their families and his other employees. Sometimes it is not about doing what might seem best for the business, and more about doing what is human.

Whatever the case, at the end of the day, the decision falls to you as to what kind of leader you want to be. Regardless of the type of leader you are, make sure to have a vision.

Read up on how to craft the perfect vision statement, so you can build your leadership strategy around that!

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To Do or Not to Do? – The Dilemma of Decision-making

Tanisha Achrekar — Mon, 21 Dec 2020 07:27:34 +0000

When you decide you want to buy a new shirt or a new dress. You go online and check several options. With several apps and websites that are selling dressing, your pool to choose from is bigger than ever before! Having so many choices is definitely a privilege but it is also making it more difficult to choose one. Having several choices has given rise to a whole new kind of impulsive and indecisive buyers. The same goes for the business world, say you are hiring a software engineer for your company. You will get hundreds of candidates on LinkedIn. The more choices you have, the more confused you are likely to be while choosing the best candidate, clothes, food, or anything. We live in a world where we are constantly bombarded with options, choices, and replacement. This makes the skill of decision-making worth harnessing now more than ever.

Decision-making is a mental process and must-have business skill. A survey conducted by the Harvard Business Review in 2010 found that there is a correlation between decision-making and financial results 95 per cent of the time. The companies that have great decision-making skills tend to perform better than their competitors.

Different styles of decision-making

There are different ways to go about effectively making business decisions. Each and every entrepreneur has his own style and way of thinking. Though overall the way decisions are made can be divided into three vast categories:

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You can't make decisions based on fear and the possibility of what might happen.

- Michelle Obama

Psychological

A psychological decision is clearly subjected to how an individual feels. It depends upon what are his or her needs, preferences, mindset, ethics and perspective. It totally revolves around an individual making all the decisions.

Cognitive

A cognitive system is one where the decision maker and the ones who will be impacted by those decisions function collectively in an integrated manner. Here the decisions are discussed, assessed, and suggestions are made accordingly. The decision is open for discussion as reactions and suggestions are received.

Normative

This method is usually how group discussions go about in an organisation. Obviously, when there are so many people involved in decision-making, communication is the key. Here the organisational norms and logical discussions are the key part of the process.

The seven-step process of decision-making

The go with the flow mindset does not fit quite well in the business world. Every crucial step of an organisation is well-planned and decided before implementing it. There are several ways you can make a decision regarding your business. The most sought-after way to go about it being –

What are you deciding about?

Before beginning the process, it is vital to know what you are deciding about. There should be clarity regarding what a decision needs to be made. If you fail to understand clearly the setback or the opportunity, the decision you make about it might probably not be the best.

Be well-informed about it

The best decisions are the ones that are well-informed. Once you know regarding what you are making a decision, gather all the data about it. Suppose you are deciding whether or not you need to hire an accountant for your startup. Think about how the current accounts are being handled by you or your manager.
Analyse how hiring an accountant will make a difference or is it basic calculations and it can be managed without any professional help. Then consider the amount you will be spending hiring a new accountant. There are plenty of things to know and consider while making your decision. After all the considerations, the pros and cons and the long-term impact assessment, make the decision. The best decisions are the ones that are well-informed.

Look for alternatives

Businesses have constant requirements and needs. Consider what suits you better, hiring an accounting firm that manages your finances or an accountant. Look for hitting two stones with one bird by hiring tax and accounting consultants or firms that manage both your account and taxes. While making decisions, it is necessary to consider all the possible alternatives. As usually there are several ways to meet the same goal. Find the one that suits your business the best and offers value for time, efforts and money.

Analysing the multiple alternatives

Once you have jotted down several alternatives, start weighing them against each other. See what has worked for organisations in the past in a similar situation. Then see how you can do things differently and better. We keep weighing options against each other all the time. When you are hungry, the end goal is to feel full. Now you can either fill-up on the tasty junk or have a healthy meal, have a home-cooked meal or order takeaway. Depending upon the time you have for cooking, your food choices, your budget and your diet, you will end up factoring into your decision-making process.

Finally, the verdict is here!

After brainstorming and contemplating all the options and alternatives, the next step is making the decision. The decision you have made at this point is clearly impacted from all the steps above. Having clarity, gathering information, looking for alternatives and weighing them against each other is important to make the best possible decision. This method works in any and every decision-making crisis that a business comes across.

And… Action!

It is time for implementing the decision that you have made. Make a tangible plan based on your decision and start acting on it promptly. Assign tasks to all those who will work towards making your plan a reality. Proactively get started as a delayed action may lead to loss of opportunity. When college students are contemplating which colleges to apply for and are busy researching about the best colleges for them. The ineffective decision-makers usually miss the admission dates.

It’s review time

Once you have made the decision and implement it, observe how it performs. Are you happy with it? Are things going as you thought they would? Is everyone impacted by it satisfied with your decision? If the answer is a strong ‘yes’, the decision needs no alterations. However, if that answer is ‘no’, then conduct discussions, identify the setbacks and come up with solutions for the problem at hand.

‘‘

Whenever you see a successful business, someone once made a courageous decision.

- Peter F. Drucker

Techniques for making decisions

Decision-making techniques help in reaching your goals more effectively and in turn produce better outcomes. Some of the best techniques worth considering are –

Be more process-oriented
When your job is not only to make the decisions but also getting it implemented through others, a process-oriented approach seems the best way to go about it. Having a process in place will have a set way of getting things done. You can also form a process involving the steps above that best suit your business.

Get your team together
When you alone are making a decision, you are likely to have a tunnel vision. Involving your team in the process will help you to view things from different perspectives. Bringing different ideas and viewpoints to the table will only lead to generating an effective decision.

Induce a collaborative mindset

While making any decisions in an organization, the mindset of everyone involved should be taken into account. Work on uplifting your employees and create a mindset where their inputs are taken seriously.
Also, the approach should be more towards making the best decision overall as a team rather than employees defending each other’s opinions and downplaying their weaknesses. Instead, the focus should be on collectively addressing the questions that stand while making decisions.

Create psychologically safe environment

In research done by Google, it was found that psychological safety is largely attributed among teams that perform well. It is obvious that a team where employees feel safe and respected will have better communication than the one where they feel they are condescended or ignored. A lot of great ideas will be thrown out of the window if employees don’t feel psychologically safe to share them.

Reiterate the goal behind the decision-making

Every decision that is made in an organisation is with a set goal in mind. A simple decision like framing the leave-policy of an organisation is with the goal to promote work-life balance for employees without hampering productivity. It is important to not lose sight of the goal while getting involved in the decision process. Keep revisiting the goal to remind the entire purpose of making the decision.

As an entrepreneur, decision-making is an integral part of your journey. Your business will evolve and so will your process and strategies. The challenges that come your way will only enhance your decision-making capabilities. Along with decision-making, problem solving skills also go a long way in making the best business decisions. Read our article on ‘problem solving’ to know more.

The post To Do or Not to Do? – The Dilemma of Decision-making appeared first on Dutch Uncles.

Transition – The Time to Move on And Let Go

Tanisha Achrekar — Sat, 19 Dec 2020 20:08:46 +0000

Remember the mixed emotions you experienced when your school or college ended? Feeling happy and unhappy at the same time. Some things will never be missed, while other memories will be forever treasured. Change is an inevitable part of life and still the only thing that is constant. A business transition is a change in the ownership of an organisation. The transition can be anything from expanding a business, exiting it or simply taking a step back.

Preparing for a business transition is like building a house from scratch. It requires a lot of preparation. It is a step-by-step procedure where each piece needs to be in place for achieving maximum performance. The first step is deciding when the transition should be made.

Is transition management different from change management?

There is an intrinsic link between transition and change management. Transition management is a part of the change management process. Change management deals with preparing the organization and its employees for the new ownership. Whereas, a transition management plan is tailored to an individual level. The psychological impact of adjusting to the organisational change will directly impact how long the change will last. A new owner may have a new way of getting things done, which the old staff may not be comfortable with. Transition management is all about reorienting people’s needs in response to the change that occurred. For a smooth and successful change of ownership, transition and change management goals should be aligned.

‘‘

Often when you think you’re at the end of something, you’re at the beginning of something else.

- Fred Rogers

What compels a person to transition?

Often the term ‘exit strategy’ is used in selling a business or ‘cashing out’. An entrepreneur who plans and thinks ahead often has an exit strategy in his head. The few reasons why an entrepreneur may prefer to exit are:

Seizing the perfect opportunity

Many entrepreneurs prefer selling their business when a buyer makes an offer they cannot refuse. If the condition is working to an entrepreneur’s advantage, he will make a quick move of selling his business. In this case, it is essential to know in advance what your business is worth in the market. Also, the demand of potential buyers for your business. These two things will give you an idea of what you and your business deserve.

Being ready for retirement

We often hear many young adults who establish their business, make it successful, and then retire in their late 20s or early 30s. Most people do have things planned ahead of time when it comes to retirement. After you have sold your business, you should have enough money to sustain yourself for the rest of your life. Create an estimate of all possible future expenses and then tally with the reality of your company’s worth. This will reflect how ready you are for retirement.

Moving on to the next best thing

Many entrepreneurs also prefer to sell their business when they feel that they have done their part. They usually prefer to move-on to their next venture. This comes from a place of feeling saturated, bored or burned out. Selling your business is not the only way to move on. You can start a franchise if you feel your business is successful enough, you can consider merging with other companies, or even going public. These are a few alternatives worth considering if you still want to do this business on the side. However, in case you are completely done with your business, it makes sense to simply sell and move on.

Business troubles and drawbacks

A business requires capital to function. If a business is facing financial difficulties with no glimpse of hope in the future to revive it, then selling it and exiting might be the only option. Usually, when a business is sold due to financial trouble it is sold lower than its value. Simply stating why would a buyer pay heaps of profit for selling a loss incurring business? It is usually an exit strategy preferred before things get worse.

Businesses shutting down due to disputes amongst partners is not a surprising revelation. Many entrepreneurs decide to sell their business and part ways for good after constant tiffs with partners. Hiring negotiators is the last ray of hope before exiting in such circumstances

Unexpected life changes

Life does not always go as planned. Sudden changes in an entrepreneur’s life may compel the business to transition. Usually, the common life changes that lead to a business transitioning are death, divorce, and disability.

In case of a sole proprietor’s death where there is no one to take over, the transition seems the only available option. A disability where an owner ceases to function and carry out everyday business activities, the transition of a business again seems inevitable. Entrepreneurs are always advised to have long-term disability insurance especially sole proprietors.

A divorce may also lead to a change of ownership in a business and cause its transition. In most cases, parting ways from your spouse may lead to the division of all assets including your business. Many owners opt for selling their business while dividing the assets. However, if the divorce is on a mutually-good term, you may even opt for partnership.

Steps for transitioning your business efficiently

Strategic planning is a must-have if you want to transition your business smoothly and efficiently. Before the transition takes place, an entrepreneur must ensure that things are in place to support the new owners. Below are the steps worth considering for transitioning your business:

Evaluating the market

Knowing the current state of the market is vital before selling your business. Take a close look at how your business is doing and how the industry is currently functioning. This will help you understand what you can quote to your initial potential buyers.

Assembling your advisory team

The transition of a business requires lots of planning and anticipation. A team of professional advisors will help you to get all the paperwork beforehand and have everything in place. The usual advisors you will need include the insurance agent, wealth manager, estate planning attorney, and tax professionals.

Reviewing and organising important documents

Before you consider talking with potential buyers, it is essential to note that your financial records and corporate documents are all in place. The documents from when you incorporated the company to the last financial year’s balance sheet, all of it should be up-to-date. Also, have a look at the existing business contacts that exist before the transition.

‘‘

The question isn’t at what age I want to retire, it’s at what income.

- George Foreman

Knowing the worth of your company

You’ll know what your company’s worth after getting everything reviewed by your team of advisory and getting all the paperwork done. Oversee all the potential issues that might affect your sale adversely or delay it. Also, it is a good time to evaluate the overall corporate structure of your organisation. Knowing what about the business is going to work in favour or against while selling will help you estimate its worth.

Obtaining a valuation

After you know your company’s worth, get in talks with the broker to get the final figures. Figure out the range of possible quotes you are interested in selling your company for. A credentialed and experienced business appraiser will help you in calculating your business valuation.

Engaging with potential buyers

After the valuation, your business is ready for the transition. This is one of the most crucial steps in the transition. Start engaging with various buyers, see the quotes they are offering. Apart from the money aspect, you also want to ensure that the new owner is good for your employees, the reputation of your business and can meet the existing needs of your customers.

Structuring your transition

Once you have decided whom you are selling your business to, decide how to structure the transition of your business. This will require you to discuss with the buyer all the changes he plans on doing while taking over the business. Having a well-structured transition will ensure that your employees, investors and customers are minimally impacted by this change of ownership.

What are the challenges faced while transitioning a business?

Businesses are sold to either seek extreme rewards or as a compromise to come out of an existing crisis. Choosing the next owner is a huge responsibility for the current entrepreneur. There are several things he or she has to address before choosing a buyer, after choosing a buyer and even while choosing a buyer. Clearly a tedious and time-consuming process.

Financing the sale of your company

The next buyer may not have adequate funds to outright purchase the entire company. There are several funding options that are needed to be explored to get your entire share overtime. Some entrepreneurs consider seller financing or third-party financing to fund the sale of their company. You can also consider internal funding options to buy out your share eventually.

Selecting the right successor

The future of your company depends on the next owner. Choosing the right successor is one of the biggest hurdles an entrepreneur comes across. There are several factors you need to consider while considering a potential buyer. Know his or her capabilities, goodwill, ability and attitude towards taking ownership. Also, ensure that they have given enough time towards getting to know and becoming well acquainted with the company’s current structure and processes. Careful assessment while choosing a buyer is the only way to make the transition successful.

Letting go of your business

Any entrepreneur will find it hard to relinquish control over their business that they have worked relentlessly building from scratch. Minimising your role and eventually leaving your company is tougher than it sounds. There will always be that temptation to take things in hand. Letting go of managing your former employees or making deals with usual buyers will be hard. Start one step at a time here with the new successor. While training him for the company, start taking steps back eventually and put him on the pedestal.

Each and every business has its own unique manner of transitioning. For an entrepreneur, the transition of the s business can be a roller coaster ride. It is important for you to remember that you gave your best while planning the transition and choosing the right successor. For a successful transition, have a well-established relationship with your successor. It will come in handy more often than you think. Business goals keep changing and evolving over the years with more successors coming in and going out. To know more about how evolving business goals, impact an organisation, read our article on ‘business goals’.

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