• Monday, July 22, 2024
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Between owner-manage and owner-led businesses

Between owner-manage and owner-led businesses

Every business owner or corporate leader knows that people are the most critical and unpredictable factor in production. No success can be achieved without people. God, in His infinity, needed men to achieve purpose on earth. The need for people is constant. The changes are in the context and capacity of the people leading this significant production and manifestation factor.

I was recently quoted as saying there is a vast difference between owner-managed and owner-led organisations. Of course, there are differences between leading and managing people.

Managers are meant to develop into leaders as a career progression. Whereas leading is more about creating an atmosphere for sustainability, managing ensures steps are followed to generate a predetermined outcome. Human beings are better led than managed, unlike other factors of production.

“Human beings are better led than managed, unlike other factors of production.”

Adewale was appointed as a general manager and committed to being promoted to the position of managing director of a large conglomerate. He was allocated a certain percentage of the company’s share. The planned transition period is five years. To meet the expectations of the chairman, the organisation’s owner, Ade, focused on results. In leading his team of two hundred people, he adopted an approach to get a performance that could impress the chairman and outdo his fellow general managers. Though there has been an improvement in the critical performance metrics, people being led by Ade are burned out, bruised, and abused. They were spoken to in a way that lowered their emotions and dignity. Those whom Ade exited counted themselves lucky because they left with their mental and emotional health intact.

As much as the noise of Ade’s insensitivity is, the Chairman loved the result and felt Ade must be doing something exceptional to deliver on the numbers. However, the organisation’s atmosphere becomes more toxic with the loss of staff and a high hatred ratio for the brand.

In every forum, the staff believed the chairman wasn’t as harsh as Ade when he was leading the team directly and wondered why he couldn’t intervene rather than enjoying the benefits of Ade’s conceited approach to business and results. Ade is an owner-managed person. He owns the company through his subscribed share and position. However, his focus is to impress one man who can decide his future. Unfortunately, the chairman’s velvety-like perception was not rooted in a deeply convicted desire to build an institution that would outlast his current benefits and wealth-conscious ego.

Read also: Sad tales of small business owners over epileptic power supply

Things got worse for the organisation as critical senior staff who could no longer endure Ade’s torture left after seeing no hope of change. The staff became actively disengaged and waited for the opportunity to go. Service levels plummeted, customer loyalty dropped, and market share was lost.

The chairman eventually relieved Ade of his position based on a petition of insulting words to a staff member. Ade had escaped many such accusations, including cases of verbal and sexual harassment until the protection the chairman could offer him waned. However, it is too late for the organisation.

I have seen the above scenario play out in many organisations and businesses. One of my roles as a leadership coach has been to shift business owners and corporate leaders from a myopic to an ambidextrous view of performance. Building an ambidextrous organisation means leading for the present and the future. The chairman wasn’t ambidextrous enough to have tolerated Ade’s disruptive behaviours against the company’s primary factor of production—her people.

Whether it is a growing business (I would not say I like the word small business and often change the mindset of my clients to think of their business as growing rather than small) or in established corporate organisations, owner-managers have tendencies to show some traits that create toxicity in the work atmosphere. I have observed these traits manifested as:

-the tendency to focus on today’s outcome to impress the board or the key owner at the expense of staff wellness. They are often self-centred, paranoid, and thinking of what comes to them in terms of executive compensation. They are owners without a long-term ownership mindset;

-they have a high level of positional intoxication. They speak and act in their positions. Being the number one person in meetings does not mean being unchallenged or speaking derogatorily to others. Fortunately for them, we live in an environment where people are afraid to talk due to the need to survive first;

-acting as if they know it all and have an overinflated ego. This is common if they are the principal owners, especially among medium-sized businesses. The owners see the organisation’s establishment as a reward for their knowledge and expertise. In most cases, these are half-baked experts because they refuse to grow by not listening to those who do the work for them; and

-they can do whatever they like and make irrational decisions. The downside is that people under them aspire to own organisations in the future to replicate similar behaviours. Real leaders don’t do what they feel, but what is required to build an organisation.

Owner-managed businesses without the above traits are owner-led. The difference between the two is that leaders in an owner-led environment focus on vision and creating an environment that assures the sustainability of performance and brand image.

Owner-led leaders are velvety regarding people’s welfare and wellness, don’t want to burn bridges except when necessary, and desire to build an organisation that can transition into an institution. As noted by the chairman in my story, the main problem is the authenticity of owners’ desires to place people, the future, and sustainability above the immediate gratification of being the owners and the ego involved in leading businesses that produce atmospheric results for the moment.

Babs Olugbemi FCCA, the Chief Vision Officer at Mentoras Leadership Limited and Founder of Positive Growth Africa. He can be reached on [email protected] or 07064176953 or on Twitter @Successbabs.