A business owner recently told me that he has a good team. He's happy with the work his employees produce, the team has made improvements to its processes, and they're having a very successful year.
But he's also frustrated.
He has four employees who are supposed to function with him as his leadership team. Yet he's still involved in far more client work and project decisions than he wants to be. He knows the team can deliver excellent work without him because he's seen it happen. It just hasn't happened consistently enough for him to feel comfortable stepping back.
Meanwhile, one member of the leadership team asked about opportunities for continued growth and whether there's a path to becoming an owner.
That left the owner asking questions like:
Right now, the owner isn't convinced that anyone on his team approaches the business with the kind of ownership mindset he would expect from a future partner.
But when I asked whether his leadership team had visibility into the company's financial performance or understood how their work affected profitability, the answer was no.
And when we talked about who makes the consequential business decisions, the answer was still the owner.
So what, exactly, are these employees being asked to take ownership of? And how will they demonstrate it when they do?
This is a challenge I see in businesses that have grown around the talents, relationships and hard work of their founders.
As the company grows, the owner promotes experienced employees into supervisory or management roles. These are often people who have been with the company for years. They're technically proficient, know the customers, and have earned the owner's trust.
Now these employees are expected to supervise others, manage projects, solve problems and take ownership of outcomes.
But being a great individual performer doesn't necessarily prepare someone to lead a team.
A talented designer may need help learning how to evaluate other people's work and provide constructive feedback. An excellent project manager may need to develop the skills to manage budgets, address poor performance or make staffing decisions. A successful salesperson may have never been responsible for developing a sales plan or holding other people accountable for results.
And there's another complication.
The owner may have promoted these employees without ever really changing how decisions are made.
The managers have new titles and responsibilities, but the owner is still reviewing proposals, solving problems, managing important customer relationships and stepping in when projects aren't going as expected.
Eventually, everyone gets used to working that way.
The owner complains that the managers aren't taking enough initiative. In some cases, the managers try to make decisions, but the owner consistently overrides them. Others stop trying and keep bringing decisions to the owner because that's how things get done.
When I talk with owners about why they remain so involved in day-to-day operations, they usually have good reasons.
They've spent years building their company's reputation. They know their customers and what it takes to deliver a quality product or service.
Sometimes their personal style and expertise have become the standard by which good work is defined, and they believe they're the only ones who can produce it.
Often, they've seen what happens when someone makes a poor decision, misses a deadline or fails to anticipate a problem. They haven't been able to successfully turn those mistakes into teachable moments. Instead, they take back responsibility to avoid future errors without helping their employees learn how to do better.
I understand why that makes it difficult to let go.
But if your goal is to build a business that can operate without your constant involvement, you have to figure out what would make you comfortable trusting other people to do the work and meet your expectations.
In the conversation I mentioned earlier, the owner acknowledged that, under his leadership, the team had successfully improved quality control. They'd made some personnel changes, introduced better systems and seen meaningful improvements in the work being delivered to customers.
They'd already demonstrated that the organization could change how it operated and get better results.
The questions now are how to achieve that same consistency in other areas of the business and how to have others lead those efforts.
That requires being specific about what isn't working.
Is the problem that your managers don't know what you expect? That they lack the technical or leadership skills to deliver? That they don't have the authority to make necessary decisions? Or that you haven't yet become comfortable with someone else approaching the work differently than you would?
Those are different problems, and they require different solutions.
You may need better processes, clearer performance expectations, more training or more opportunities for your managers to exercise judgment.
You may also need to change some of your own habits.
One of the more revealing parts of my conversation was the owner's reluctance to share financial information with his leadership team.
This is very common. Sharing financial information with employees, especially in a small business, can feel risky and vulnerable. Many owners worry that employees will misunderstand the numbers, question compensation decisions or share information they shouldn't.
Those concerns deserve consideration. But there is a difference between sharing every detail of the company's finances and giving managers the information they need to make good business decisions.
Consider a project manager who consistently delivers work on time and keeps customers happy. That's what you want.
But what if the team regularly spends 30% more time on projects than was estimated? The customer may be delighted while the company's profit margin suffers.
If the manager doesn't know the labor budget, actual hours or expected margin, how can they be expected to recognize and address the problem?
Or consider a department leader who wants to hire another employee because everyone is feeling overwhelmed. Do they understand whether the company is producing enough revenue and profit to support that hire? Could changes in scheduling, utilization or workflow solve the problem without adding payroll?
You don't have to share your personal compensation, distributions or every line of the P&L to have these conversations.
You do need to decide what financial information your leaders should understand and how you'll help them use it.
For some, that may mean learning how to read a departmental P&L. For others, it might involve reviewing project budgets, labor utilization, pricing assumptions, revenue forecasts or gross profit margins.
The objective is to help them understand how the decisions they make every day affect the financial performance of the business.
And then give them responsibility for improving those results.
If you've recently designed a future organizational chart without your name in so many boxes, you may be wondering whether the people you have today can fill those roles.
You probably won't know until you give them an opportunity to try.
To do that, you have to identify specific responsibilities you want to transfer, agree on what successful performance looks like, and develop a plan to help your managers learn and practice new skills.
For example, you might ask your operations manager to take responsibility for improving project profitability over the next six months. Together, you'd establish the financial and operational measures they'll be accountable for, identify decisions they can make independently, and agree on when and how you'll review progress.
You might ask your sales manager to develop next year's sales plan, including revenue targets, customer priorities, staffing needs and the activities required to achieve those goals.
Or you might involve your leadership team in evaluating how changes in technology, customer expectations or the competitive environment could affect the business over the next three years.
In each case, you're giving people an opportunity to think beyond their individual responsibilities and consider what the business needs to succeed. This also gives you the opportunity to observe how they approach problems, evaluate alternatives, make decisions and follow through.
Some will surprise you with what they're capable of. Others will need more development than you anticipated. And some may discover that they don't particularly want the additional responsibility.
In every case, you'll have more information to help you build the team you need to run the business the way you've always wanted to.
I don't believe owners should assume that every good employee has the potential or desire to become a great leader. Nor do I believe that giving someone a title, access to financial information and a few more responsibilities will automatically change how they perform.
Leadership development takes time, effort and a willingness on both sides to do things differently.
As an owner, your job is to be clear about expectations, provide the necessary resources and information, offer coaching and feedback, and create opportunities for people to demonstrate what they can do.
Your managers have to be willing to learn, accept accountability, make decisions and take responsibility for the outcomes.
And if someone isn't able or willing to meet those expectations, you need to address that, too.
You may discover that an employee is much happier and more effective as an individual contributor. You may need to change someone's responsibilities, bring in additional leadership expertise or make a difficult personnel decision.
But at least you'll be making those decisions based on what you've learned rather than what you've assumed.
In my last article, I suggested designing a future organizational chart that doesn't depend on you filling multiple roles.
Once you've identified the leaders your business will need, the next step is to figure out what has to change for those people to successfully take on the responsibilities you're carrying today.
That includes what they need to learn and do differently, what you need to stop doing, what information you're willing to share, and which decisions you're prepared to let someone else make.
You may find that you already have some of the right people. They just haven't had the opportunity, support or authority to become the leaders you need.
If you don't, wouldn't you rather know that now, while you still have time to do something about it?
Building a leadership team that can run your business without you gives you more than a lighter workload. It gives you time to focus on strategy, develop new opportunities, respond to changes in your industry and decide what you want your relationship with the business to look like in the years ahead.
That's worth investing in, whether you plan to own the business for another three years or another thirty.
Start by giving managers a better understanding of how the business makes money, what drives profitability, and how their decisions affect results. Be clear about what they're responsible for, give them the authority to make decisions, and establish expectations for measuring performance. Just as importantly, provide coaching and opportunities to develop their leadership skills.
Your managers don't necessarily need access to every detail of your company's finances. They do need the information necessary to make good decisions. Depending on their roles, that might include departmental budgets, project profitability, labor utilization, revenue forecasts or gross profit margins. The goal is to help them understand the financial consequences of their decisions and take responsibility for improving results.
Look beyond technical skills, tenure and loyalty. Give the employee opportunities to manage people, solve problems, make decisions and take responsibility for business outcomes. Establish clear expectations, provide support and observe how they respond to feedback and accountability. Their performance over time will tell you more than their interest in a leadership title or ownership opportunity.
First, determine what's preventing them from succeeding. Do they lack training, experience, clear expectations or decision-making authority? Or are they unwilling to accept greater responsibility? Some employees can become effective leaders with the right development and support. Others may be better suited to individual contributor roles. Understanding the difference will help you make better decisions about your leadership team.
