Why the Emerging Companies Face Rapid Growth Followed by Continuous Stagnation

published in: Leadership

08 Dec
2009

When starting a new business anywhere in the world, usually the owner manages the company.  If the business is successful, after several years enormous quantitative changes will be visible: more orders, more customers, staff and suppliers, more inter-relationships and interactions.  The increased work load forces the owner to delegate some of his/her duties to managers.  In any young company, management arises from the transfer of tasks from the owner to his assistants.

The company expansion, which is quantitative change has led to a need for additional level of management which is a qualitative change.  But now, after the emergence of management in the management structure, manager, leaderorganization, its future functions must not be determined by the delegation of rights from the owner.  The management must now take functions determined by the objective needs of the enterprise.  The majority of owners do not comply with this qualitative, newly emerged change, ie they do not comply with the objective needs of the company in the right degree and they become the main reason for the stagnation of their own enterprise.

The management of the enterprise is not an aim itself.  It is an entity that consists of individuals.  In the book "Practice of Management" Peter Drucker highlighted the following 6 requirements to the management of managers:

  

Management by objectives and self-control

Every manager's focus should be on the business goals, and his/her will and efforts must be devoted to achieving these goals.

 

Appropriate conditions and structure of the managerial activity

The manager must have the necessary preconditions to be able to achieve the targets.  I am amazed by owners who keep their managers ignorant about the salary costs within their departments, upcoming cuts, nomenclature changes, changes in pricing policy or owners that modify the obligations of managers every other month, etc.

  

Structural principles of the managerial organization

Any organized group needs a structure and principles of interaction between its elements.

  

Morale within the company

Managers must work as a team.  And each team has a specific, universal, morale.  It continues to live long after its creators are gone.  Team morale shapes the  behavior and attitudes of the newcomers.  To a great extent it determines who will succeed and the company.  High morale will produce high-quality managers, low moral - weak managers.

  

Executive Director and Supervisory Board (Board of Directors)

The Executive Director shall carry out overall management and take the final decisions.  The Supervisory Board has an obligation to conduct a comprehensive review and evaluation (justified for large enterprises).

  

Securing tomorrow's managers

The growth of the company and even its survival depends on growing tomorrow's managers. Unfortunately this is probably the most postponed task.  But we should be aware that its implementation is a slow continuous process.

  

All 6 requirements for the management of the managers are applied in each company.  For example, each company has a CEO, good or bad. Each company has a management structure, effective or ineffective. Every organization has a morale, killing or inspiring.  True leadership is needed, however, to push all these existing requirements in the right direction

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