Transcript for Episode #145 ‘The Core Components of Business Management’
Host: Scott Weaver
Date Nov 3, 2021
Intro: Welcome to the Arise-2-Live podcast. In this Episode #145 Scott talks about the two basic components of business management: organization structure and employees. And why it takes both art and science to manage a successful business. Arise2Live’s purpose is to bring clarity and perspective so you can have freedom in both your business and family life. Let’s get started with today’s episode.
Howdy folks and welcome back to the Arise2Live podcast. I trust you are having a great day. My name is Scott Weaver and I am excited for today’s topic. I think it’s a very practical one for business owners. When you get the chance, please share and like this podcast. This will help the show grow so that other business owners can benefit, too.
Today I’m talking about an important concept regarding business management for your business. If you know and apply these concepts in your business, you will be able to better handle changes in growth and in the economy. Plus, you’ll have a tool that will keep your employees productive.
I know there’s a lot of things about business management, but I’m going to the foundations, the time-tested principles that so easily gets lost in the noise and the weeds of the zillion or more management theories, tools, and methods. There are many, many books and papers on the details, much more than this podcast can cover. In this episode, I’m going to present the foundations that they all stand upon.
The first timeless principle is that humans work and live in structures. That’s what we do to survive and it makes our lives better. For example, what type of place do you live in? Is it a condo, apartment, farm, house, tent, hut, boat? That is structure. What about routines you have? Do you et coffee in the morning? How about eating and sleeping habits? I bet you have a bit of structure around these, too.
So you business owners out there, you have humans in your company. You need to provide them structure. A place where your employees can be productive and excel at what they do.
This leads into that Business Management has two major parts, how the business itself is organized and the people in it. I probably should add as a side note that the business should be customer centered because customers pay the bills.
I tend to view the organization structure of a company as the logic part, the task-oriented part of the brain of the company, if you will. The people in the company is like the heart, providing life and movement. Your company needs both.
This is not an easy thing to do. I think one of the biggest challenges in managing a business is balancing the need to get the task done with the needs of the people doing the tasks. The good thing is that this is not rocket science. Often just seeing what’s really going on in your business and putting some deep thinking, you’ll come up with some pretty good solutions.
This is a trick in my coaching of business owners. I see how the organization structure is impacting the employees or vice-versa. The purpose of your business structure is to help your team and your employees to get things done with a minimal amount of frustration and cost. Your personal convenience takes a back seat. After all, who’s actually doing the work in your company?
Leadership vs management 3:58
I should add a note that leadership and management are different. Management is about running the company and the tactical part of reaching goals. It’s about doing things right and keeping the costs down while delivering value to customers. It’s about the little things, like changing the oil at the right time and getting payroll out at the right time. Leadership, on the other hand, is about influencing and inspiring the people in your company to strive for your vision of the future. Leadership picks the destination and management is the activities to get there.
For many business owners, management is the boring part. Nevertheless, you should be spending time to get your management structure and team on the same page. Unless, of course, you want to be burned out from herding cats and fighting fires all the time.
So recapping a little bit here.
So remember that there are two basic parts to management: Organization structure and People.
The Organization Structure 5:10
The business structure includes the legal “type” of a company, such as LLC or partnership, or C-Corp and others, as well as the internal framework of positions and processes.
The purpose of having a good organization and company structure is so that the business day-to-day tasks are performed in a mostly efficient way. Good productivity keeps costs down while delivering good value to the customers.
It is important to know that there is no “right” organization or business structure. It is a tool for making people productive. Let me repeat, your company’s structure is a tool, a tool to reach your vision and goals. And like a good car mechanic, you have several tools to pick from. So pick the one that’s right for the job.
So how do you know what tool to use? Pick the organization structure that fits the task needed to serve your customer and business.
For example, a local gym business will have a different structure than an HVAC company. The military does things differently than a hospital. In the tech world, the R&D center is run differently than manufacturing plant. Can you imagine the military being run like your local health fitness business? I can’t either.
The point here is that each business has different tasks to accomplish to reach its goals, and such, you need to pick a structure that fits your company. One more thing, how you run your company also depends on the maturity of your business. A start-up company is run differently than a stable, cash-cow company. That means that over time your business grows and you need to change your business organization. Now we are back to saying that business structure is a tool.
Remember that your company structure is the framework, the vehicle, and there’s two parts to this:
First, it does the day-to-day work and tasks. That usually means how people work.
Second, it’s the management and deployment of resources to accomplish the tasks. This usually means dealing with stuff like money, material, inventory, computers, etc.
That’s it. The day-to-day work and stuff to create with. So don’t get all wrapped up in the theories of org-charts and titles, or execution of the planning, or developing the workforce and supply chain, and they just go on and on and on. If you come up with a system or a manner to tackle the people work and the stuff to create things, you’ll be well on your way to success. With that said, definitely don’t reinvent the wheel—there’s likely already a structure template that you can start from. After all, most businesses, let’s say, construction or tech companies, whatever, they have been around for a while. People have figured out a lot of good things, mostly. You still have to apply it to your own business.
Okay, the organizational structure part is the easy part, the science part. Just treat your business as a machine and go build it. However, as Dave Ramsey said, “Business is simple until people are involved.”
People is the second part of the business management and it’s also the active part. People do things. They do things in your company: they build things, they talk to each other and customers, they mess things up, and they also come up with brilliant ideas that you never would have thought of.
In some ways you are like a coach of a sports team, you look at the skills, the motivation, and limitations of the players on your team and adjust the strategies. You adjust your strategy to win the game. But in the game, you have to accomplish the required task, the task to score points and go on to win. Good coaches figure out the people part inside the rules.
I wish I could share some, I don’t know, “Employee Science” for your company. I probably could, but that would get us off track from business management part. If the organization structure is the Science part, the employee is the Art part. There are plenty of others saying that management is both art and science.
So, you need to figure out the art part of your company.
Balancing Tips 10:07
Here are some tips on balancing this combination of art and science.
- Your people need structure to blossom. Have clear roles and responsibilities for everyone, including yourself. Having good business process helps reduce frustration and increases productivity. The art comes in from determining how much flexibility and autonomy you allow the employees.
- People are there, just not a piece of equipment to move around. Look at the individuals for their particular talent and skills, limitations, and motivations. Place people where they fit. The art comes in determining how much training and how much allowed career moves you allow.
- When you are delegating, have a hierarchy of decision making. Someone must have the authority to make the final decision in a certain area, the person who says, “The buck stops here.” And in a growing company, especially as it gets bigger, you cannot make all the decisions in your company. So when you pick that person to help you out and help you make decisions, you must tell everyone who that person is, who has the authority so that everyone will follow. The art form is determining what type of final decision is going to be made in a certain area of the company. For example, who has the authority to issue customer refunds? Is it a front-line employee? Is it you, the business owner or a manager? What about ordering $100,000 of materials? This is where the rubber meets the road in your company and in your management structure.
The bottom line is do the things that helps your people to be successful so that your business can bloom. Use both science and art to fit into your company.
If you know the management premises, then you are less like to be confused about the details and the noise of running a company.
Basic Business Management has two major parts: how your business is organized and the people working in your organization. They are related. Business owners need to have both of these in balance to have a smooth operating company that doesn’t overwhelm or burn people out. It’s both art and science.
Keeping balance is tricky, like the balance between the hard-nose army captain giving explicit directions on what needs to be done and telling them how it’s going to be done, with the gentle, but firm sports coach that is looking at each player’s talents and skills to put them in a position that they and the business can win the championship.
That combination leads the science and art. So I suggest that you spend some time, okay, a lot of time, thinking and reflecting about your company on how it’s being run, how things are going, and maybe do this on a quarterly basis. Ask yourself how are you are keeping the balance between the organization and the people. Remember, your company will have to change as it grows and quarterly reviews help prevent surprises.
So, the timeless principle here is that your business structure is a tool, a tool to help you to be adaptive to changing times and to the growth of your company.
Knowing the basic business principles of management is one way you and your company will Arise2Live.
Sponsor: Today’s sponsor is Arise2Live business coaching. A professional and structured system to get business owners to grow and gain freedom from the chaos of running a business. Scott uses a proprietary four step system to get you the results you need. Start running a thriving business, not a self-created job. Schedule a call today on the Arise2Live.com website.