Developing self-managed teams is a prescription for increasing profitability, running better operations, and decreasing owner – executive stress!
Employee turnover, especially in key management and team member positions, is killing the ability of small and medium sized companies to increase their top line sales and bottom line profitability. In my restaurant and hospitality consulting business, I have seen so much damage created by turnover, that I am surprised anyone is making money.
This story illustrates my point:
A young friend of mine recently decided to leave a very happening restaurant. While the money has been fantastic, the lack of consistent leadership has resulted in ambiguous service situations, inconsistent communication, overall chaos, and employee burn out. Recently the GM conducted a team meeting, where team members were presented with a definition of their work groups’ major areas of responsibility, and a set of guiding principles to help steer the boat in the right direction. Wow! I applaud this kind of leadership, it hits me where I live! The team left the meeting engaged, positive and inspired and ready to improve service and product quality. Shortly thereafter however, the GM left to, “…pursue other interests”. Other leaders followed turning the good intentions and the initiative started by the GM into fading memos hung on various walls around the restaurant. I get a sinking feeling in the pit of my stomach, when I hear this story, because it is a replay of a horrible movie, one that I have personally experienced.
Another restaurant company I have worked with has seen a continuous cycle of management turnover, forcing them to move managers and chefs laterally and vertically into positions they are not qualified for . And the crew response is typical; team members become skeptical at any new manager who comes and tries to evolve the business.
Overall, the result of all this “plug and play” management means: disappearing profit margins, anemic sales growth (if there is growth at all), formulaic solutions to poorly identified problems lacking a root cause, disappearing guest (customer)satisfaction, and poor employee retention.
Based on these problems, any service and product business should think about implementing a management model that I call “Self-Managed Teams” (SMT’s for short). SMT’s are highly competent, autonomous and self directed; if your plan is to grow your business, need to focus your time and energies on being an owner or executive, or plan on getting to the next level of your own career, Self-Managed Teams are your answer.
Are SMT’s an expensive proposition? Not when you add up the losses due to the conditions mentioned above. While managing labor costs have been and will continue to be the holy grail of the restaurant business, developing SMT’s to their full potential is a critical element to expansion as well as providing a path to increasing profitability. While it is almost impossible to imagine employees / managers staying with a company for their whole career in our current age, it is not impossible to add great longevity to a team member’s commitment using this team leadership and management model.
Self-managed teams are not for the faint of heart or the uncommitted company. And if your style is top down, forget it – because this type of management team forces you to let go, not hold on. It also takes patience, perseverance and commitment, because you have to invest in team members by helping them gain skills and knowledge while allowing for a bit of learning curve. But what they provide is a way to deepen company culture while allowing the team the opportunity to focus efforts on strategically growing the business instead of focusing on the day to day tactics of operations to the exclusion of all else. A deeper culture and increased profitability mean companies can grow while cutting down on the future learning curve and wasted profits in existing as well as new operations.
What are some key characteristics shared by SMT’s”?
- SMT’s are driven by the business purpose: they understand, live and breath mission and vision.
- SMT’s utilize guiding principles and company values in their decision making.
- SMT’s understand their responsibilities, and have authority to carry them out.
- SMT’s are goal oriented.
- SMT’s work “in the solution”, meaning they quickly identify problems accurately, then develop and implement the right solutions.
- SMT’s place teamwork before ego.
- SMT’s keep their owners and company informed of forward progress, challenges and new ideas, while sticking to the outline of the plan.
- SMT’s are rewarded for company, department goal accomplishment and for their own personal development.
The concept of self-managed teams can be carried down to every level of an organization if you recognize this principle: leadership exists at all levels and in all people if you know how to identify and tap into it. We know this to be true because our first solution when someone leaves a business is to look inside for talent and promote from within! Even in large companies, recruiting efforts which lead to outside candidates many times result in an inside hire. The question is not if we will promote from within, but who, how, and when?
Is a self-managed team a direction for you? Here are some key questions that you should explore before moving in this direction:
- Is the management and key employee turnover rate high in your company by industry standards?
- Do your team members consider you to be the employer of choice?
- Have you quantified employee turnover costs in terms of disruption, product or service quality, or by measuring the potential of lost sales revenue?
- Is expansion a dream because you do not have a deep and talented bench?
- Are you spending too much on training and not seeing an improvement in customer service quality and customer satisfaction?
- Are you getting tired of holding meetings where leaders focus too much on problems instead of creative problem solving and the development of problem solving strategies?
- Are you getting tired of the lack of leadership skills in your organization, from team members who show up at meetings with a blank stare and an empty notepad?
In coming posts, we will explore how you can develop a self-managed team, and how it can increase your sales, profitability, team loyalty, and improve customer satisfaction. Perhaps more importantly, show you how it will reduce your stress and increase your own peace of mind.