Advice to a New Manager

ADVICE TO A NEW MANAGER

Updated 9 July 2018

This advice is based on 30+ years of working in smallish businesses and some exposure to large organisations – Bradford Council, Bradford College, and the Law Society. I have also listened to others and read others.  

I made mistakes and misjudgments along the way, but I learned from them. You will make mistakes and misjudgment. Learn to recognise them and make sure you learn from them.

One common interview question for managers is

“Tell us about a mistake you have made and what you have learned from it?”

The reason for the question is to check that you will admit to having made a mistake and that you learned from it. Could you answer that question today?

The mistake I usually offer is that I went to an employee believing I understood a problem, and I gave instructions how to resolve the problem. The employee explained to me gently that I was addressing a symptom rather than the underlying problem.

The underlying problem was different and difficult. Together we worked on it, and together we solved it. What I learned is that if a reasonably intelligent person seems to have a problem, do not go in with all guns blazing. Go in gently because the problem may not be what you think. Also, the employee will likely have perspectives that had not occurred to you.

An employee who with your help has worked out the answer to his problem will do what is needed better than an employee who is ordered what to do without consultation.

Administrator or Manager?

Many jobs advertised as “manager” really want an administrator and many jobs for “administrator” really want a manager.  What is the difference?  

An administrator ensures the steady running of an existing enterprise. This in itself can be challenging. “Just” making sure the personnel and production records are properly maintained, that appropriate staff training takes place, that health and safety happen, stock and supplies are ordered, everything is documented, and that the organisation runs is a major job.

A manager does all this – or ensures all this happens- but does more. A manager ensures that there is a future.

An administrator responds to problems – a manager anticipates them. The example often given is the buggy whip industry. It does not matter how well you administer a buggy whip factory, the fact is that the market for buggy whips has died. So have all the well administered buggy whip factories.

A manager would have diversified into riding crops and saddlery, or sex toys, or into accelerators and brakes for cars, and so ensured the organisation survived and prospered.

The time to make changes or to reposition an organisation is before the need is obvious.

A manager will notice that the increase in sales has slowed – not wait until sales are falling or have stopped. This involves taking remedial action while everyone else is saying the downturn is “seasonal” or “the economy” or “a blip”.  It involves making refinements to the existing product line or developing new sales and marketing techniques or developing new products when no one else sees the need.

Even an administrator is not expected to wear blinkers. An administrator can run the department along tried and tested lines that were fine when the department was set up 20 years ago. The world has changed, the technologies have changed, but the department has not.  If the administrator does not “manage”, the department and possibly the whole organisation will be in trouble.

A manager has to be an effective administrator but has a much more challenging job. Sometimes his first task is to delegate much administration to free up time in which to manage.

In a well-run organisation there is little excitement, few crises, and no uncertainty. The old problems have been ironed out and the new problems anticipated. It is not clear what the managers do all day.

In a badly run organisation there is constant excitement, lots of crises, and high levels of stress. The managers are constantly fire-fighting and it is obvious what they do. What they should be doing instead is getting a grip on the situation.

If you are in the second organisation, step back from this morning’s crisis and think what is/are the basic or underlying problem/problems? They will usually boil down to some or all of the following:

  • Lack of financial / organisational information. We simply do not know how many widgets we have in stock, how many days or weeks supplies of materials we have in stock, whether we are making a profit and on which lines or which sections, etc. What is losing us money? Not opinion or guesswork– information!
  • Lines of management control and accountability are blurred. It is sometimes hard to know who has the authority to make a decision.
  • There is no plan or strategy
  • We have been hit by a change in interest rates/exchange rates/the economy

Of all of these, lack of information about our operation, and about our customers, is the most common and the most important. It is a truism that 80% of our profit comes from 20% of our customers or 20% of our products. But which customers or products are they?

Distinguish between underlying causes and symptoms. Symptoms will often include:

  • There is a lack of profit
  • There is a lack of cash
  • Suppliers are reluctant to supply because they don’t know when they will get paid
  • Some staff spend their time bitching gossiping scheming etc. instead of getting on with their job.
  • Staff sometimes have to “sit on their hands” because of shortage of materials/shortage of customers/ shortage of sales/tools or vehicles not being available or not working.
  • Everyone seems to be in meetings all the time.
  • Low staff morale

In drastic situations you can often do much that in normal times would take months or years to achieve. Make changes that will provide a foundation for the future – but be subtle about it because people fear loss of autonomy.

Central reporting and concentrating funds in the centre are often presented as desperate measures in hard times, but are essential to control of the organisation.

Allocating capital or investment is one of the key ways to build for the future.

If I were revamping an animal park or zoo currently in crisis I would step back and see what it will look like in 10 years time. If in 10 years time we have 5 times as many customers, where will they park, eat and wash?

Will there be a clock or a statue or a pond to operate as a central theme and meeting point? What are the implications of that for toilets, food outlets etc.? Where will the toilet blocks, snack concessions, cafeteria, souvenir shop be? Where will the paths and roads have to be? What animals will be where?

You work backwards from the future to help you decide now whether to repair a building or demolish it or change its use. You might decide to install bigger drains than the current job requires or when building roads and footpaths prepare tunnels through which electricity and gas and water lines will later run. Try to avoid having water and electricity in the same tunnel.

If you are to succeed as a manager you must have two sets of plans. One is for the organisation or department for which you are responsible. The other is for you personally. Both are important.

The plans for the organisation or department are fairly obvious. They are qualitative as well as quantitative. Profit, percentage increases in turnover, increases in spend per visit, are quantitative. You can even measure the average length of duration of visit.

The qualitative side, how much did people enjoy the experience of using your premises or using your product, is harder to measure. That may well turn on their expectations – did you surpass their expectations or not live up to them?

Look at similar organisations. What is their turnover per employee? What is the ratio of customer facing staff to back room people? On which aspects of their operation do they make most money?  They may not be right. Your organisation may have it right. National averages can be misleading – but they are a starting point. If you do not compare with others, you are missing a perspective. What are other companies doing better?  

It is unlikely that you will spend the rest of your working life in this job with this employer. At a time of your choosing, or perhaps not of your choosing, you will need to apply for another job. What have you achieved?

Your base line information is essential, updated by new statistical information. How does your organisation’s success rank against national averages? If you are starting from a low base, your relative success can be enormous. What have you learned? What additional qualifications or industry recognition have you achieved?  Use your job to begin networking. Plan what qualifications you will achieve because without a plan you will never make the time. If you really can’t get time off in the week think about distance learning.

Keep a duplicate set of your information off site in case your employment ends unexpectedly. You also need this information for pay negotiations and for operational analysis.

You can be sure the competitors are visiting your operation – so visit theirs and see what they do better. Why pay consultants when you can use your eyes? Build it into the budget and into your work schedule that you visit a competitor once a month.

It might be good manners to tell them you are coming. Over a cup of tea, you might pick up useful advice. You might establish friendly relations, which may mean you are offered equipment they are upgrading or animals they no longer have space for.

Send your employees to look at their opposite numbers in well run establishments – they will see and learn things that you missed.

Keep a diary – off site.  This is not your work appointments diary or a bitching diary but a reflective diary in which you record your learning and reflect on good and bad experiences. It will be more useful 10 years from now than it is today, but maintain it.

The diary is potentially defamatory, probably incriminating, and certainly embarrassing SO KEEP IT OFF SITE.

The responsibility of a manager is to manage, not just to administer.

What are the criteria for success?

You may be lucky and have a boss who is only interested in profit. This is a measurable and relatively objective target which you achieve or you don’t.

Amazingly often you have a boss who seems more interested in

  • the size of the department – to get himself a pay rise
  • the reputation of the department within the organisation
  • the reputation of the organisation in the town
  • the reputation of the organisation in its industry
  • PR photo opportunities for himself
  • the departmental 5 a side football team
  • an easy life
  • not making waves
  • not being shown up

What does the boss really want? The problem with most of the criteria above is that they are not measurable, so whether you have achieved them depends on your boss’s perception rather than on reality. You can control reality but you cannot govern your boss‘s moods.

Try to negotiate with your boss measurable criteria, and record them by sending him a memo or email. Now frame them and pin them to your wall. Make sure your team know what your measurable criteria are.

Then give the boss monthly or quarterly written reports on how you are doing, so he does not have to ask.

Try to limit your boss to a maximum of three measurable targets. That discussion will help you to understand your boss’s priorities. Some organisations have 20 “targets”, but when you look at them most of them are not measurable.

Sometimes you can negotiate a target band “increase profit by 15%-25%” – so if you hit the target range that is fine, and if you surpass it then your achievement stands out.

In a good organisation, you will be set targets for your section and for you as an individual.

“Increase production of widgets to 10,000 a month without extra staff or overtime”

“Reduce staff turnover – but we don’t mind losing Sid Sue and Jack”

“Obtain the XYZ qualification in your first year”

“Gain ISO 9000 and Investors In People within 3 years”

“Increase sales by 20% each year”

The reason you need to have measurable criteria is that you cannot manage against perception-based criteria.

You can hire people into your marketing department based on their footballing skills if your boss wants to be top of the company league. It is crazy, but if that is what you need to do, do it. Just bear in mind he may not be with you long. Perhaps it is his boss who is failing!

“Managing the boss” is an unspoken and unwritten requirement of every job. Think out what his needs are and make sure you address them.

One of the most frustrating things for a manager is being kept in the dark. Give him any bad news early – not after other people have told him.

In a small or family business there often several “bosses” with whom you must maintain relationships. Do not stir or cause dissension because they can get rid of you much more easily than they can get rid of each other.

DISCOVERING THE BASE LINE

You cannot begin to set yourself targets if you do not have a base line. What is the existing base line?  How many widgets do we sell? How much profit do we make?

What are the fixed costs like rent, wages and how much are the variable costs like raw materials? What is the cash situation? Does it vary seasonally?

Having established the base line, what is reasonably achievable? What are your 3 month, 6 month, 9 month, and 12 month targets? If you are not visibly achieving results in 3 months 6 months etc. you will be got rid of.

Even in a badly organised place that does not set targets there is a requirement to “achieve”. If you have not negotiated your targets your achievements will be perception judged rather than performance judged. If you do not have a plan or objectives you will just drift.

It is all very well having a target of increasing profit by 10% in the coming year. Take a good look at your accounts at an early stage.

What is set against your profit? How is your share of central overhead set?  Is your contribution to central costs based upon

(a) the number of staff in your department?

(b) turnover?

(c) profit?

If you lose two staff but everything else is static, so you are generating increased profit, does your contribution to central costs (a) go down, (b) stay the same, or (c) go up?

You probably cannot do anything about it, but you need to know how your budget works. How else can you hit your targets?

One young manager was hired to run an unprofitable department .  Walking around the department it seemed well organised and well run. How could it be losing money each year?

He looked to the accounts and he found a number of staff on his payroll who were actually nothing to do with his department. It seems that 15 years earlier the organisation wanted people to do a particular job and just assigned their wages to the most profitable department. That had never been changed.

Taking 4 salaries away from his department and assigning them back to the departments that used the workers transformed the finances of his department. The departments that had used these employees for years but now had to pay for them reduced their numbers quite quickly!

BUDGETS

A budget is not written in stone. It is a series of guide posts. Normally it is based on last year’s pattern of activity, in the expectation that this year’s pattern will be very similar.

When you see your budget, you will discover that you have virtually no flexibility. Your labour costs are “given”, your materials costs are “given”, and quite often you have no flexibility whatever. It would seem you can’t do anything.

They don’t give you a lump of cash to play with, because the money is held centrally.

Chat up other managers in your organisation to find out how they get round the problem. There will be a way.

Chat up your boss to find what he suggests.

Do not chat up the Finance people; because once they know you are trying to get round their systems, they will watch you more closely.

Most accounts departments are frantically busy at month end and year-end. Put your dodgy invoices in to catch their frantically busy times and hopefully they will slip through. Then you can use those paid invoices as precedents in future arguments.

One manager found he had absolutely no budget for marketing and promotions. He spent the money anyway. He invited his boss’s boss’s boss –the ultimate boss- to do the prize giving and photo opportunity.  Eventually he persuaded the centre that although his department continued to run the activity it was really an organisation flagship activity and it should be funded out of central funds because he had no marketing budget.

The same manager still has no marketing budget, but he is still spending money on marketing activity.

He under spends on other things. He claims not to understand the difference between capital spend, revenue spend, and unauthorised spend. His budget balances, so what is the problem? His department is very profitable – in part due to his unauthorised marketing – so he gets away with it.

The same manager is notorious for giving dour projections for the future when involved in forward planning. Everyone else gets pats on the back from the boss for promising a 20% increase in revenue. This manager explains all the reasons why he will have an uphill fight to stand still, but to show willing he says he will offer 2%. The people who offered 20% frequently fail to achieve this stretching target. This manager always delivers much more than he promised. His bosses are wise to him by now. He is their “ace in the hole” who generates profit which rescues the group when the other department managers fail.

Under Spend or Overspend?

In your personal life, your reward for spending less than your income is that you have some savings – money that you can spend at a later date.Your natural instinct as a frugal manager is to conserve your money carefully and not overspend.

In business life if you under spend your management will reduce the allocation to your department because you have proven that you do not need the money.

Many managers make it a principle to spend or overspend their budget every year to prevent their budget being cut.

A few enlightened organisations do give “flex” allowing you to under spend or overspend by 2% of budget in any particular year. The wise manager still overspends rather than under spends.

Supposing you are a high manager or the big boss? How do you prevent deliberate overspend?  

In an ideal world, you would show that under spending does not bring budget cuts. This actually is impossible to promise because you always need to increase profit. Any form of carrot is out – except for departments that increase revenue.

What you can do is

  • focus on the departments with the highest percentage overspend, and work through those departments’ accounts very carefully, with their managers. Maybe cuts are needed? Most managers will do anything to avoid that, so knowing that you do this is a terrific deterrent.
  • charge interest on overspend – out of next year’s budget.
  • Put “contingency” or “discretionary” into the budget, with praise/bonus for not using the money.

Harold Geneen of ITT used to talk of the “one two” for a business hit by falling sales. “One” was savage cut back on overheads – which usually meant jobs but sometimes included entire factories. The idea was to get the costs of the organisation below its income immediately to generate immediate profit and immediate cash instead of loss. The “Two” was to find something new for the organisation to do with its skills and capacity that would produce money quickly.

Warren Buffet of Berkshire Hathaway concentrates on “capital employed”. His experience of many large companies is that they do not know where their capital is, or which departments are using the capital effectively. He finds that if managers know how much capital they are using – and are charged interest for using it – they reduce the capital employed without hurting profit. He has other uses for the capital, and so do you.

MARKETING

Your cheapest form of marketing is repeat customers and recommendations.

If customers have unsatisfactory experiences with you, they will laugh in public when your TV or radio advertisements are aired. They will tell people not to use you. Conversely, if they have had good experiences with your organisation, they will recommend you to others.

Your first marketing task is to ensure that your organisation delivers the goods or delivers the service or the pleasant experience.

No-one ever wins an argument with a customer – because you lose the customer. Find out what the past arguments and complaints have been and see if the problem is miscommunication in some way. Fix that.

Has your company lost many customers through the same problem? Perhaps the fault lies in your shop rather than with unreasonable customers?

You will not enjoy doing this but telephone the appropriate managers in businesses that no longer use your business. Explain that you are trying to find out what went wrong. They will tell you, rather forcefully in some cases.

You will have the information a lot quicker and a lot cheaper than by using consultants. Your information will be unsanitised which is also important.

With emails and internet you can organise a “friends of” group. Maybe take the 20% of customers who generate 80% of your business and give them a monthly “stroke”. Communicate with them to find out why they like your product. What are you doing right? What could you do even better? Consolidating that 20% of customers is important to future revenues.

Many people confuse “Marketing” with “Advertising”. Marketing is configuring your organisation to generate what people want to buy, at a profit for you.

When addressing students I will sometimes say

“When a young man talks about how good he is –that’s advertising.

 “When girls seek out a young man because other girls have said how good he is – that’s marketing. And, girls, you know how rare that is!”

Every business has a marketing dimension.

Imagination, humour, and good ideas will generate value and financial return. Whoever thought of advertising car tires with a calendar showing nude young ladies? Or peanuts attached to a board with a pretty girl on it? Remember though that you want the customer to remember your product with the clever idea rather than your clever idea without your product.

Making your product easier to use, or more versatile, is also marketing.

Two marketing books I have found to be revelations are “Its Not Luck” by Eliyahu Goldratt and “Even More Offensive Marketing” by Hugh Davidson. Both books are old but they are riveting.

DEALING WITH PEOPLE

In many ways it is easier to come into a company from outside. You have no preconceptions about people, people know nothing about you, and there is no baggage of past good and bad relationships.

Many new managers are internal promotions. They know or know of lots of people and many people know them or know of them. You cannot avoid bringing this information with you. Be aware that in your new job you have a responsibility to everyone under you – not just those whom you like. You have to work to be seen to be fair.

If your friends get the easy jobs and the praise and the “out” group get the hard jobs and the criticism, everyone in both groups will despise you.

Concentrate on the “out” group to make sure they know they can talk to you and that they will be fairly treated. What would they like to see the organisation do? Encourage them to make suggestions and take their suggestions seriously. It may take some of them years to trust you.

Chew out a friend early on. When you were a mere worker your friends were mere workers. You can’t be their friend and their boss because that gives mixed messages. You are their boss – so your friendship has to cool.  For friendship look upwards and sideways – and outside the organisation.

This should not have to be said, but have your sex life outside the office. Respect the dignity of your fellow workers.

Some firms tolerate sexual misconduct and sexual favouritism, but it will end in tears.

Some jobs create or attract personalities. Book keepers are careful and precise – or they lose their jobs. Receptionists need to be open and friendly. Security usually seem lazy or officious or both.

Turf wars are rarely won by being reasonable. Accept that people who are in difficult times personally or professionally are not at their best. Never forget, but don’t hold grudges. Preconceptions can be altered by discussing an apparent problem frankly and honestly.

If you deal with trade unions, make sure you know their procedures and policies. This is so you understand the complexities of life for the person with whom you are negotiating. With trade unions and with individuals, be aware the “presenting” problem may not be the real problem. Try to find out what the real problem is, and address that.

People will gossip. If your place of work is a rumour factory, by all means listen to the rumours. Try not to start new rumours. Do not release information until those who should be told it have been told.

Keep your mouth shut. Some people will try out rumours on you to see what response they get. Don’t respond.

The root of rumour mongering is lack of honest accurate timeous information, coupled with anxiety. Defeat rumour mongering by clear memos, newsletters or notices.

Make sure the usual suspects are just too busy. If necessary split them up or give them more responsibilities.

If you have a loud mouth obnoxious type, one way to deal with him is to get him to volunteer for a job he said “they” should do, and then monitor closely how he performs. Do not use the task as a punishment but as a learning tool for both of you. For him because he exercises responsibility for a job that he recognised needed doing. It really is a learning experience for him.

For you because he is a potential future manager who has already displayed analytical skills to recognise the job that needed doing, and who is learning that he is capable of doing a difficult job.  You might be able to persuade him that loud mouthed and obnoxious is not necessarily the best way forward. Subtle and honey usually works better than crass and vinegar.

For yourself, try to develop a reputation for consistency and integrity.

SACKING PEOPLE

Obviously you have been through the procedures – warnings, letters etc. But why did it happen?

Regard each dismissal as a personal failure by you. Either you hired the wrong person, or you did not treat them right while they were here. Which is it? If you do not address that problem, then you are learning nothing from the exercise.

Are there particular departments or particular managers generating high percentages of dismissals? Why?

Once your managers know that staff turnover is one of the criteria by which they are being judged, they will treat their staff differently.

HIRING PEOPLE

You are not hiring people. You are extending them an opportunity to do an interesting job that is right for them at the moment. Be clear whether this is a job without prospects or a job that could lead to promotion here or elsewhere.

Make it clear at interview that as they settle in and they show they are competent, tasks and responsibilities will be added to their current job. Your organisation is growing and evolving and as that happens needs will arise and opportunities will arise. If they wish to be personally engaged in the business the door is open.

Alternatively, if they want a job that does not stretch them, are you hiring a new gossip and rumour monger?

STAFF TURNOVER

Staff turnover is more expensive than most people realise. The cost of advertising interviewing training and early supervision until they are an effective worker is always hundreds of pounds and frequently thousands of pounds. If you can reduce staff turnover you can reduce these expenses.

The arithmetic is easy. If it costs you £600 to recruit and CRB (Criminal Records Bureau) and train and supervise a new cleaner until he is a competent cleaner, and he stays 10 years, your apportioned recruitment etc. costs reduce to £5 a month. If your cleaners stay on average 4 months your apportioned recruitment costs are £150 a month, and for much of the time you have trainee cleaners who are less than competent.

You gain by not having repeated training costs, by continuity, and by collective memory. People usually also get better at their jobs over time.

Many organisations run on the collective experience of their staff, the majority of whom have been there more than 10 years. The collective knowledge of the staff can save you thousands of pounds every year – if you have the humility and the wisdom to ask the staff to contribute.

Why do people leave? Although money sometimes talks, money is rarely the main reason for changing jobs. Often it is because the people can see no way to get on. There is no way to change the job, make the job more interesting or “get on”.  In 5 years time they will be doing exactly the same thing. So they go.

A progressive training and education policy will tie people for longer. Even those who do not take advantage of it know the door is open – they only have to walk through it. Balance the education costs against perpetual recruitment and training costs.

A better trained staff should mean a better organisation. Maybe when top and middle jobs come along the better-trained staff can apply for them and get them. Why not an annual “alumni” newsletter for staff who left you to go to better things?

Training is a legitimate business expense. There is government subsidy for training some workers. A manager who is known to “grow” people is highly regarded – and has a lot of his alumni scattered across the company or the industry.

FLEXIBLE HOURS

Many people, particularly women, have numerous responsibilities. They have families to run, elderly relatives to look after, children to get to school, hospital etc.  If the employer is flexible enough to permit this, staff are not forced to tell lies, fake illness etc.

There is a line between “taking liberties” and being fair.

Often people will take a lower rate of pay because the flexibility is there. Try to be transparent in what the system is, and monitor whether it is being abused. Perhaps pay bonuses to people who do not use the flexibility much.

AND FINALLY

Think ahead for your organisation and for yourself.

Try to get through each day with integrity. Do not do anything you would be ashamed to see reported in the local newspaper.