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Helping Family Businesses
Prosper Across Generations®

Structuring Your Company for Change

When you consider how best to manage human resources for change, consider how your organization is structured. Many relatively small family businesses are hesitant to develop middle management, for example, because they see managers as expensive "overhead". The owners of such businesses try to do everything themselves. Besides the fact that they can't do everything themselves, they don't have the time to think strategically and generate new ideas. They build a trap that makes it impossible for the company to change.

We take the view that the job of the chief executive officer is not merely to run the company but to lead change. If you are the CEO, it makes sense to invest in enough executive talent to allow you or some other appropriate person time to envision the future and work toward implementing that future as opposed to being totally eaten up by day-to-day operating concerns.

Begin by understanding that the different titles or different roles in companies are REAL. Being chairman is a real job, and that job is to manage the board of directors, lead the shareholders, and guide the business' values. Being the chief operating officer (or, in some companies, the executive vice president) is a real job, and that job is to run current operations.

The CEO has a real job, too. You oversee the COO, but more importantly, you plan for and implement the future. As the executive responsible for building the business' value, the CEO should sped more time working on the business than working for the business. And that means being responsible for continuous improvement--in short, for change.

As your company grows, you need a more fully articulated upper and middle management team. Where you may have had an accounting manager that you called your chief financial officer, for example, you now hire a real CFO who can be part of your strategic team in planning the future and who can manage the more sophisticated approach to finance that's required to take the company forward.

You'll be investing more money, but you won't be buying mere "overhead." You'll be bringing more highly talented people into your organization and giving them more power and more responsibility and counting on them for being part of the process that recognizes, plans, and implements changes that build value.

The Crotty family of Van Dyne-Crotty, Inc., has focused heavily on professionalizing its business, hiring and developing the best managers it can. That enables family members to be more philosophical. "We're more geared toward issues of vision, strategy and direction," explained Dan Crotty, the third-generation CEO.

You can't have the ability to address or create change effectively without the wise allocation of resources. That means a commitment to thinking and re-thinking the way you deploy resources and adapting your views to meet the needs of change. 

 

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