With large corporations "downsizing" in unprecedented numbers, one wonders what is wrong with today's business entities. Is smaller really better? The answer to this question is an emphatic yes, and small-business owners all around the country know why: Shorter distances between customers, management and employees lead to better company performance.
Shorter distances result in better products and services, better communications and better working relationships. These factors taken together create better profits for small-business owners. Large companies see this too when times are tough.The benefits of improved efficiency are obvious, yet small-business managers must diligently check and recheck that they are taking advantage of the efficiencies available to them. Is your small business growing rapidly? Are you considering hiring middle managers and setting up some form of hierarchy? Are you considering setting up service organizations that cut into your efficiencies? Well, if you are, take heed. Small companies compete so effectively because of the inherent competencies and low overhead costs that smallness nurtures.
As you consider growing, you can make sure that you are still benefitting from this competitive advantage. By assuring that your company is managed like an integrated team rather than a slow-moving bureaucracy, you will maintain that small business atmosphere. Apply the principles shown below to your business and see if improvements can be made.
1. Lessen the distance between your employees and your customers. When an employee never sees or talks to a customer, how product- or service-oriented can you expect them to be? Do you shield your employees from the customer and his or her needs? Do you do a better job of serving them? By allowing your employees to serve your customers, you enrich his or her job and they feel more responsible for the customers' satisfaction.
2. Shorten the distance between you and your employees. If the employees are unable or unwilling to talk to you as the owner of the business, how are they supposed to know what your short- and long-term priorities are? How can they understand and facilitate your vision for the company? Employees are much more able to improve products and processes when they understand what you want. They may be more creative and innovative than you think. Foster that creativity and allow them to be a part of your dreams.
3. Reduce the distance between your employees. If employees work in another department or even in another building, then distance provides a buffer for your workers to hide behind. They may not need to respond immediately to a request for service because there is no face or relationship to back up the request. How can they be sure that what they have provided their fellow workers is proper? What if these mistakes cause late delivery to customers? Is your structure organized so anyone can get help from anyone without using management channels? A burdensome management structure will slow progress faster than anything else, even in a small company. A structure where anyone can work with anyone without using formal channels will result in empowered employees.
In bad times, large corporations look for ways to go back to the basics. They look for ways to end the bureaucracy. But how was this established in the first place? Well, when times are good, profits are high enough to allow organizations to grow even when growth is not required to increase profitability. Then, as competition catches up, profits are squeezed out and the multilevel corporation suffers. The only way to recover is to "downsize" to cut the excess people who were added during good times. Economists suggest that this is simply repetitive business cycles, butreally it is simply bad management in these large companies. Small-business owners should not be tempted by this alternative.
A prudent business manager only hires extra employees when each will add to profits. Evidently, adding layers of management does not add to the marginal profit of a company, large or small. Business owners can do themselves and their customers a big favor by maintaining their small structure: no middle management, large spans of control and empowered employees. So do not be tempted to change your streamlined, competitive, successful organization by adding layers of management and structure. Hire each employee as if it will make the difference between your profitability and your bankruptcy.
Susan Opp is a University of Utah MBA student at night and an electrical engineer in a very large company during the day.