With the changes in the business economy, companies must understand the vital and significant difference between managers and leaders. Too often there is merely a differentiation in semantics when it comes to the definition of these terms. What I am proposing is a shift from management to leadership across the board.
When a company assigns a management position, what is it asking the incumbent to do? In most cases, the companies focus is on driving business objectives through the management of personnel, assets and business strategies. In effect, this practice helps to maintain a necessary order for the business model, but the unfortunate side effect is an overall ineffective push to maintain the unnecessary hierarchy of the business. To merely manage, by definition is to maintain the status quo and place a person or group in charge of a particular aspect of the business. We've seen the detrimental results of many businesses trying to merely maintain their place in the market, and their own profitability levels. The failure of many businesses can be directly attributed to the failure of the business to bridge the gap between mere management and actual leadership.
A business can't thrive and prosper in a culture of mere management. Without the emergence of a leadership mentality, business will continue to falter, or at best maintain a moderate growth. The true strength of any business can be seen in a down economy. Increased revenues and profitability can be obtained by almost any business in a robust economy, but when business starts to drop off, the true leadership driven businesses emerge. It is time for each company out there to realize that without proper leadership at all levels, the down turns will last longer and become much more pronounced.
If we take a look at a branch business based model where profit centers are utilized to gain or maintain market share and presence we will see a similar hierarchy throughout. Although the titles may differ, the basic set up will be similar. At the top, there will be a regional VP or director responsible for all of the locations within a certain geography, below them will be a number of area managers or directors who in turn are responsible for a number of those locations. Finally, at the bottom of the management structure will be the cost center managers. This places three levels of management between the revenue producing locations and the operations manager. I've intentionally left out many of the other mid level managers such as sales, safety, HR and other industry specific individuals in the interest of brevity. With this system in place, there are many advantages and disadvantages which will directly impact the business.
The biggest advantage should be having extra support for the day to day operations. Above the cost center manager, the other managers should have the ability to analyze the business, create efficiencies throughout the region and support the operations of the individual cost centers. Above them, the regional VP should have the ability to further analyze the business and support the area managers with issues that arise from the day to day tasks. This additional level of management's primary responsibility should be to support the growth of both the lower level management team as well as the business itself. Far too often this advantage is not utilized. Instead of being a support group for the cost centers and the cost center manager, they become more of a police force, trying to enforce the corporate regulations and guidelines. Instead of training and coaching their direct reports, they spend their time inculcating them with rules and procedures which often times are irrelevant at the cost center level. In many cases, the area managers and higher spend the majority of their time performing tasks that should be relegated to the cost center managers.
This type of system is doomed to failure. Within it, there is an inherent culture of mistrust where a business can't bring itself to believe that anyone within the system is knowledgeable enough to make decisions and thereby withholds the ability to make decisions from those that are closest to the action. Within this culture of mistrust, there are a select few individuals holding on dearly to as much knowledge and power as they can. The only disbursement comes in trickles and only when absolutely necessary. Within this culture of mistrust the seeds of fear are sown, and grows into overall operational ineffectiveness. When the business is inefficient, a manager begins to fear for their job. By holding as many cards as they can, they try to mitigate the situation by holding their direct reports to higher standards than they hold themselves too. Instead of their position being complimentary and supportive, it becomes combative and isolated.
The first and foremost responsibility and duty of a leader is to train their replacement. Where a manager is trained within the cycle of mistrust and fear to keep the hierarchy intact, a leader welcomes and supports the ideas and decisions of their direct reports. While a manager disciplines an employee for making a bad decision, a leader embraces the opportunity to coach and support their direct reports. A manager takes a difficult decision away from their direct report where a leader pushes the employee to understand all of the aspects of the decision and has them make it. Managers thrive in an environment where their self worth is based on the amount of decisions they make for their employees where a leader has no regard for self worth and measures themselves as a part of a team. While a manager creates an environment where their employees perform their tasks at a level just above keeping their jobs, leaders create an environment of trust and confidence that allows their direct reports to perform their tasks at the highest level of their ability. A manager looks at the financials and operational reports and focuses on delegating tasks designed to overcome inefficiencies while a leader involves their direct reports in all of the aspects of the operations and utilizes the input and ideas of their team to create a cohesive and knowledgeable group working towards eliminating inefficiencies. A manager surrounds themselves with direct reports who can be easily managed and understand the hierarchy while a leader surrounds themselves with people willing to push the boundaries of the hierarchy and contain the potential to take a leadership role themselves.
These are just a few of the important differences between a leader and a manager. Once companies begin to understand that a large gap exists between management and leadership, they will have taken the first step at creating a more efficient and sound operational environment. If a company begins abate their fear of their employees and celebrates the individuals as equal contributors, it will be on the road to success. When a company starts to bring this attitude into their hiring process, and looking for people with the potential to succeed, they will have come to a place where the culture of mistrust can be eliminated. As soon as the company starts replacing managers with leaders, and committing to the process they will be well on their way to becoming industry leaders themselves. Finally, when a company is not only willing, but able to overlook the necessary obstacles that will come with this culture change and continue to push forward with their new leadership team, they will have finally broken the cycle that has caused so many failures in so many businesses.
