The Three Essentials of Management
How an organization is being managed can make or break it. Many businesses fail because of ineffective management by weak leaders. If you want your business to succeed, you need to put someone who can create a direction for the employees and the organization as a whole toward achieving short-term and long-term goals.
Managers in any organization should learn and adopt the essentials of management. At Change Works, we help managers and future leaders become better equipped to manage a team more effectively. We offer a leadership development program designed to help trainees better understand the essentials of management.
Good leadership alone is not enough. In managing an organization, a leader must be well versed in the three essentials of management as these are associated with corporate success.
The Harvard Business Review researchers came up with the three essentials of management based on a survey participated by 10,000 firms in more than 20 countries.
- Rigorous monitoring
Best practice firms are seriously monitoring the whole production process. Firms that stick to the concept that "information is king" and are collecting, processing, and exploiting information are beating firms that do not.
As information is integral to the operation, you need to have an effective way of gathering it. You should also consistently monitor relevant information inside and outside the organization and use analytics tools to explore your data.
- Challenging targets
Best practice firms are those that set tough short and long-run targets for each stage of their process. There is an emphasis on "tough" but fair targets, and it takes time and effort to develop them. Firms that have broad and challenging targets outperform their competitors.
Measurement alone is not enough. It's important that you should also turn information into action and make the necessary changes in your business process. The initial step is to apply strategic processes for developing appropriate targets for each level of your organization so that everyone knows how their actions can affect the organization.
- Rewards and incentives
The best firms are those that acknowledge and reward their top performers by way of giving bonuses and promotions. This practice greatly motivates employees to do better. Firms with strong reward systems are most likely to overtake competitors with weaker reward systems.
The second step to turning information into action is providing incentives to employees to encourage them to do the right thing. In this step, a performance measurement system is necessary to have an informed discussion with employees. This can be a difficult task as it can't be automated.
Bringing the three essentials of management together
These three essentials of management are effective if they are used together. For instance, an effective performance measurement system allows you to identify who your top performers are and only then can you give incentives. Based on the same survey, the best firms adopt the performances across the board. As a result, they get positive results and their efforts to develop better management allow them to achieve a 3% higher return on their capital and 26% higher market valuation. These firms also saw 70% faster growth.
There are many important takeaways from the survey, and one thing is for sure–achieving good management is not a walk in the park, but it requires a lot of effort. Moreover, the three essentials of management are not "nice to haves" but are vital to success.