by Verne Harnish "Growth Guy"
September 21, 2010 12:36 PM ET
You can tell a great company from a good company by spending just a few minutes inside the business. In good companies, you'll find the senior team stressed out and overworked from the crush of ever increasing demands while the rest of the team seems oblivious to the challenges facing the firm.
In great companies, you find just the opposite – a senior team rested and relaxed while the balance of the staff is on fire as they work to capitalize on the ever increasing opportunities facing the business. I may be exaggerating somewhat, but not by much.
Unless the DNA of the senior team – namely the knowledge and values required to make good decisions – is sufficiently instilled within the middle managers on down, the top leaders will find themselves increasingly overwhelmed by the demands of a growing business.
To do this requires one simple routine – a well structured one-day monthly management meeting that includes everyone who supervises or manages anyone in the business. Focused on learning, sharing, and problem solving vs. a day of mind-numbing reports, anything short of hosting this meeting and the business will ultimately outgrow its middle management. And few things are more painful than seeing a business leave loyal people behind.
Nowhere is the need to develop middle management more apparent than in India.
With an expected 8.6 % annual growth rate in 2011 and a stock market that has more than doubled, I'm hearing nothing but upbeat news from my audiences in India. Growth rates of 25 % to 100 % seem to be the norm as companies describe "expanding into two more countries" and "adding 20 more locations" as if these are everyday expectations. I was particularly excited to catch up with Ashiana Housing, a client and one of 39 Indian companies named to the 2010 Forbes list of Asia's 200 Best Under a Billion.
This is what Ashiana Housing, the 480 employee New Delhi-based housing construction firm, calculates it spends bringing all 70 managers from around India to its monthly management meeting, but it has already paid offten-fold. It was difficult for Vishal Gupta and his two brothers who run the business to imagine getting 70 senior and middle managers to find a day each month to meet, a Friday evening and all day Saturday, let alone to go to the expense of hosting it. Yet, they trusted that I knew what I was talking about and started scheduling these monthly meetings. Three key outcomes the first year:
During the first monthly meeting they collectively tackled a huge issue – sales conversions. The market for housing, even in India, had slowed down in 2009, so the company wanted to boost business.
The challenge wasn't getting traffic to their developments; it was converting them into customers.
After the 70 leaders discussed the issue for several hours, the big idea that emerged was creating a "wow factor" at each of its locations, requiring a coordination of construction and maintenance. In addition, the team decided to provide customer service training to guards greeting potential customers and increase the number of signs directing customers to the sales and rental offices – all activities that could be implemented immediately because the entire middle management team was part of creating the solution.
The result? Monthly sales tripled two months later and have been high ever since.
Ashiana also hosts a show and tell session during these monthly management meetings in which teams from both construction and maintenance highlight a best practice from the previous month. In one case, the company's new Pune construction team had created a way to construct a kitchen in six to seven fewer days for slightly less money.
Immediately, the construction teams at five other locations implemented these best practices. Cutting down construction time by a week improves cash flow and speeds sales – a big win providing huge returns from the company's monthly investment.
Pulling all 70 managers together has also helped forge stronger relationships across functions and business operations. For instance, legal now understands better some of the challenges maintenance faces. In turn, having all 70 together creates positive peer pressure as managers share "their number" at the beginning of the meeting Friday evening. Today, 85% of the 70 managers have a main Key Performance Indicator (KPI) that defi nitively measures whether they've had a successful month or not.
Just one year later the company is essentially managed by the 70, leaving the three brothers more time to focus on the market-facing activities, like land acquisition, that continue to propel it ahead of its competition.
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