Thirteen Important Management Principles to Build a Growing Company

November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים

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1

Thirteen important management principles

to build a growing company and generate

profit

A lecture in Prof. Dov Zohar’s seminar for MBA course at The Technion, Israel Institute of Technology

Lecturer :

Ze’ev Ronen, Business Excellence

• Looking back over my 20 years of experience as

CEO and the dozens of CEO’s and managers I

have worked with after it,

• I have refined 13 important principles of good

management in building a growing company and

generating profit.

• Their order may change, but I recommend

sticking to all of the principles presented here:

2 November 17, 2014 זאב רונןB.Sc 052-4767531: נייד. מצוינות בעסקים

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A brief introduction

• First rule:

• The CEO/manager must stick to a path, and still

be open to change in the business environment;

he should not be afraid to run the company, and,

if necessary, to confront the internal power

forces that report to him.

• I have met more than a few managers who were

afraid to manage some of their subordinates


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Leadership or management

• In extreme case, the CEO (and owner) closed

himself up in his office and watch anxiously as

the company spiraled down to insolvency.

• Although it was clear to him that they were

approaching the edge of a cliff, he was afraid to

confront his subordinates, primarily because

they were family relatives.

• This case was extreme, but a situation where

the CEO is afraid to confront his subordinate

managers is fairly common.


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Leadership or management (continue)

• Please note: from now on the order of

preference of the following principles may

change; i.e. the order in which they appear does

not necessary represent their order of

significance.

• In addition, for convenience purposes, I will refer

to the manager as “he”, but of course, we

assume the possibility of both genders.


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Prioritization of principles

• Establishing a vision determines the direction in

which the company will progress, and its values

should be defined accordingly. The lack of

establishing a vision often stems from the

absence of direction.

• Without a vision, company growth will be

random and may suffer along the road.

• It would be advisable to decide on the vision via

teamwork.


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Vision

• Like the vision, this value has tremendous

significance in the development and growth of

the company in a clear, programmed direction

that avoids randomness.

• Here too, it would be advisable to define the

strategy and determine the company’s path via

teamwork.


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Delineating a clear path, strategy or policy.

• When a company or CEO do not conduct

themselves honestly, the impression trickles

inwards and employees may end up not

conducting themselves honestly towards the

company.

• I have known companies to direct employees to

make false reports to the authorities, and, as a

result, the employees would steal from the

company.

• Harsh words, but believe me, that’s the way it

was.


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Honesty

• The value of fairness within the company is of

the greatest importance.

• “No secrets” and information will travel among

workers.

• When the CEO discriminates or is unfair, this will

create bitterness and disloyalty at all levels

below him.


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Fairness

• The CEO/manager must lead the company

according to set strategies. The concept of

leadership is included in the concept of

management. However, due to the significance

of this value, I have chosen to stress it

separately.

• Even when the vision is determined and strategy

is set, not all managers stick to their plan. A

CEO must stand at the front and lead the

company after him.


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Leadership

• Every single manager and employee notes the

CEO’s conduct, not just what he says.

• If you don’t stand behind your words and

conduct yourself by the values you preach, you

can’t implement what you preach.

• When a CEO behaves disrespectfully, his

employees will treat him the same. This goes

for honesty, truthfulness and loyalty as well.


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A personal example

• The more that employees are privy to company

objectives and information on company goals

and performance, the more you can enlist them

in the drive towards the company’s success from

a sense of partnership.

• Transparency gives a company great strength.

Concealing information results in a detachment

among employees from their managers and

company objectives; it also reduces the drive to

create profit.


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Transparency

• Transparency doesn’t mean that everyone knows

everything. But it is true that sales staff will always be

aware of company objectives and sales volume, and can

therefore be enlisted to attain objectives and company

success, With this strategy, other employees will follow

as well.

• The more management keeps information close to its

chest, the more difficult it will be to obtain objectives.

• Concealing information primarily occurs in small and/or

family businesses.

• It is sufficient to observe successful public companies to

realize that transparency doesn’t hurt, it helps.


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Transparency (continue)

• Listening to managers and to employees will

contribute valuable information and ideas, along

with generating innovation and motivation at all

levels.


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Listening

• Nothing said above can replace discipline. We have all

been testing limits since we were kids, and we never stop

doing so.

• At one company, a rule was made that smoking was only

permissible in designated areas. One employee lit a

cigarette next to his manager and smoked as he operated a

lathe. The day after he was reprimanded, he changed his

clothes at the end of the work day, lit a cigarette outside

and toured the workshop with the manager.

• How should a CEO behave? If the manager or CEO

doesn’t enforce discipline and define clear limits, he won’t

be able to lead the company towards its objectives.


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Discipline

• To realize your strategy and attain company

objectives, you must outline a multi-year work

plan (in greater detail regarding the oncoming

year) and set quantitative objectives accordingly.


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Work plan and objectives

• The CEO cannot do everything.

• To effectively enlist his management, he must

delegate responsibility to them and rely on them

to be responsible and authoritative.


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Delegating responsibility

• Finally, after we have set objectives, a multi-year

work plan and have delegated responsibility, we

must begin a routine of control with quantitative

K.P.I’s (Key Performance Indicators) that will

represent progress towards attaining our objectives.

• Instead of constricting himself and interfering in

his subordinate managers’ work, the CEO should

evaluate management in light of results (at least

once a month) and ask to see a plan of action

everywhere he notes a delay in attaining objectives.


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Control

The CEO must lead and focus the company

19 November 17, 2014 052-4767531: נייד. מצוינות בעסקים B.Scזאב רונן

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CEO: Improvement

in company profit

Engineering

Funds

Operation Marketing and sales

Human resources

Throughout the process we

mustn’t forget our objectives

and our means to attain them.

Our various objectives and

KPI’s create a balance

benefitting the main objective.

Work is cooperation while

maintaining balance; it is not

struggles.


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Thank you for listening.

Any questions?

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