ASIA FOCUS

When managers leave or are dismissed

A mismatch between management and the company is keenly felt when a team is small. Cultural, monetary or skills-related differences can eventually result in departures

In common with large companies, entrepreneurial firms make mistakes when hiring senior managers.

However, unlike the case with larger organisations, recruitment missteps have a far greater impact on a high-growth company.

A surprisingly large number of respondents in INSEAD's survey of Asian entrepreneurs have admitted to experiencing significant problems with their managers, to the point where the owners/founders were forced to let them go.

Entrepreneurs therefore have a larger stake in ensuring that their selection of key personnel does not lead to future business disruption or failure.

As discussed previously, managers are hired primarily on the basis of congruence in values and relationships. Unsurprisingly, the same elements account for the majority of failures in retaining management talent.

While company owners may make an effort to build trust, sometimes "bad apples" may be hired. A conundrum that many entrepreneurs face is ensuring adequate background checks with a paucity of resources.

One way to overcome this challenge is to develop sufficiently robust social and professional networks, which can in due course yield reliable management talent.

A significant segment of the survey respondents (35% of the sample) reported exits at the management level, both voluntary and forced.

Hiring mistakes that the respondents ranked as significant typically related to time pressures, i.e., rushing to fill key management roles, the founders' lack of experience in managing an organisation and underestimating the importance of background checks when hiring candidates.

Interestingly, entrepreneurs in our survey often, although indirectly, blamed themselves - either for hasty and wrong decisions or for not acknowledging a problem early enough.

Deep-seated cultural differences that originate from a divergence of professional backgrounds, personalities and personal goals can also undermine a manager's position within the entrepreneurial team.

At the operational level, the inability to adapt to the new organisation and difficulty in execution are often manifestations of these types of cultural tensions.

If the situation persists (or, worse, goes unnoticed), the manager will more often than not simply pack up and leave.

Of course, there are other reasons why managers may leave. Money is a motivator, and sub-optimal compensation may result in exits.

In many instances, the manager may simply not be suitable for the task at hand; senior personnel tend to have more generalist roles in smaller organisations, whereas the manager may have specific competences, which in isolation will prove inadequate (a classic case of organisational mismatch).

However, the primary catalysts for recruiting failures are differences in values and culture. Entrepreneurs need to ensure that the people they hire "get" the company's vision and culture, i.e., understand, believe in and are willing to adapt to the organisation's attitudes and values.

Bangkok Post
Sunday January 28, 2007