Employee turnover, especially in key management and team member positions, is killing the ability of small and medium sized companies to increase their top line sales and bottom line profitability. In my restaurant and hospitality consulting business, I have seen so much damage created by turn over, that I am surprised anyone is making money.
This has led me to revisit a management concept that every service and product delivery business should consider if they plan on being around for the long term, or are considering expanding their current operations– developing highly autonomous, self–managed teams (SMT’s). This is not a new concept; variations of this leadership system or pieces of it have existed in service businesses for decades.
It is no secret that corporate leaders and ownership are concerned because keeping great talent and developing a strong team pose huge challenges. In one instance, a medium/large restaurant company I have worked with has seen a continuous cycle of management turnover, forcing them to move managers and chefs laterally and vertically to positions they are not qualified to do. And the crew response is typical: team members become skeptical at any new manager who comes in and therefore do not fully commit to the changes necessary for the business to evolve. The result of “plug and play” management is this:
Disappearing profit margins, anemic sales growth (if there is growth at all) formulaic solutions to poorly identified problems lacking a root cause, and disappearing customer satisfaction.
Don’t get me wrong, labor costs have always been incredibly important to manage with paper thin margins, especially in the restaurant and hospitality industry. The difference is, most restaurant and hospitality companies used to prize the experienced management team (and some good ones still do), which allowed them to develop a deep bench of talent for unit expansion or promotion to the next level of responsibility. While it is almost impossible to imagine employees and managers staying with a company for their whole career in our current age, it is not impossible to add great longevity to a team member’s commitment using this team leadership development model.
Self-managed teams are not for the faint of heart or the uncommitted company. And if your style is top down, forget it – because this type of team is about letting go, not holding on. It also takes patience because you have to let people learn from their mistakes. But a SMT’s leadership system aligns well with expanding companies or companies who want to deepen the company culture quickly and with consistency in order to grow.
Characteristics of a Self-managed Team
- Driven by the business's purpose: they understand, live and breathe the mission and vision.
- Utilize guiding principles and company values in their decision making.
- Understand their responsibilities, and have authority to carry them out.
- Goal oriented.
- Work “in the solution”, meaning they quickly identify problems accurately, then develop and implement the right solutions.
- Place teamwork before ego.
- Keep their owners and company informed of forward progress, challenges and new ideas.
- Rewarded for company, department, and personal accomplishment.
The concept of self-managed teams can be carried down to every level of an organization if you recognize this principle: leadership exists at all levels and in all people if you know how to identify and tap into it. We know this to be true because our first solution when someone leaves a business is to look inside for talent and promote from within! Even in large companies, recruiting efforts which lead to outside candidates many times result in an inside hire. The question is not if we will promote from within, but who, how, and when?
Is a Self-managed Team for You?
- Is management and key employee turnover high in your company by industry standards?
- Do your team members consider you to be the employer of choice?
- Have you quantified what employee turnover is costing you in terms of disruption, product or service quality, or by measuring lost sales?
- Is expansion only a dream because you do not have a deep and talented bench?
- Are you spending too much on training and not seeing an improvement in operational quality?
- Are you getting tired of holding meetings where leaders focus too much on problems instead of working and implementing solutions?
- Are you getting tired of leaders showing up to meetings with a blank stare waiting to record your considerable wisdom onto a blank notepad?
In coming posts, we will explore how you can develop a self-managed team, and how it can increase your sales, profitability, team loyalty, and improve customer satisfaction.