The MOST critical asset in a business is its promoter, his mindset, and his strategies/ideas for expansion. The primary role of an entrepreneur is to devise business strategies for business expansion (new products, new clients, new geographies). Business owners should ideally invest their time & energies into meeting clients, prospects, vendors, competitors, and partners to forge new alliances in business. Promoters should be visiting industrial associations & exhibitions to meet the thought leaders in their industry so as to gain foresight of next-level technology and innovations in their business. Instead, they spend their time in day-to-day execution and fire fighting issues.
Promoters invest huge funds in acquiring state-of-the-art IT systems and hire skilled & experienced people to work for them. Still, I see several promoters working arduously and burning their midnight oil just to ensure timely execution of their projects – so as to pay rent and salaries on time. Sometimes, I fail to understand whether the employees are working for their bosses, or are the promoters working harder just to pay salaries to their employees on time.
The trick here is not to work “IN” business, but instead work “ON” business. Although flawless execution is very important in business, an entrepreneur cannot afford to get “confined to” execution level tasks all the time. Not only does it inhibit the freedom/autonomy of the business owners and limit their productivity, but it also stalls the growth in business.
That’s where we suggest the “Chairman-CEO model of working” in an organization so that the promoters can focus on designing business strategies, forming strategic alliances for 10x level expansion, and conceptualizing innovative products & ideas. Execution of these strategies can be delegated to a CEO. This would not only grant a lot of autonomy to the promoters but also multiply their productivity by 10x.
However, success in developing this SLOM (Second Line Of Management) depends on implementing an unbiased performance review system in the business. Most entrepreneurs prefer an external agency (independent professionals) to do this, since their in-house teams get “too myopic” and “too aligned” to the existing gaps/lacunae within the system.
A lot of businesses hire us to design & implement robust financial controls and performance review systems to periodically track their team-level performances and most importantly raise a red flag, whenever required. This exercise not only improves productivity at the organization level but also eliminates the risk of any frauds/errors in the future.
As an external independent agency, our expert team of auditors challenges the status-quo in the organization by questioning the current functioning in each department and then strengthening the financial controls at every level, thereby resulting in kaizen (continual improvement) over a period of time.
Thank you so much for investing your time in reading this article. I sincerely hope you found it useful. Please feel free to share it with other entrepreneurs in your network.
___________________________________________________
The above article is penned by one of our finance mentors CA Vikram Menda to disseminate the best practices followed by some of the best businesses across the globe.
CA Vikram Menda handholds businesses in implementing new-age tools & techniques of financial management, thereby ensuring cash-rich businesses and timely compliances.