One of the most important elements of scaling a business is you must develop a strong middle management layer. Often when a company first starts to expand, people are made managers somewhat haphazardly. Perhaps they are the least worst for the job, the most outspoken, the first hired, the tallest or some other random criteria. Sometimes people become managers without ever being told what that entails. Some figure it out. Many do not.
Yet, the middle management layer is the key to scaling a company. If you don’t have a solid front line management and second level directors, you are unlikely to build a high-performance culture, no matter how good your executive team is.
Why is that? At a fundamental level, the middle managers outnumber the executives. They also have more direct impact on the work of their teams. So the span of influence of the middle managers is greater than that of the executives. You can come up with all the great ideas and strategies at the executive level, but without buy-in and leadership from front line managers, very little will get done.
So it is critical that you develop the performance of the middle managers. Their influence and abilities will determine whether your company will scale to great heights or whether you will be a company with brilliant strategy and lousy execution.
The guiding principal should be to push as much decision making as you can further down into the organization, close to where the action is. The idea is that those closest to the problem usually have the best context on how to solve the problem. You want to empower front line managers to make the decisions on what work gets done, how to prioritize and when to make exceptions.
But, wait a second — how can you trust these inexperienced managers to make decisions?
It helps if you have a meaningful set of values and principals that guide your operations. These can’t platitudes. They must be guidelines that will actually help people.
As an example, at Gatsby one of our values was to prioritize the customer. But we didn’t just talk about it, we lived it. We would go the extra mile to help customers out when they were going live into production with our product. Sometimes that meant 5am calls with our engineers and managers working side by side with customers. It won the customer’s trust and support. It also demonstrated inside the company, that we were serious when it came to providing great service. And if a customer was unhappy with the service, for whatever reason, we would let them out of their contract. And it wasn’t me making these decisions. It was the front-line managers.
It isn't easy to be customer focused. But over time, we turned it into a competitive advantage. We often won customers from competitors because they felt screwed-over or trapped into contracts that left them angry. Everyone in the company understood the competitive value of helping our customers. They saw that the managers and executives focused on customers, so they did, too. We gave examples in our regular town hall meetings. Values like customer focus were part of our annual review process. When someone was promoted, we showed how they helped customers. This encouraged employees to take initiative themselves, without having to ask for permission.
At Zendesk, I remember one time Mikkel the CEO asked me “Why do I have a line outside my door every morning?” It was because he was letting people escalate decisions to him. With every decision Mikkel made, he was reinforcing the behavior, instead of encouraging people to make decision themselves.
I never like it when people bring me decisions that they should handle themselves. It makes me anxious because they likely have more context than I do. And often, by the time the decision gets to me it’s become quite a thorny customer situation or a struggle between two different departments. If I can, I will ask questions to elicit more information, discuss the tradeoffs and encourage the manager to make the decision based on our values.
Scott, our director of Finance at Zendesk came to me one time and asked me to implement a discount approval schedule, along the lines of sales reps could approve up to a 10% discount, managers 20%, directors 30% and perhaps the VP up to 40%. Anything beyond that would require my approval.
I said no.
Scott was stunned. “What do you mean?” he stammered.
I told him we didn’t need a discount schedule. I trusted the sales VPs and their managers to implement whatever discounts they felt were necessary.
“So you’re saying if Matt wants to discount the product to 90% you are ok with that?” (Matt ran our European operations and was one of our most trusted executives.)
“Yes,” I said. “Matt is an experienced guy. He’s not going to discount something if he doesn’t need to. He’s also not likely to do anything radical without discussing it with me. He runs his region and he knows his customers and the market in Europe better than we do. So if he needs to provide a discount, he’s the best person to make that decision.”
Scott walked off infuriated. He was used to a command-and-control model where headquarters made the rules and slapped people down when they got out of line. I understood where Scott was coming from. After all, that was the model at every large software company, including Salesforce where Scott had worked previously.
But the role of an executive is not in approving things. The goal is to add value. The best way to do that is to create a resilient, high-performance culture. One of the ways to do that is to empower your front line managers and executives and teach them to make good decisions. If people want my input, I provide it. But I don’t hire people so that I can second-guess them. I want managers to grow in confidence so that they are making good decisions, developing action plans and communicating.
In my experience pushing decision making close to the action is the best way to operate. Most people will think things through when it’s their call. I want to cultivate an organization so that when the stuff hits the fan, managers don’t panic and instead they muster their problem solving and communications skills to tackle the problem. And they can’t do that if they’ve never been given the responsibility and trust to make decisions.
How does your organization make decisions? What decisions come your way that could be handled by someone closer to the issue?