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Why General Managers Fail
Inadequate
Experience:
It is important to recognize that one reason why top management
candidates have been failing in increasing numbers is that they have
not been getting the kind of experience they need to prepare
themselves for general management.
U.S. companies typically keep their top management candidates
immersed in a single functional department during most of their
careers.
All but a few have abandoned functional job rotation because it
is cumbersome and expensive.
It should be noted, however, that job rotation is still
practiced by many foreign companies, especially by the Japanese who
recognize the critical need for their general managers and chief
executive officers to understand the operations of each department.
In
confining top management candidates to a single department, our
companies are depriving them of the experience they need to learn how
to handle the cross-functional coordination and integration tasks they
will be responsible for as general managers.
As Robert H. Hayes and William J. Abernathy observed in their
article:
“The
purpose of good organizational design, of course, is to divide
responsibilities in such a way that individuals have relatively easy
tasks to perform.
But then, these differentiated responsibilities must be pulled
together by sophisticated, broadly gauged integrators at the top of
the managerial pyramid.
If these individuals are interested in but one or two aspects
of the total competitive picture, if their training includes a very
narrow exposure to the range of functional specialties…, who will do
the necessary integration?”
The
answer, of course is that no one will “do the necessary
integration” until the new general managers either learn by trial
and error how to handle their cross-functional coordination
responsibilities or are replaced by others who know how.
General
managers and chief executive officer candidates clearly need a new
kind of experience that will teach them as much about each functional
department as they would learn from job-rotation assignments.
They need enough experience in making departmental decisions to
be able to supervise the department managers and to pull their
operations together into a coherent enterprise.
They need, in short, decision-making experience in each
functional department.
New
general managers are further handicapped because their prior
experience does not teach them how to handle their profit management
responsibilities.
As functional managers, they were not responsible for the
profit or loss of their organizations.
They were expected to live within their budgets and, if they
managed sales departments, they were responsible for achieving their
revenue objectives.
But they were not responsible for setting profit targets,
making short- and long-term profit trade-offs, approving budgets or
keeping expenses and revenues in balance.
These are complex tasks that most new general managers need two
to three years to master.
But chief executive officers and boards of directors are
increasingly reluctant to give them that much time to learn.
New
general managers often are warned by experienced general managers in
large companies:
“You have a year to learn and a year to earn.
If you don’t make your profit budget by the second year, look
for a new job.”
Unfortunately, that is not enough time to enable many new
general managers to learn how to avoid serious profit shortfalls –
and failure.
General
management candidates need to be given experience in profit
management, before they are promoted into general management or chief
executive officer positions.
They need the kind of experience that will enable them to learn
how to achieve both short-term and long-term profit growth – the
kind of experience that they can get only as general managers.
They need, in short, experience in managing the profit growth
of an organization similar to the one they will be expected to manage
when they are promoted.
A
Slow, Unreliable And Unfair Teacher:
A second reason for high failure rates among new general
managers is that their own experience often is a slow, unreliable and
unfair teacher.
Their experience tests them before it teaches them and lets a
great many of them fail before they learn what they need to know to
succeed.
Before being promoted, new general managers typically have had
several years’ experience in a single function, such as engineering,
manufacturing, marketing or finance.
During this period, they master what they need to know about
that function.
But when they become general managers, they must manage other
functional managers who know more about their own functions than they
know.
Instead of leaning how to manage these functional managers,
however, inexperienced general managers often continue to immerse
themselves in the function they come from and know best.
Professor John J. Garbarro has documented this tendency
of new general managers to continue to concentrate their
efforts in the functions in which they had previous experience.
As he reported:
“The
extent to which managers’ functional experience influences their
actions is quite surprising.
For 13 or 14 new managers studied, their initial actions were
in areas where they had functional experience, and the most
significant changes they made also were in the areas where they had
experience.
The emergence of this pattern among the general managers
reveals the extent to which experience influences actions and points
of view.”
When
general managers remain involved in the function they came from, they
inevitably fail to learn how to manage the other functional managers.
They over-supervise the department manager whose function they
know best and over-delegate to the department managers whose functions
they understand least.
As a consequence, they often lose control of their business
units and fail to learn about major problems until it is too late.
The
following two cases are typical of a great many I have observed that
illustrate why general managers fail:
“The
Vice President of planning in a manufacturing company remained
preoccupied with the long-range planning function, even after he was
made general manager.
He over-delegated to his department managers and failed to
learn about the problems that existed in the engineering department
until those problems resulted in the late delivery to manufacturing of
an important new product design which also had poor manufacturability.
These engineering problems caused production delays which
resulted in failure to meet customer commitments that had been made by
the general manager as well as the sales and marketing managers.
The delays caused order cancellations, conflicts among
department managers and rapid deterioration in revenues and profits.
As a consequence, the general manager was seen as ineffective
and was removed.
The
General Manager of a large television station who had been the former
news director continued to be deeply involved in the news department
which he believed held the key to the station’s ratings and revenue
growth.
He over-delegated to his sales director and was not aware of
the serious problems that were emerging in the sales department.
Despite a decline in revenues, he relied on his sales
director’s assurances that the decline was temporary.
Even though the finance director questioned the sales
forecasts, the general manager assured his group president that the
station’s failure to meet its profit target, terminated the general
manager whom he said “obviously did not know what was going on at
the station.”
The
prior functional experience of these general managers was a handicap
because it encouraged them to continue to do what they had learned to
do in the past.
Their new experience as general managers was an unreliable
teacher that let them fail before it taught them what they needed to
know to succeed.
Experience may have a great reputation as a teacher but, as the
Dutch are fond of saying, experience leaves us “too soon old and too
late smart.”
Top
management candidates need a new kind of experience that will teach
them before it tests them – that will help them learn from their
mistakes so they will avoid repeating them on the job.
Above all else, they need the kind of experience that will
teach them in a fraction of the time required by their own, ordinary
experience.
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