There is a difference between an entrepreneurial managed organization and a professionally managed organization. When reviewing the differences two questions come to mind. What is the impact on the organization’s employees when comparing the two styles of management? And, what is the impact on the organization’s customer base? After reading this article you will be able to identify your current style. You may even want to set some goals to make some organizational changes.
Keep in mind that there is no right or wrong answer. The majority of entrepreneurially managed organizations are privately owned. And, many of these businesses transition to a professionally managed organization over a period of time. Professionally managed organizations can be public or private.
One caveat to this dialogue is the large mature bureaucratic public company that focuses on organizational stature and reputation. They have their own management style that does not directly relate to this discussion.
The Entrepreneurially Managed Organization
1. Profit is viewed as a result of the organization’s effort. It is the old ‘the harder we work, the more money we will make’ syndrome.
2. Planning is informal and impulsive and is based on the owner’s view of what is important at a particular point in time.
3. Authority to act is ownership based and rarely delegated. Roles and responsibilities frequently overlap. There are no written position descriptions that are used to manage the behavior of the employees who work in the company.
4. Decision making is subjective, and can be emotional and self-serving at times.
5. Training and development is most often through on-the-job-training.
6. Budgets are sometimes disorganized and there is little to no follow-up on discovering the cause of variances.
7. Innovation is based on a willingness to take major risks.
8. Leadership is situational in nature, and styles vary from directive to laissez-faire.
9. The corporate culture is loosely defined and may be family oriented; and there are there may be conflicts between what people say and what they do.
10. Performance management is non-confrontational and crisis oriented.
The Professionally Management Organization
1. Profit is an explicit goal that must be achieved. Results are communicated on a regular basis to those that have a direct impact on achieving the goal.
2. Planning is formal and accomplished on a regular basis and includes strategic planning, operational planning, and contingency planning.
3. Authority to act is position based. Roles and responsibilities are clearly defined, mutually exclusive, and exhaustive in nature.
4. Decision making is objective and is based on goals and metrics such as Key Performance Indicators.
5. Training and development is a regular planned event and is based on a gap analysis by business function.
6. Budgets are strictly managed by standards and variances.
7. Innovation is driven by a willingness to take calculated risks. The challenges are communicated in a group setting.
8. Leadership is based on overall performance objectives, and styles vary from consultative to participative.
9. The corporate culture is well defined. Management aligns language, behavior, and symbolism and is aware of conflicts.
10. Performance management is formal process driven by an objective and subjective performance appraisal system. The process includes performance improvement planning.
Now that you have compared the two management styles you should be able to answer the two questions mentioned in the first paragraph. To stimulate your thinking, I will close with a couple of thoughts of my own.
When your employees grow and develop your customer base grows and develops.
A change in management style is a calculated risk and can cause stress and uncertainty. When organizational change occurs, sometimes valued employees leave and look for another job.
Entrepreneurial spirit can, and does, live on in a professionally managed organization. In fact, it is that spirit that drives the recognition of a need for change in order to grow a business.