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An Effective People Management Culture is Imperative to Success in Business

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Professional Management vs. Entrepreneurial Management - Adapting to the Change

Letter from PartnerENTREPRENEURIAL EDUCATION

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August/September2012

Contents

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2 ENTREPRENEURIAL EDUCAT IONSince our last newsletter, our firm has been very active in the educational arena for Entrepreneurs. We delivered two seminars in Southern California that featured panels discussing:

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3 AN EFFECT IVE PEOPLE MANAGEMENT CULTURE IS IMPER AT IVE TO SUCCESS IN BUSINESSPeople are at the heart of every business. Whether it’s the person who answers your phones, designs your newest innovation or manages your accounting department, it comes back to people who fill those roles. It’s all too common for us, as individuals, to reflect on our experience with a restaurant or retail store and use the phrases, “the service was bad, or the food was cold.”

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5 PROFESSIONAL MANAGEMENT VS. ENTREPRENEURIAL MANAGEMENT - ADAP T ING TO THE CHANGEChange happens in different forms. In this article we will discuss the change experienced when a decision is made to hire outside professional managers for a Family Owned Business. This typically happens when the business enters the transition phase and the founder is contemplating retirement.

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ENTREPRENEURIAL EDUCATIONBY DAVID KRAJANOWSKI | CO-MANAGING PARTNERdkrajanowski@singerlewak.com | 949.261.8600

Since our last newsletter, our firm has been very active in the edu-cational arena for Entrepreneurs. We delivered two seminars in Southern California that featured panels discussing:

•Your vision and where you are in the life cycle of your business (presented by SingerLewak). Other topics included the pros/cons of selling your business vs. continued ownership, why accurate financial records are important, and building suc-cession in management teams.

• If you decide to sell, when is the right time? (presented by an Investment Banker). Topics included describing the process, partial vs. 100% sale, other sources of monies beside sell-ing, etc.

•Commercial lending environ-ment as discussed by a com-mercial banker including information regarding the lending environment in the future, dividend recaps funded by banks, acquisition financ-ing, etc.

•Latest and greatest ideas in gifting & estate planning, delivered by an estate planning attorney. Topics included why gifting by December 31, 2012

is crucial for large gifts (before the law changes), how to gift to the next generation without giving up control, etc.

•Lastly, Wealth Management, commented on by a wealth manager, including topics such as how much wealth do I need to sustain my standard of living and at what return, balancing portfolios to increase returns, etc.

We will be scheduling this same seminar in Northern California in the fall as well as repeat per-formances in various Southern California locations. Watch for dates and times.

Many ideas for future content were provided by participants. Suggested topics included:

•A series of seminars on Busi-ness 101 for next generations, providing basic understanding on such topics as insurance,

accounting, manufacturing/distribution costing and plant efficiency, banking & financ-ing, key performance indica-tors, etc.

•More in-depth conversations on alternative sources of fund-ing for acquisitions and/or expansion of existing business.

•Roundtable for next gen-erations to discuss common problems, ideas, questions, concerns with the ultimate goal of hosting a recap meeting with multiple generations of a company to collaborate.

Please continue to send us your ideas, as our goal is to deliver educational and thoughtful lead-ership on crucial areas of interest to you.

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DAVID KRAJANOWSKI CAN BE REACHED AT

DKRAJANOWSKI@SINGERLEWAK.COM OR 949.261.8600

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AN EFFECTIVE PEOPLE MANAGEMENT CULTURE IS IMPERATIVE TO SUCCESS IN BUSINESSBY RACHEL RICO | PARTNER, ASSURANCE & ADVISORYrrico@singerlewak.com | 949.261.8600

People are at the heart of every business. Whether it’s the per-son who answers your phones, designs your newest innovation or manages your accounting department, it comes back to people who fill those roles. It’s all too common for us, as individu-als, to reflect on our experience with a restaurant or retail store and use the phrases, “the service was bad, or the food was cold.” Both of these comments can be tied back to a person or team of people in the organization not performing their job(s); the inattentive retail clerk or the chef not preparing the food well, not necessarily the organization as whole. The outcome, though, is you will likely not shop or dine at that establishment again. The success of that business establish-ment was directly affected by the people you interacted with. The important take away here is how to prevent this from happening in your organization. In our busi-ness of providing myriad services to a wide array of clients, we’ve identified the following areas that define effective people manage-ment:

RECRUITMENT

Attracting and identifying talented individuals to join your company takes time. Be prepared to use this time to properly vet out potentially qualified indi-viduals. The positions you seek to fill and their related skillsets will be dependent upon the varying amount of time and number of individuals you have to meet with. Once you’ve identified, made the offer and they’ve ac-cepted you have entered into the retention phase of that indi-vidual. After all, you just spent all that time and energy in hiring them; you clearly saw something in them that you feel will benefit your company.

TRAINING

Once you’ve hired the right individual, it’s important to fol-low an on-boarding process that is consistent. The consistency in bringing people on may involve a training checklist to help ensure all bases are covered. Having a culture of continuous training helps to keep standards high and empowers your employees to develop their knowledge and confidence.

COMMUNICATION

Communication continues to rank in surveys as one of the areas that employees perceive to be under par. In the age of email, texts and social media it seems odd that this would be identified.

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Having a culture of continuous training

helps to keep standards high and empowers your employees to develop their knowledge and confidence

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You need to evaluate what is best for your company and particular situation. In one case, holding a weekly Monday morning meet-ing to set priorities for the week is optimum and yet in another, a monthly meeting to discuss project status and issues provides sufficient communication. If you are unsure, discuss with your team what would be optimum and adjust accordingly. Above all be sure to listen to your team, communication really should not be one way - encourage their ac-tive participation.

PRODUCTIVITY

Each company must identify what represents productivity for its employees and teams. This will provide guidelines to all in setting expectations and to evalu-ate processes along the way. The opportunity to identify poten-tial weaknesses should be done through regular evaluations.

MANAGEMENT STYLE

The variety of management styles that business owners and its

manager embody runs the gamut from dictatorial to democratic. While no style is absolutely “right” one needs to think how their style impacts the team’s per-formance. The “right” approach is one that inspires, motivates and encourages its employees to perform at high levels and act in the best interest of the Company.

TEAM BUILDING

Good teams may be easy to build, but how about a great team? Invest in time for team building where the objective is to share common goals, a common vision and develop a level of in-terdependence within an organi-zation. The methods will vary, for

some companies, a simple social activity such as lunch will suffice or, for others, a retreat approach held over a day or more will bet-ter meet the objective.

REWARD AND RECOGNITION

Providing rewards and recogni-tion is an area that is frequently overlooked, yet can yield a large return on investment. While it’s somewhat a given that most individuals would like to make more money, it’s also not in the budget. Employees also would like advancing career opportuni-ties, to obtain and develop their skillsets, to receive “kudos” for recognition when they’ve gone above and beyond or perhaps even when they’ve consistently met expectations. A “Thank You” costs nothing and yet the value is immeasurable - how’s that for your bottom-line?

Above all be sure to listen to your team,

communication really should not be one way - encourage their active

participation

RACHEL RICO CAN BE REACHED AT RRICO@SINGERLEWAK.COM

OR 949.261.8600

5 | SingerLewak August/September 2012

Change happens in different forms. In this article we will discuss the change experienced when a decision is made to hire outside professional managers for a Family-Owned Business. This typically happens when the business enters the transition phase and the founder is con-templating retirement. The other family members do not have the skills required to manage and continue to grow the business.

At this point, it becomes criti-cal for the company to begin a search for managers that can be trusted with the future leadership

of the business. Very often, when somebody is hired from the out-side, there are significant changes made that affect the operations in the family-owned business. Many of these changes result from a different management style that a professional manager brings to the business. Below are some of the significant differences in management style between an entrepreneur and a professional manager:

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PROFESSIONAL MANAGEMENT VS. ENTREPRENEURIAL MANAGEMENT: ADAPTING TO CHANGEBY DAVID KAMATH | PARTNER, ASSURANCE & ADVISORYdkamath@singerlewak.com | 949.261.8600

ENTREPRENEUR PROFESSIONAL MANAGER

Wants to be involved in all aspects in business Will build a management team and delegate authority

Quick and intuitive in decision making when faced with new business opportunities Decisions based on logic and rationalization

Is used to a more informal organization structure which allows for more flexibility

Will require it to be more formal in structure with clearly defined reporting lines

Has a power based on ownership Will have power from position of authority

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Below are some of the benefits in transitioning to a professional management team:

•Someone from the outside is likely to bring new ideas that will help maintain and grow the competitive advantage the business has in the market place.

•Professional managers are likely to be more performance driven and will make some of the dif-ficult decisions that an owner is

reluctant to do, such as dealing with unproductive family and non-family members.

•Applying their knowledge acquired from professional education in operations and management.

•Bringing their proven experi-ence, accomplishments and best practices from working in other businesses.

•Will be quick to make capital investment in technology-based processes that will improve ef-ficiencies and the bottom-line.

•Will analyze the organization's strengths, weaknesses, opportu-nities and threats in preparing a strategic plan that will grow the business profitably.

•Sound financial management and performance measurement to improve the bottom-line.

Understanding some of the differences between the entre-preneur and the professional manager and the benefits that a professional manager brings to the business will help the organi-zation better adapt to the changes that come from this transition.

DAVID KAMATH CAN BE REACHED AT DKAMATH@SINGERLEWAK.COM

OR 949.261.8600

Someone from the outside is likely to bring new ideas

that will help maintain and grow the competitive advantage the business has

in the market place

W W W.SINGERLE WAK .COM | 877.754.4557

DAV ID KR A JANOWSKI dkrajanowski@singerlewak.com | 949.261.8600

ROB SCHLENER rschlener@singerlewak.com | 949.261.8600

J IM PI TR AT jpitrat@singerlewak.com | 310.477.3924

DAVID K AMATH dkamath@singerlewak.com | 949.261.8600

STE VE CUPINGOOD scupingood@singerlewak.com | 310.477.3924

GLENN CARNIELLO gcarniello@singerlewak.com | 949.261.8600

SALLY AUBURY saubury@singerlewak.com | 818.999.3924

MARK COOK mcook@singerlewak.com | 949.261.8600

THE SKILLS YOU NEED. THE SERVICE YOU EXPECT.

OUR FIRMENTREPRENEUR-OWNED BUSINESSESSingerLewak knows the importance of relationships to excel and meet the needs of entrepreneurs and their businesses. Our client service relationship stresses client strategy and sound advice in all aspects of business - including the transfer to a new generation, the sale, or the operation of the company in perpetuity.

FAMILY-OWNED BUSINESSESFamily-Owned Businesses have been the drivers of our economy for a long time. We understand the significance of the family business structure, as well as the day-in, day-out efforts that have made an economic impact on both your local and the national community.

We understand the inter-relationships between the Goals of the Family, the Owner and the Business. Any one of these may impact the others in a significant way. We represent this with our FAMILY BUSINESS GOALS MODEL:

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