We've said it here many times, but it can't be reiterated often enough. Whether a $10 billion business or a $10 million business, your Key Employees are critical to your value and your profitability.
In an interview with business guru Ram Charan in the December 27, 2010 issue of the Wall Street Journal, Charan drives the point home. He says less than 10% of CEOs are focused closely on profitable growth and suggests quarterly reviews of people the way the CEOs do quarterly reviews of numbers. He also believes that in addition, to financial rewards for profitability, key people should be rewarded for how many other leaders they produce.
Here is a list of Ram Charan's biggest talent-management mistakes:
- Leaders not held accountable for developing talent
- Performance assessments without candor or focus on developmental needs
- Failure to drill deep enough to know best staffers well and put them into "stretch" jobs
- Top management's serious lack of time commitment and energy
- Placement of loners in leadership jobs
So, why all this in a blog about Exit and Succession planning? Charan's work is with Fortune 500 companies and our work is with companies under $150 million in revenue, most of them between $10 and $30 million. What can we learn from Ram's teachings? Owners of these small Middle-Market companies want to get the best price when they sell their companies. Sometime before they sell they either have made or will need to make the transition from and entrepreneur–led to a management- led company. The development of their Key employees and their ability to develop leaders within the organization will add tremendous value down the road.
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