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News & Articles

Jan 1, 2012

The Missing Middle Management Issue

Posted by: Joy Klitzke - 01/01/2012 12:00 AM (Articles, Farm Equipment Industry, Lighting Showroom Industry, Marine Industry, Motorcoach Industry, Office Furniture Industry, Powersports Industry, RV Industry, Trailer Industry)

NAEDA Equipment Dealer
By David Spader & John Spader

Lack of strong middle management is one of the most common issues we see when working with equipment dealers around the country. As dealerships grow through market expansion and/or mergers and acquisitions, the need for stronger middle management becomes crucial to the company’s longer-term stability and success.

For more than 30 years Spader Business Management has studied effective growth patterns in dealerships. One of the keys related to successful growth is to understand the four employee “segments” and how to structure each segment with the appropriate focus, authority and responsibility.

The Four Functional Segments:
1. Front-line production
2. Supervisory and specialized support (task management – what most “managers” are really doing)
3. Department management (managing the people and processes in the department), and
4. General management (focusing on the company’s culture, vision and strategy)

Correctly structuring the supervisory and department management segments are often key differentiators in higher dealership performance, giving dealers the ability to control growth and manage risk effectively while maintaining strong profitability and morale. Why is there a strong correlation between an effective supervisory/middle management segment and dealership performance? Middle managers are the ones truly managing the people and processes, where the “rubber meets the road” in most dealerships.

Here are just a few of the differences between effective structuring of this middle management segment compared to the same aspects implemented less effectively:

Middle Managers at Higher Performing Dealerships

? Create their own budgets (with senior management approval) and see them as a critical scoreboard that guides action
? Religiously complete deviation reports to monitor actual results compared to budget 
? Understand forward forecasting and leading indicators and constantly revise their targets proactively 
? Are given the authority to make hiring, firing and personnel decisions 
? Have the authority and good systems for personnel development and effective performance reviews 
? Etc.

Middle Managers at Average or Under-Performing Dealerships

? Provide input on budgets but may not fully understand them, or are simply given budgets (or no budgets are prepared at all)
? Are given deviation reports or don’t get them
? Are reactive in changing the game plans and follow lagging indicators
? Require senior management approval before hiring, firing and personnel decisions
? May not be comfortable developing people and may lack the skills to coach employees effectively; have a tendency to do the work personally instead of effectively delegating
? Etc.

Which column best describes your dealership’s middle management? Go back and place a check in the boxes that best describe your dealership. You can do this for individual managers, departments and locations.

Why do so many middle managers struggle with this transition from “doer” to “manager?” Research shows that large numbers of middle managers simply don’t know what to do or how to do it. Many employees in middle management have come up through the ranks because of their capabilities as individual performers in sales, service or parts. As a result, they may rely too much on the abilities that made them successful in their former roles. They can have a tendency to do the front line tasks of their departments themselves, especially in the absence of training in effective management practices. In addition to this transition from “doer” to “manager,” few middle managers really know how to do some of the new tasks that come with being a manager, like creating a good profit plan and explaining it to the people in their department to secure buy-in. They often have had no training in good hiring and development practices, which are keys to their success in this people-based role.
Higher performing middle managers have learned that their job is not to solve all problems for their employees by demonstrating their own skills at the front-line tasks. Their success is ultimately determined by how well they develop others.

When middle managers aren’t doing their job in terms of budgeting and people management, who do those tasks fall to? Senior leaders simply can’t do all the management themselves in a growing equipment dealership, and we see many becoming “burned out.” Does this describe your dealership? If it does, what are you going to do about it?

Remember, one definition of insanity: Doing the same thing over and over again but expecting different results.

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