8 senior management positions a fast-growth company needs
Modwenna Rees-Mogg, founder of AngelNews, gives us her blueprint for getting the right people in the right positions
In the first part of Modwenna Rees-Mogg's excellent guide to hiring senior managers, the AngelNews founder looks at the value they can offer and outlines the roles you'll need to fill
For every entrepreneur running a fast growing business, juggling becomes second nature. Along with everything that needs to be done today, there's the team to manage, customer relationships to smooth, suppliers to chase and barter with, and a strategic vision to ensure you remain acute to how things must evolve to ensure profitable survival. Entrepreneurialism is defined by the ability not to let the balls drop.
But no man is an island, and great entrepreneurs have an uncanny knack of gathering around them, from the earliest possible moment, top talent to help them in their mission to grow their business. In the early days of AngelNews I benefitted massively from an informal advisory board of the top talent I could find; they were paid in beer and chips! And that is still the stepping stone I recommend to other young businesses trying to get off the ground without the time, money or, let's be honest, the size of business to merit actually appointing anyone to a C-level role.
Nevertheless, in my view, the top priority for an entrepreneur should be dealing with “the management issue”, which is why we created our Pitching for Management event series. It has become trite to say that a successful business is all about three things, “people, people and people,” but nonetheless it is a rule that holds. And it's a rule that angels, VCs and increasingly banks nearly always rely on. Every time you think you can struggle on alone, remember that for every Sir Alan there are Margaret Mountfords and Nick Hewers sitting alongside them. Take note and try to do something about it as soon as you possibly can.
It's the mix in the team that matters of course. As technology increasingly enables machines to undertake more and more mundane tasks, it has not meant that fewer people are needed. It means that even smarter people are required. And entrepreneurs need to embrace the challenge of finding the right blend of human resources which will give their businesses that critical competitive edge. At the end of the day it is the right allocation of human resources that makes the difference between reaching and staying at No.1, or handing over the crown to the competition.
How an executive team drives growth
I was speaking to PJ Darling, the founder of Spark Energy, the other day. He has grown a utilities business from scratch to £20m turnover in three years. It is clear that the senior team he has built around him has made, and continues to make, this growth rate possible. From the wise chairman – who leads the business, especially in managing shareholders relations, which in turn brings in the funding the company needs – to the senior operational personnel – many of whom were persuaded to join an exciting start-up in the utilities sector from some of the world's largest and most stable businesses – the team around PJ is what is making the business what it is. Getting that team right has been the reason Spark can manage the issues arising out of the incredible growth rate it is delivering. PJ told me that he is delighted that his first two hires are still with him, which says something, but more about that later.
Wise entrepreneurs know their limitations. One of the best pieces of advice I have received was from an entrepreneur who once lectured at London Business School. I cannot remember his name, or even the event at which he spoke, but I do remember that he said, to succeed as an entrepreneur, you need to “get rid of the tasks at which you are worst, first, and then keep on going until you only need to do the things which no-one else can do better than you”.
I also remember another entrepreneur telling me that you should always hire people who are better than you, especially at the tasks for which you are giving them responsibility.
Creating the right management team
Creating the right team is all about having the optimum mix of skills for the stage the business is at. Less can be better than more in the early stage of a company's life, and therefore it makes the challenge of finding the best people even more important. You also need the right type of people – in short, those who you can learn from as well as make use of. Most importantly, if you are a resource-stretched, fast growing business, you don't want to have to teach them their job. And there is no point in having a brand name NED if they are never around when you need them.
Of course it takes courage to devolve responsibility and, perhaps more importantly, the accompanying authority to make decisions. And deciding in whom you can trust to help you “bring up your baby” is a big issue. What roles you want filled and what type of person should fill them are two issues that have challenged business owners for generations and has spawned the entire headhunting industry, so don't imagine that you will find it easy to buck the trend.
Then there is the issue of how you reward your nascent band of senior managers, especially if you are a cash-strapped business trying to juggle employment costs with production, sales, marketing and more.
Before giving you a few tips on how to build the right senior management team, here are some key reasons for why you need to fill the following roles sooner rather than later.
The right individual will be so much more than just a “big name” figurehead. He or she should have been a chairman before (after all it's not your job to train the chairman in the role they are to fulfil, and you are unlikely to have the capacity to permit them to experiment on your business).
Chairmen act as one of the key external facing representatives of your company – especially in the context of investor relations. A good chairman will help you find and then keep your investors up to speed and happy. He can be pulled out to give you gravitas at key meetings with customers, and suppliers too.
But crucially, he can act as the glue that binds the team together – managing different interest groups and working to achieve outcomes which are to the overall benefit of everyone.
Yes I know you may be CEO now, but should you be CEO in the long term? Many an entrepreneur trips up here, but for a remarkable number of them, they should move aside from this position as soon as possible and focus on their own strengths, which are often around technical expertise or business development. Getting the right CEO is critical, and make sure you appoint someone who can grow with the business, has the right attitude towards strategy, is a great people person, can work like a dog, and most of all respects and values you.
The Sales Director
Not to be confused with the marketing director. Sales directors bring in the customers. These days sales is a particularly sophisticated business. A good sales director will know all the tricks of the trade to optimising the volumes of cash that can be obtained from your customers and provide vital input on what customers really want from you, rather than what you may want to give them.
A great sales director will also be an expert manager, and give you unbounded help in building a sales team that can support your exponential growth. Often from the industry you are operating in, it's vital to look at their underlying skills and match them to your specific plans for growth, rather than just relying on their “industry knowledge”. Sales directors will have a major impact on the culture of your company, so bear that in mind when hiring them.
Remember a great salesman will always accept a heavily commission-based remuneration package. If someone demands a high salary, the rule probably holds that they do not in themselves believe they can bring in the sales you will be expecting from them.
If you need anyone, you need someone with a strategic hunter killer mentality. Look for someone who knows your target customers and knows how to sell to them time and again, but who also has ideas about who else your customers might be.
The Marketing Director
Marketing directors will have a major impact on how your company is seen by the outside world. By default this means they have a major impact on how your company works internally.
Remember marketing people spend your money and only indirectly make you money. This is the polar opposite of a sales director whose job is to bring in the cash.
Whilst the intrinsic skills required of a marketing director remain the same, bear in mind that the rapidly increasing importance of social media, AND how it interacts with traditional marketing channels, means you must find someone who knows how to help you address this challenge. For that reason don't dismiss younger marketing people in the interview process. Marketing people need to be great strategic thinkers and be very nimble. The best will have a strong mathematical bent and will truly understand phrases like “return on equity”!
The Operations Director
At the end of the day, if you cannot get your product or service to the customer when they want it and in the form they demand, you won't keep them for long. So a good ops person will make or break your business. This is a role where skills rather than industry knowledge should take priority.
The Finance Director
A good FD or even financial controller will stop you going bust. A great FD will make you richer than you could possibly have imagined. You need someone to do this job for you from day one, even if it is on a subcontracted once-a-month basis.
Many investors will demand that an experienced financial controller is in place before they will invest. If you follow that route, make sure that you know, and make clear to the individual, whether or not you see them moving into a full FD role in due course. Even with a good FC in place, retain the services of your auditor to support this role until a full time FD is in place.
Once you hire your FD (and this is one role that is frequently part time until the demands of the business require it to move to full time) remember there are many different types of accountant, from chartered accountants to management accountants. Stress test the individual carefully to make sure that you get the person with the right skills you need. Don't be afraid to give them the VAT return test – if they have never had to fill in a VAT return, they are probably not right for you until you have several £000,000s, if not £ms, of turnover.
The HR director
Often one of the last roles to be handed over by the entrepreneur, this is a role that needs to be taken very seriously. Expert knowledge of employment law is a must, and a good HR director will also be able to help with internal team structuring. Perhaps this is a role that could suit the finance director, or the chairman, until you are ready to hire specifically for the role. Alternatively, consider contracting with an outsourced HR business to do the job for you.
The role of the non-executive director (NED) can be varied, but challenge yourself if you think that a trophy name is what you really want. What you need in a NED first and foremost is “someone who is prepared to go to prison for your business”, as one headhunter at Norman Broadbent succinctly put it to me recently. He or she needs to be a wise adviser and not someone who interferes with day to day management. Make them aware that being “non-executive” does not absolve them from exactly the same legal obligations as the executive directors. Set in place from day one a rule about non-attendance – e.g. if they miss more than three meetings in a row they will be expected to depart from the business forthwith!
Remember the right blend of NEDs will be very different if you are planning a flotation or a trade sale, or just to become a private cash cow for yourself and your fellow shareholders, but whoever you appoint, you need to make sure they are independent thinkers and also discrete and tactful.