Last year while reading the Orlando Business Journal I came across a one liner that read, “the sign of a good leader is when the business runs as smoothly when the leader is in the business as when he or she is out of the business.” As a succession planning professional dedicated to impacting lives and perpetuating family business legacies, this quote resonated with me. While it occurred to me that the title of this article sounds like a quote from Johnny Cochran, the hub and spoke approach to management and leadership impedes the business’ ability to operate smoothly when the business owner (the hub) is away from the business. And from a succession planning perspective, this can be devastating!
The term “hub and spoke” refers to a management or leadership style whereby all information flows through and decisions are made by one individual, the hub. The spokes represent the employees who come to work every day, fulfill a specific role and contribute to business success as defined by the hub. Hub and spoke management is customary in fledgling businesses where the business owner is forced to wear several hats in an effort to survive. However, the hub and spoke approach is also prevalent among business owners who want and feel the need to be in control. These individuals believe no one can do things as well as they can and often times subscribe to “if I want it to be done right, I am better off doing it myself.”
As with most things in life, there are pros and cons to managing and leading via hub and spoke. Some of these repercussions include:
- Business growth is limited to the owner’s capacity
- Business decisions do not get made in a timely fashion when the hub is away
- People development is inhibited since employees are not empowered to make decisions
- Employees are reluctant to make decisions without seeking permission
- Hubs have a tendency to overextend themselves and get bogged down in operations
- Hubs tend to micro-manage which results in a perceived lack of trust among employees
- Business frailties are masked
Throughout my career, I have encountered many successful businesses that have been quite profitable and have thrived while the hub was actively engaged in the business. However, when the hub is no longer available (premature death, disability or mental incapacitation) the sustainability of the business is in question. So is the value of the business which could have a profound impact on the owner’s family’s financial security. If you are one of those hub and spoke, bullet proof business owners who intends to sell your business and ride off into the sunset, think again. You represent much of the value of your business so it is highly likely the purchaser of your business will require you to stick around for two to five years to assist in the transition. In order to maximize the value of your business, you must begin to effectively delegate to your employees. Develop specific job descriptions for each key employee which will enable you to coach, train and mentor several important people to take over your responsibilities. Just as a wheel will not turn without a hub holding together the spokes, you must replace yourself with an equally effective hub. The new hub may be made up of one key person or several key players.
So, ask yourself today, how well does my business run when I am away? Perhaps this is the time to make your business less dependent upon you. Begin making strategic and deliberate changes that will help take your business to the next step in the succession ladder. Don’t be the hub and spoke that chokes!
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