How often have we seen ineffective leaders in senior level positions? Likewise, how often have we seen a manager that demonstrates exemplary leadership skills? A question many of us probably don’t ask ourselves enough is: what is the difference between management and leadership? Without careful consideration, many of us would probably naturally question if there really is a difference.
Why is it important to distinguish between leadership and management? In dealerships, the practice of positioning people in roles that do not match their strengths is quite common.
“When hiring for key positions in the dealership, success is dependent upon identifying the difference between a leader and a manager, as their motivations and expectations for the future vary greatly,” says Suzanne Malo of DHG Search.
“In dealerships, the practice of positioning people in roles that do not match their strengths is quite common.”
It’s even more common to feel stuck in not knowing how to re-position such employees that will better facilitate their success. Therefore, good people either end up leaving the dealership out of frustration, demoted or even potentially terminated because they aren’t fulfilling expectations. Ultimately, these issues impact organizational morale, increase turnover and impact organization-wide performance.
Understanding the Differences
First, we start with understanding that certain individuals require and should have different skills and competencies. Let’s look at a high level overview of leaders vs. managers:
- Leaders have the ability to leverage information, expertise and goodwill to inspire and motivate teams towards the dealership’s and dealer group’s strategic vision.
- Managers use positional power (authority, reward and discipline) to direct teams towards the fulfillment of the manager’s vision.
In its most simplistic view, a leader leads a team to work towards the common good of all. It is more about the strategy of getting there. Where as a manager is focused on their individual contribution and how to simply get the task done. The motivation of the leader is “we,” and the motivation for the manager is “me.” If the manager is passionately in-line with the strategic vision of the business and emotionally aligned with team members, he/she demonstrates leadership and the finite difference between a leader and manager dissipates. However, once there is misalignment, a manager can take your people off course and create a confusing and frustrating business culture.
To gain a full understanding of your leadership and management bench, it is critical to determine your B.A.S.K.E.T and leadership criteria for every significant role in your business.
|B. A. S. K. E. T.
|5 C’s of Leadership
Once you know your golden mix of BASKET and 5 C’s of Leadership, you should evaluate your people. During this process you will likely identify managers with great leadership potential and people in leadership positions who do not fit your strategic vision.
“A manager does not have to be a leader and a leader does not have to be a manager. The best combination, however is that managers are leaders and that leaders are managers,” says Loyd H. Rawls, Founder of The Rawls Group.
As Loyd’s comment reflects, this process can be a confusing and emotionally draining process to work through, a third-party facilitator can provide an objective perspective and strategic vision to position your people for personal and business growth.
Identifying Your Leaders
Now that you have identified your rising and shining leaders, which we refer to as “key managers,” the next step is to determine their individual impact on your business based upon their collection of strengths. Where they all may meet your management/leadership criteria, each carries more or less significance to the performance, operational and overall success of your business. With this in mind, there are three classifications of key managers:
- Key Managers – organizational role models for dedication, hard work, core values, loyalty and commitment.
- Special Key Managers – proactive, energetic, multi-tasking, creative movers and shakers who are significant operating assets to your organization.
- Very Special Key Managers – rare and extraordinary managers and leaders that have a profound impact upon the productivity and value of your business.
By identifying and understanding the different classes of key managers in your organization, you can effectively align each manager’s priority with an appropriate development and retention structure. You can strategically motivate them to make a long-term commitment to the growth and, ultimately, the success of your business.
So how do you motivate your key managers? Let’s take a look at some recommendations:
Generally working within a well-defined job description and management comfort zone, key managers generate extraordinary performance. For this reason, security based recognition of their hard work, loyalty, commitment and competency works well. Motivation and retention incentives should include compensation plans that offer regularly adjusted, security-oriented salary and production incentives constituting a minority (20%) of their total compensation. A retention recommendation would be an incentive structure based on a supplemental executive retirement plan (SERP) that acknowledges tenure and the amount of production, not the profit generated from the production.
Special Key Managers
Not needing oversight and exceptional team leaders, these managers understand and respect organizational core values, but are focused on results. Recognition of their influence and impact in your business is a recommended reward. Motivation and retention incentives include variable compensation plans that acknowledge their impact on productivity and public acknowledgement. Connecting with their entrepreneurial spirit with affirmation of participation in a Management Advisory Board (MAB) or a collaborative group gives them an opportunity to showcase and share their strengths.
Very Special Key Managers
A leader who significantly impacts the direction of the business with access to adequate resources to achieve goals, Very Special Key Managers are uniquely driven and motivated. Recognition of their value is a key form of reward. As for motivation, these managers are traditionally focused on equity ownership in the business. Therefore, as a business owner, you should consider doing everything reasonable, including the sale of, or the option of gifting stock or offering stock as part of a bonus structure.
The identification, motivation and retention of key managers is essential to building the value of your business, sustaining performance and the achievement of your strategic business goals.
“If not investing in attracting the right individuals to manage, as well as those to be your future leaders, the impacts can be detrimental to the future growth of your dealership,” says Suzanne Malo of DHG Search.
Remember – aligning the role and incentive with the appropriate person and right type of key manager will have a significant impact upon your ability to motivate and retain them for the long term. While there is no one way to lead a business, some of us just naturally do it better than others. Understanding the various manager styles and what motivates them will inevitably help you identify the future leaders of your business.