Wednesday, February 3, 2016

The Challenges of Managing Different Businesses

Perhaps the biggest challenge for a CEO is managing different businesses, since it is not uncommon for a holding company to own a number of subsidiaries that may, or may not be related.   While each business may have a life of its own with different compensation plans and even personalities, it is the CEO's job to meld a common culture based on the company's core values.  And further, since resource allocations are always involved, the CEO is ultimately perhaps the only person in the company that can balance the interests of all employees, clients and customers, particularly when various managers fail to see the big picture because of a narrow focus.

Managing any business is about long term success, not short term gains.  Since there will always be business cycles where one business is up and another is down, it is important to recognize that we grow a company as a team, not as individual contributors.  That is never tested more than during bad times when tough decisions are required.  Long term employees get it always demonstrating business maturity.  Short term employees will never get it.

The fact is that in any company's history, there will be good years and bad years.  As someone who has successfully managed through multiple Recessions, the Dot Com Bust, 9/11, the lowest and highest interest rates in American history and the Fiscal Collapse of 2008, I can say that good managers perform best in bad times.  Bad managers are usually gone one way or another.  In managing different businesses within one company, it is critical to forge one company culture, while recognizing industry differences.

That culture cannot be built on selfish interests.  Though selfish interests may result in short term gains, they cannot be the basis for long term success. Further, while it would be great if it was the case for all employees, at a minimum, all senior managers must understand the big picture to bring value to a company.  It can't work any other way.

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