Where have all the managers gone?

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I had an interesting insight this week. It all started with a fleeting bout of nostalgia when I remembered the ‘good old days’ when our industry was almost clearly divided into two distinct sectors — small (micro) businesses and big (corporate) businesses — instead of the complex confusion we now have in our hospitality economy of businesses of all different shapes and sizes.

Ironically, I briefly found myself echoing the behaviour of my father, an engineer, who often rues the demise of the old craft metal trades when ‘we used to train them properly’ — only for me the nostalgia wasn’t for blacksmiths or toolmakers, it was for well trained, all round managers who can run an independent business in the absence of specialised support departments. They are becoming harder and harder to find. Outside the corporate sector, who is training managers now? It’s not that they’re no longer needed; the reality is more the opposite — we need a lot of them right now, but they don’t seem to be out there.

Any business owner who has tried to take a senior corporate manager and put them in charge of an independent business unit will tell you that this is at best a very risky move. It’s not that corporate managers are incompetent or anything like that, it’s just that they are trained to manage a different kind of business environment. For example, in a corporate environment if you need marketing support you call the marketing department, if you need repairs and maintenance you call the maintenance manager, if you have a problem staff member you call the human resources department, etc.

An independent business unit manager is a different bird entirely. To survive they must be a jack of all trades and have a workable understanding of all aspects of the business they are managing. They rarely have the luxury of skilled specialist support around them, and if they call for it from sub-contract suppliers it is likely to cost an arm and a leg and must, by absolute necessity, be used very sparingly.

I’ve come to the conclusion over many years of management training that independent business managers and corporate business managers require training that is quite different in focus — indeed, the required training is different enough to make it difficult if you have been trained in one sector to cross the divide and work in the other sector. I could summarise corporate management training as ‘specialist’, while the independent sector requires ‘generalist’ trained people.

The independent business sector in this industry is quite sizeable, so why are skilled managers so hard to find? Well here’s where the insight came in. I think it has a lot to do with globalization — that wonderful word that is being blamed for almost everything — only in this case I think the blame is deserved.

As international market forces come to bear, small and medium sized businesses are becoming less and less viable. As their viability declines, money becomes scarce and the need for tight management increases dramatically. Tight management requires well trained managers; but well trained managers require substantial investment. So we end-up with a vicious downward spiral of sorts — because of difficult economic circumstance, we need better management, but because of difficult economic circumstance we can’t afford it — and so the skilled labour pool diminishes.

For a lot of the independent businesses we deal with day-to-day survival is a far greater imperative than all else. Investment in the future is a luxury that many companies pay lip service to but precious few actually put their money where their mouths are, or if they do it is only for short bursts while things are financially stable. When money gets tight it all goes out the window. I know this from first hand experience because I run a training company, and when things get difficult training tends to be the first thing to be cut by all but the most far sighted business owners.

Meanwhile the corporate hospitality sector, which tends to be more focussed toward growth opportunities and which has economy of scale adding to profitability, keeps training it’s managers, but only to suit the sector’s own needs and particular business environment. In difficult economic times the sector will tend to purge expensive senior management staff, but at the same time keep training new people — for the future good times when they cycle around again.

Standing back and looking at the whole management supply and demand equation leads me to conclude that the current lack of well trained independent business managers will be likely to further erode the viability of a large section of our industry and hasten the agglomeration of the industry into fewer and fewer, larger and larger players.

I believe that in the not-too-distant future small hospitality businesses will go the way of the corner milk bar and the local butcher, and there will be fewer and fewer of them as time progresses. I suspect that the day is not too far away when a small hospitality business will only be viable if the owner or the owner’s family are prepared to put in long hours of direct labour. The option of growing your business and then putting it under management while you start another business unit will become much more risky as the pool of skilled managers further erodes over time.

Don’t be fooled by the legions of hopefuls out there who hold themselves out as skilled managers and who will try to bluff their way into plum jobs. Most of them will send you broke.

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