15.06.2023 Feature Article

Well Paid Managers vs. Poorly Paid Managers: An Analysis of Management Remuneration on Business Operations

Brian KazunguBrian Kazungu
15.06.2023 LISTEN

Managers are the link between the business owner, subordinates and other stakeholders and therefore, they are instrumental in determining the organisational mood which the subordinates can reflect to those stakeholders in turn.

Before we engage in a detailed discussion of how a manager contributes to the success or failure of an organisation, we need to firstly understand the art of management.

I can describe management as the effective, progressive and harmonious integration of factors of production towards attainment of a set objective.

Management can also be described as a process of accomplishing an objective through planning, organising, demonstrating, controlling, coordinating and continuous maintenance and upgrade of the available systems and resources.

This means that for a goal to be met, someone has to do the planning and this entails putting mechanisms in place in order to take advantage of the opportunities and guard against threats.

After opportunities and threats have been identified, resources have to be put in place in a way that ensures the smooth flow of activities towards achievement.

This brings us to Organising, which is the correct positioning of every resource in its respective place in order for it to achieve its intended objective.

When these resources have been put in their respective positions for generating maximum benefit, there has to be a mechanism to ensure that every resource is measuring up to the set expectations.

If there is a discrepancy, an investigation has to be done to find out the causes thereof and then make the necessary adjustments. This is called controlling.

People with the requisite skill and expertise must be selected to make sure that they set the pace and mood for achievement. This setting of pace and creating the good mood towards achievement of goals is called demonstrating.

The people in an organization and other resources must be made to work together in a way that minimise friction and enhances efficiency regardless of inherent differences. This is called coordinating.

Put simply, a manager is a person who plans, organises, demonstrates, controls and coordinates the activities of a given entity for it to achieve its goals as explained in detail above.

Poor remuneration to such an individual can lead to poor products and services as well as inefficiency which in turn affects the profitability and reputation of an enterprise.

You must always bear in mind that a business’ profitability hinges on increasing revenue and minimising costs but this must not be done at the expense of the relevant stakeholders.

The methods of minimising these costs must be approached with care since sometimes cost reduction in the form of poor salaries for management can lead to poor product quality and poor service delivery as well as unscrupulous activities.

Some entrepreneurs tend to enjoy the good life brought by increased business activities while forgetting those people who make it happen.

As the business grows, the span of control increases and therefore the proprietor should find it worthwhile to proportionally reward those in charge of the business activities.

When the managers feel neglected and deceived from not receiving a commensurate reward, they may reduce their effort or quit the organisation.

When this happens the business will start to feel the pinch as most managers have an influence on staff members and stakeholders.

Poorly paid managers can be the most dangerous people in the organisation since they can engage in corrupt activities and can manipulate organisational data for their own benefit in a way that is difficult to trace especially when there are no proper systems in place.

The three most common routes that poorly paid managers can take in an organisation are:

1) To quit the job
2) To engage in corrupt activities
3) Poor performance.
Whichever route is taken is equally dangerous and can quickly lead to a company’s closure.

When a manager quits, this can result in losing valuable expertise that was very instrumental in propping the business forward and this might cause you to engage the services of an inexperienced or unqualified individual.

This engagement of a wrong or poor management team is dangerous to the wellbeing of an enterprise because of its lack of the necessary tactics to plan, organise, coordinate, demonstrate and control the organisation towards achievement.

According to David Skok, five time serial entrepreneur turned Venture Capitalist at Matrix Partners, a poor management team is one of the reasons why Start-ups fail as described below.

Poor Management Team: An incredibly common problem that causes start-ups to fail is a weak management team. Weak management teams make mistakes in multiple areas:

  • They are often weak on strategy, building a product that no-one wants to buy as they failed to do enough work to validate the ideas before and during development. This can carry through to poorly thought-through go-to-market strategies.
  • They are usually poor at execution, which leads to issues with the product not getting built correctly or on time, and the go-to market execution will be poorly implemented.
  • They will build weak teams below them. There is the well proven saying: A players hire A players, and B players only get to hire C players (because B players don’t want to work for other B players). So the rest of the company will end up as weak, and poor execution will be rampant. (Why Startups Fail by David Skok).

So, as an entrepreneur you must learn to value your management team and make sure that you reward them adequately when the business is registering success. Those good managers that you tend to lose because of poor working conditions are likely to end up working for a rival company or they can start a rival company on their own.

In most of such instances these managers have been known to move along with their subordinates and customers in one way or the other.

So, this development has got multiple ripple effects which would be difficult to stop but this situation can be corrected by continually reviewing the benefits of the people who make the business to grow.

When they feel neglected and there seem to be no platform for addressing these issues, these managers can somehow expressly or implicitly connive with the subordinates on a number of issues which would affect the company.

You must therefore be humane, considerate, focussed and disciplined in your business affairs because there are always people who are watching and getting ready to take advantage of your weaknesses and oversight.

Although the issues of management salaries and benefits is overlooked in some start-ups, it must however be noted that it can really affect the business dramatically.

As a business owner, you must understand that when business is expanding it is an added burden to those who manage it and therefore they also deserve a relatively added benefit for the added tasks.

The people involved in overseeing the operations and expansion of the enterprise must also be made to feel recognised in the company’s achievements.

When such people feel neglected in an environment where there is competition they are likely to be lured by either new players or even by big players who would want to expand in the same market.

You must understand that managers are always subject to regular temptation by conmen, rival companies and other various stakeholders.

As such, they should therefore be made to see the benefit of defending the company through thick and thin by receiving their dues and being treated with respect.

Adapted from The SME HANDBOOK written by Brian Kazungu

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