The best and worst job in the company is general management
April 26, 2022
by Lance

Being a General Manager (GM) is either the worst or best job in the company, depending on your internal wiring. As I was taught by Dennis Fortino, the most important word in General Manager is “general.”  The General Manager must balance the perspectives of all of his or her direct reports, solid and dotted line.  As you walk down the corridor from the General Manager’s office, you will see the offices of the Controller, Marketing, Sales, Engineering, Operations, Service, and Human Resources. While the first job of the General Manager is to get superstars in each of these positions, the reality is that this (almost) never happens. Thus the General Manager has to coach and shore up whatever area is weak.  My rule of thumb is that if the General Manager knows your job better than you do, then your job is at risk—you had better get deeper into your job ASAP.  It may be the case that the GM could do your job better, that is ok, but you are supposed to be doing it 100% of the time and he or she can only spend 10% or less on it.  So get deep and make sure, through competence, that your boss doesn’t have to do your job.  This generalization is true all the way up and down the organization.  Each functional manager reporting to the GM must try to simultaneously represent the view of their function yet work as part of the management team to optimize the whole.  It is an inherent conflict that some manage better than others.  General Managers become particularly worried about direct reports who become too “tribal,” that is too focused on their team to the exclusion of the division, because they worry that they are not working for the whole company and they also worry whether or not the employee is promotable. If someone does not show respect for their peer groups today, it is difficult for that person to lead them tomorrow because leadership requires trust.  Those that do their functional jobs best can clearly articulate the impact of any potential decision on their team and then on the whole division so that all of their peers and the GM can understand, and then they take their functional hats off and recommend what is best for the division and company.  Not easy.

Because of this, the General Manager has to lean particularly on two dotted line reports that have no agenda other than that of the company: finance and human resources (HR).  These two rabbi’s need to excel at keeping discussions with the General Manager in the strictest confidence (as long as it does not jeopardize the company) or they dramatically diminish their usefulness.  A finance or HR person that gossips should be fired.  The GM job is very lonely.  Without a consigliere, it gets much harder and more dangerous.  The Controller and HR Generalist must also make sure not to become consumed with transactional activity or they won’t have time to do their real jobs.  I have seen cases where a HR Generalists worked in their office with the door closed; how can that be right?  By the way, the other great, but sometimes overlooked, resource is the Administrative Assistant.  It is important to pick someone for this job that is easy to talk to (not the same as someone who spends their time gabbing) so that they can feel the pulse of the organization.  This provides another window into the human part of the organization for the astute GM.

Note that the Controller and HR Generalist must never get confused as to where their ultimate loyalties lie—to the company.  For instance, if the Controller “goes native” and becomes more loyal to the division than the company, he or she becomes a liability to the GM because life is hell if the VP of Finance cannot trust the numbers coming from the division.  This is one of the reasons Finance frequently rotates Controllers.

Because the GM does not typically have a balanced team, he or she must guard against unbalanced decisions.  A simple example is in the master schedule meeting.  If the salesperson is too strong relative to operations, there will be a tendency to overbuild, creating inventory, lowering the return on invested capital, and risking excess and obsolete material write-offs.  If the reverse is true, the tendency is to go the other way and lose market share because of an inability to meet customer demands.  It is a sin to lose a sale because of lack of units.  The GM walks a knife edge in this respect.  There are three big places where a GM can quickly lose their job: in the master schedule meeting (the heartbeat of the factory), in program execution, and by harassment or other improper behavior; the first two because of their huge financial impact, the third because of its enormous human impact.  Note that the company cannot afford to keep a GM in a job once they suspect the person will fail—the job is just too vital.  And I do mean “suspect.”  Senior executives have learned a long time ago that they far too often live to regret moving too slowly than too quickly.  No effective executive will wait for all of the data to be in and be conclusive.  Firing GM’s is not a seven step process.  Sorry.  That is why good executives and General Managers need to have tons of experience—their chances of being right with fast “gut” decisions are much higher if they have seen similar situations before.  This is why new General Managers are so dangerous.  Our CEO often said that every new GM would cost him at least $5M in bad decisions in the first year.  (I cost a lot more!)  If you want to be a General Manager, you must seek to collect as many diverse management experiences as possible.  Know that the bias of the executive team is to demand a lot more experiences than you are probably thinking are appropriate.

Since the most important word in General Manager is “general,” it is obvious that having experiences in all of the key areas, finance, marketing and sales, engineering, etc., is a prerequisite.  For instance, it is best if engineering managers spend time in marketing and operations (which of course they do not want to do).  Sometimes we give the GM candidate a pass on one area, e.g., operations.  We never give the GM candidate a pass on strategic thinking.  A great exercise for the aspiring GM is to be in charge of the division strategic plan at least once.  For the equipment business, I think every GM candidate needs to have run a product development through its various phases.  This can span one product or, better yet, many.  Product development management is a great training ground for general management since its cross-functional responsibilities make it essentially a mini-General Manager position.  The aspiring GM needs to have taken at least a finance short course (profit and loss, balance sheet, cash flow, return on assets, net present value, etc.) and must have had extensive customer interactions and developed significant customer relationships over long periods of time.  We look for proven judgment and an ability to deal with reality like it is.

In today’s workplace, an increasing number of these functions are dotted line, which makes the job somewhat more difficult.  For instance, as the semiconductor equipment business matures, we are pushed to become ever better at operational excellence.  Operational excellence is a fancy word for improved productivity, which in turn means fewer people effectively doing more work. Every organizational structure optimizes something.  What the company is trying to optimize governs what should be solid line (direct report) vs dotted line (influence). Let me give one example.  If a company is focused first on differentiated products and second on operational excellence, we can assume that the essential functions that a GM must have solid line reporting to him or her are Marketing, Program Management, and System Engineering.  Everything else is optional and properly subject to the grinding pressures of efficiency.  As we look to the future, international and multicultural experience will likely become more of a requirement for business leadership.

The new General Manager must quickly assess his or her own weaknesses.  This should be easy since there are usually lots of people willing to point these out.  In my experience, even new direct reports that were formerly peers will join in because they realize that their success is now linked to that of the new GM.  A quick 360 evaluation, ideally including customers, provides a ready diagnostic tool.  Then the new GM must compensate for weaknesses and eliminate disqualifiers.  For instance, my weakest area was customers—so I quickly did 220,000 international miles seeing and listening to customers. Please keep in perspective that everyone makes their career based on what they are best at.  If you are good at technology, get better at it.  If you are good with customers, get better with customers. This is where most of your efforts should go throughout your career.  As for what you are relatively poor at, you just need to prevent this from being a disqualifier.  Unfortunately, as you rise in the corporation, the threshold for what is a disqualifier gets less and less forgiving.  Going from a relatively one-dimensional functional job to that of a general management job is one of the transitions most likely to expose new disqualifiers and that is one reason why it is so dangerous, and so exciting.

Of course there are compensations.  The General Manager runs the business.  With oversight yes, but basically the General Manager is captain of the ship.  By analogy, the admiralty and commander-in-chief are far away.  The General Manager will make dozens of uncontested decisions each day.  If you want to be in the nexus of strategy and action, this is the place to be.  Your BlackBerry will be crammed with crises when you wake and emotionally explosive issues will plague your sleep.  But if you are jazzed by multidimensional Gordian problems, if you love combat, if careening from financial issues to human resource issues to customer issues within a space of 60 minutes excites you, there is no better job. If you like thinking about strategy in the morning and tactics at night, you are in the right place.  (But don’t let the urgent overwhelm the important.  This is particularly dangerous in the age of the BlackBerry.  Take time to think!)  Unlike the CEO job, the General Manager is largely shielded from the board of directors, financial analysts, Sarbanes-Oxley, SEC investigations, and so forth.  The General Manager’s is a pure job—take your army into the field and win.  But if worrying brings on ulcers and laying off whole teams (I have had to do this twice) gives you heart palpitations and nightmares, find a different job.  (On the other hand, if it doesn’t bother you a lot, you should definitely not be in the job.)  Aside from all of the natural disasters, some of your customers are actually sophisticated enough to profile you and target actions designed to create anxiety for you just so that they can have a marginal advantage in some negotiation.  Sweet.

It is worth spending a minute discussing potential rules for putting Divisions together.  The key challenge is not killing the small division by putting it in with a large.  For me, the Ocom’s razor is whether or not the Division General Manager will view the new addition of the smaller Division as an opportunity or as a burden. In general there needs to be operational synergy, strategic synergy, or passion.  For operational synergy, pick divisions of similar size.  Never combine if a burden.

An essential skill the General Manager must practice is the deep dive, even in areas where the GM is not knowledgable.  Sometime I see a General Manager go too much with their strengths and spend too much time with the areas they understand most.  Given the General Manager’s integrating charter, this is a mistake.  It is impossible to know every detail in the division, but the General Manager should follow his or her intuition (and coaching and internal intelligence) and dig deep in areas of importance.  Cultivate truth-tellers.  Some employees will tell it like it is regardless how lofty your position.  Such people are invaluable.  Listen to them.  How deep should you dive?  As deep as you can go.  Every time you do this it improves your intuition about your business and the people you have running it.  It also sets the right example.  In virtually every case you are guaranteed to find something awful.  Don’t get discourage.  Turn it into a teachable moment and go on.  Everyone gets better.  Given that you are guaranteed to find turds, pick areas that are important.  And what if it is an area where you have little experience?  That’s simple.  It is the obligation of the GM to demand that the team explain things so that he or she understands it.  It is ok to ask stupid questions.  As my hero Ken Levy taught me, if someone cannot explain to you why something is true so that you understand it, perhaps it is not true.  Now each of us have intellectual limitations that prevent us from going as deep as some other human beings.  For instance, there is math that I just cannot get.  It is not a question of trying harder—I am no more capable of “getting it” than is my goldfish.  But such situations are far and few between in business.  Indeed, if a concept is so hard to understand, how can one expect a whole team to work on it?  And almost nothing in business is done by one person.  So if you are General Manager, do not let anyone ever intimidate you out of challenging their knowledge and reasoning.  If you are working for a General Manager, understand that these inquisitions are not an issue of lack of trust—it is an obligation that comes with their job, and every other management job too.