Finance & Operations

Attention CEOs: Avoid These 5 Mistakes

April 15, 2011

Startup founders and first-time bosses are typically very energetic, passionate, brave, and highly intelligent individuals. They tend to work well under pressure and possess an innate ability to think outside the box

Circled Subway 5

But that doesn’t mean their exempt from making some pretty common mistakes.

In this case, the mistakes aren’t related to their strategic aptitude or understanding of the business and its market. For some first-time CEOs and founders, the most common mistakes stem from managing people for the first time. The Wall Street Journal recently published an interesting article that spoke to those common missteps. The article highlighted the five most common flubs that first-time founders and executives make. For all of us experienced executives, it should be reminiscent of things that we’ve witnessed or, in some cases, have made ourselves.

According to the WSJ, the most common management flubs include:

  • Yelling at employees when they make a mistake. New business owners are typically experts on their product or service, not on managing people. As such, rookie bosses with a lot on the line sometimes lose control of their emotions when there’s a significant hiccup.
  • Failing to check for competence. Startup and early stage companies usually operate in fast-paced environments and it can be easy for first time founders to fail to properly train or check for competence in new employees, leading to conflict and confusion.
  • Lying to avoid hurt feelings. No one likes to be the bearer of bad news. But rookie founders tend to avoid it more than veteran executives. The truth is sometimes difficult to deliver, but it’s always better for the overall health and development of the company.
  • Blindly trusting workers. You can’t assume that everyone you hire will have the same professional standards that you do. It’s important to clearly state what is expected of employees and hold them to that.
  • Giving mixed signals. Rookie entrepreneurs are often used to worrying only about themselves and the company they’re trying to build. As they assume a leadership role, they sometimes learn the hard way that sending mixed signals will cause confusion (and occasionally contempt) among their employees.

In early and growth stage companies, people are the only strategic asset you have. They build and sell the product, support the customer, create the marketing content for your website, and run the operations for your data center. In other words, your people will execute your vision and strategy for the company. Keeping them happy in the workplace is becoming an increasingly strong indicator of employee engagement and productivity. A recent study by the Milwaukee Journal-Sentinel revealed that employees from the city’s top 30 companies valued overall happiness in the workplace over compensation and pay. Listed in order of importance to the survey respondents were:

  • Direction of the organization (78%)
  • Execution of the organization (74%)
  • Career opportunities within the organization (74%)
  • Conditions within and how people are treated (74%)
  • Management within the organization (65%)
  • Pay and benefits (53%)

And that’s not just true in Milwaukee. The results of that local survey mirror national trends. Inc. Magazine writer Issie Lapowsky penned a list of 10 things employees want most last August. Near the top were things like purpose, transparency, responsibility, autonomy, ability to innovate, and flexibility. Last on the list was compensation. One thing is for sure: compensation is often irrelevant if your employees feel unwanted, lied to, or don’t respect the company’s leadership. People want to work with leaders they can learn from and admire. As the CEO and founder of a company (even if it’s your first time in that role), it’s up to you to eliminate these types of rookie mistakes within your organization and across your management team. Doing so can go a long way in helping you attract and maintain top talent now and in the future.

Venture Partner

<strong>George Roberts</strong> is a Venture Partner at OpenView. He enjoys partnering with companies and helping them achieve their goals through strategy, focus and operational execution. From 1990 to 2003, George spent 13 years at Oracle Corporation, most recently having served as Executive Vice President of North American Sales. While at Oracle, George was responsible for over $1 billion in revenue and more than 2,000 employees, reporting directly to the company’s CEO and Chairman, Larry Ellison.