Micro-management and backing executives into a corner

The difference between micromanaging, intrusion and appropriate questioning is not well defined and can vary from person to person, organisations to organisations.

What really defines micromanaging is not whether a manager is digging into small details. It’s really a question of which details and for what purpose. Is the manager scoring points, making a small point, nit-picking on minutinae and expenses? Clearly, the manager believes they are drilling down into the details, where the devil lives and that will help reveal a higher-level issue; detecting risk or a structural change, getting to the real root cause of a problem, or questioning the overall effectiveness of a specific process?

Asking questions of an operational nature, is not in itself micromanaging, as long as the questions lead to pertinent insights about issues like strategy, performance, major investment decisions, key personnel, the choice of goals, or risk assessment.

Probing a decline in gross margins, or rise in expenses, etc., can easily be seen as trivial but in industries like office supplies or personal computers, where gross margins have taken a beating over the last ten years, managers may be correct in trying to discern whether the decline is symptomatic of a fundamental shift in the industry and whether the strategy has become obsolete.

The key lies in the analytics of working backwards, to link the operating details directly with strategic issues. For a mobile phone service provider and ISP, subscriber churn rate is an operating detail with very strategic importance.

The board of a telecommunications company that approves a multibillion-dollar project to lay new cable has a stake in knowing how the implementation is going. The project’s success might depend heavily on assumptions management made about attracting and retaining targeted high-revenue customers.

The board will want to dig into details about how many customers are willing to pay a premium for voice, video, and text combined. Are a sufficient number of customers coming on line on schedule? What percentage is staying with the company? What is the monthly churn, or turnover, in customers and what is the average customer bill?

In these cases, operational details are an important microscope for tracking the effective execution of the strategy and gauging how well it is working. These items materially affect the business going forward.

When a manager picks up on a small point and challenges it simply to demonstrate their power and ego; for the sake of showing who is right or what could have been done differently, or when a manager attempts to make a decision about operations, or individual people, then you can raise the alarm and accuse that person of micromanaging.

This typically happens in the area of the manager’s previous expertise and can be driven by a personal need to demonstrate superior subject knowledge or that they 'still have it.'

The way in which a question is worded can also indicate or reveal whether a manager is micromanaging. The difference lies in how the executive could respond. Does the inquiry put paint the executive into a corner, instead of shedding more light on a subject and opening the door for a broader discussion?

In Q2/Q3 2007, most boards across the globe were keen to learn how management was responding to the steep rise in commodity prices and the impact on margins. Many boards debated the potential impact on margins and what could or could not be passed on to customers. That was a very vital discussion to have.

A micromanager will initiate the discussion of pricing by lecturing long and hard on their personal experience in dealing with a price increase, implying that the executive in question lacks the courage to address the issue. This implies that management can do it if it has the will or the guts and is more of a challenging ultimatum than a discussion point.

Another more constructive approach, is to say, “I’m curious about several aspects of inflation and our pricing strategy. What is our process of adjusting prices as inflationary conditions change? How are decisions initiated? Who gets involved and with what tools? What training is being given to people who are looking at pricing and to the sales force that brings it all home? Are the regional sales managers buying into it?”

This lets management explain what the company is doing and what alternatives it has considered, an explanation that is likely to include topics and issues that the manager had not known of.

The manager's comeback, “What benchmarking are you doing to improve pricing processes and reduce our exposure to margin compression? Are there any strategic implications that the board needs to learn about?” In that way, the manager opens a door to several possibilities without insisting on his own chosen course of action. It also opens the door for other managers to join the discussion.

This open style of questioning becomes an imperative when the company is highly leveraged and commodities prices increase several times in a year. It gives managers flexibility and an insight into whether the company has the organisational mechanisms to move and is not awaiting orders from the top.

The difference in approach has a profound impact on the boardroom dynamic. Asking questions at the right altitude, with the right tone, and about the right things refocuses management’s attention while respecting the executive’s decision-making authority.

It is, after all, management’s job to deal with the margin compression and decide on its pricing practices, not the board’s. The board is there to make sure management has a plan and that it is executing that plan.