The ten management secrets of a hyper-successful entrepreneur

29 November 2017 -

The man who built one of Britain’s top engineering companies insists it’s gritty management skills, not entrepreneurial flair, that underpin success

Charles Orton-Jones

What does it take to grow a company from zero to 1,700 employees? Chris Rea knows. He founded AESSEAL in Rotherham in 1981. Since then it has recorded 35 consecutive years of growth.

Today it sells to 104 nations, operating from 230 locations. It’s won 13 Queen’s Awards for Enterprise, and an OBE for Rea.

AESSEAL produces high-tech mechanical seals used in pumps and rotating equipment. The company is one of our elite manufacturers – a national standard-bearer, alongside Dyson, JCB and McLaren.

Despite his company’s achievements, Rea doesn’t regard himself as an entrepreneur. “I am good at managing the unknown,” he says, “and even better at getting everybody else to do all of the work.” In other words, he’s a highly effective manager.

So how do you work your way from a quirky start-up in Yorkshire to a global behemoth? We got a rare opportunity to sit down with one of Britain’s top business leaders to hear his ten best tips for managing growth.

1. Fifty employees is the trigger to change

When I started out, we were five people in a room. Communication was verbal and instant, and I loved it. We were like a speedboat – so agile that we could change direction in a second. Wow, I miss those days!

However, when you grow, things start to change. It gets more formal. Then, at 50 employees, you need to reinvent the company. Written guidelines are mandatory. I personally wrote every word of our procedures document, quality-control manual, ethics code and HR policy.

To get past 50 employees to 500 or more, you need that structure. Don’t think you can grow using the same methods as a start-up. You can’t.

2. Replace yourself

Writing those manuals woke me up. I thought: “Why am I doing these jobs? There must be a professional who can do this better than me.” Of course, there was.

I was still in the small-company mindset, trying to do it all myself. Wrong attitude. It became my mission to hire specialists who were better than me in every role.

By delegating work, I not only raised standards, but also freed myself up to focus on expanding the business. Ideally, you should be redundant. Everything should be taken care of by someone better than you.

3. Know that innovators are different

Truly innovative people have the ability to be both wonderful and destructive. Why? Because they have no boundaries and no sense of normality. They are as likely to come up with the most stupid idea, which will cost the company a fortune, as the best idea, and have no ability to discriminate between the two.

I found that truly creative people are unable to be critical of their own ideas. Never give innovators a ‘maintenance’ job. They won’t do it well, as they can’t follow guidelines and will just be distracted.

Give anyone the choice between innovation and a maintenance task and they’ll gravitate towards the second every time. You need to understand how innovators work to get the best out of them. Liberate them from mundane tasks, and then manage them.

4. Recessions don’t matter

The last recession was my fourth. And let me tell you – I love them. Recessions are a brilliant opportunity to pitch to new customers. Buyers can’t simply daydream through their jobs, as they can when times are good. They need to prove they are getting value for money and reassess suppliers.

We started out selling to the coal and steel industries in the early eighties; they were declining from day one. We grew then and we’ve grown through every recession. Naturally, you need a strong product and sales proposition. We’ve been able to offer customers a price 25 per cent lower than that of our rivals, and, if our product doesn’t work, they don’t pay.

It means we expand, no matter what the economy is doing.

5. Give your customer-support people your full backing

We have a mission to give such exceptional service that our customers never look elsewhere. We refund customers if they’re not happy, even if it’s not our fault. The result is sky-high retention numbers. It’s a big part of our growth story.

And how do we deliver such great service? The answer is you must live your ethos. You can’t be hypocritical.

We back our customer- support people no matter what decision they make. The alternative – questioning them – is the worst thing in the world. Their confidence will go, and then they’ll go. We’ve created a culture of mutual support, and this feeds into our performance.

6. Get good with numbers

When I was 23, I taught myself accounting from T-accounts. I used a pen and paper to go through the numbers until I knew exactly how it all worked. Cost accounting and management accounting are absolutely essential skills.

I had a guy in a division selling labour who didn’t know he was selling it for less than it cost to provide. He couldn’t run the numbers. We took him through the process for three months, and finally a lightbulb went on. He later got promoted to managing director. Now we teach about accounting, so departments can make accurate commercial decisions.

7. Everyone must develop a succession plan

It’s no good just having one tier of high-class management, as one day they’ll leave

or you will want to promote them but won’t be able to. You need two tiers. Seven years ago, I developed a Fast Track Management Development programme. I made the first appointee responsible for hiring two successors as a number-one priority, after they had demonstrated their competence.

They needed to find someone better than them in at least some things to continue the programme. This method means we have a constant pipeline of talent. To be honest, there was a social element to the employment of people straight from university, in that we expected a very high percentage to leave what was their first job. But, astonishingly, 50 per cent of the interns stayed with the business.

8. You must export

Today, we export to 104 countries. Exporting means you’ve got a vastly bigger market. It makes obvious sense. But it’s hard. When I began exporting, I spent seven months of the year away from home, at a time when communications were via telex. I had no money. I made a three-week round trip involving two weeks in Australia, going or returning via Hong Kong and Singapore.

On my first trip, when I got off the plane I used a Thomson directory in Australia to find someone to see. A few years later, I dreamed up the idea of a distributor conference – this allowed more face-to-face time with distributors in a shorter time period. Yes, exporting is a challenge. The language barrier is tough and travel is expensive. But what market will you have if you don’t go?

9. Stay out of the casino

I tend to make all of my big decisions, and our board does too, by asking: “Can we afford to lose? What is the downside risk, and what are the consequences of losing for our employees, our suppliers and our customers?”

There can be a temptation for entrepreneurs to keep gambling – to bet everything on red, even if they’ve already won 15 times in a row. Maybe I had a different appetite for risk when I was starting out, but, as they say about the seven ages of man: “When I was a child, I did childish things.”

Now I’ve grown up, I will never bet the company. We are not entering a casino.

10. Better to trust and get burned

My last tip about managing people. There are two ways to do this. You can keep a close eye on and monitor people all the time. Or you can stand back, give them responsibility and let them get on with it. I choose the second approach.

The trick is not to mind when you get burned. The worst business decision I ever made was trusting someone who turned out not to be right. It might have changed me. But I took the decision not to overreact.

I still tell people they are empowered to make decisions. And it’s okay if they make wrong decisions, as long as they make them (the worst thing is not making a decision – that leads to contempt).

If, once in a while, I get an employee who is dishonest or inept, I take that as a fair trade-off for the people empowered. If you want to grow a global enterprise, then frankly I don’t see any alternative.