Are you promoting strong managers into weak directors? In this episode, Marco Soares explores one of the most common and costly mistakes made in growing owner-managed businesses, and explains what to do instead.
Why Leadership Capability Is Holding Growing Businesses Back
One of the key constraints for many growing owner-managed businesses is leadership capability. And one of the things that owners do to accidentally make this worse is promote good managers into director-level roles when those people are simply not ready for it.
When that happens, the functions those people are supposed to be leading do not perform the way they need to. They do not scale, and they do not develop as the business grows. What then happens is that you, as the business owner, become the director of everything, because you do not have capable directors running your business and sharing that leadership burden with you.
A Great Manager Does Not Automatically Make a Great Director
This is so important to understand: just because somebody is a good manager, or even a great manager, that does not translate automatically into being a great director. The two roles are fundamentally different, and confusing them is where things start to go wrong.
| Role | Core Mandate | Key Responsibilities & Mindset |
|---|---|---|
| Managers | Run functions | Ensure the daily work gets done properly, manage the immediate team, see that processes are followed, and guarantee targets are met to keep the machine moving. |
| Directors | Shape functions | Ensure functions are structured correctly and strategically aligned with the future goals of the business. Evaluate metrics, placement of talent, and overall fitness for purpose. |
These are two very different mindsets. They require different levels of thinking, different skill sets, and different levels of experience. This distinction becomes especially important when you consider the purpose of a Managing Director and the strategic thinking that is required at the top of any organisation.
What Happens When You Get This Wrong
What often happens is that a well-intentioned owner promotes somebody who is doing a good job into a director role without being crystal clear on the expectations, and without being crystal clear on whether that person actually has the capability to do what is being asked of them. As a result, that person steps into the role not fully knowing what they have signed up for. They do not achieve the results. The function stalls. Everything comes back to the owner, who ends up becoming the director of everything, because they do not have that person running things the way things need to be run.
Loyalty Is Not a Good Enough Reason on Its Own
Promoting from within is a genuinely good thing. You want to reward loyal people. You want to look after those who have been there for a long time and are doing a great job. But that only works if you support them properly, if you give them the tools, the training, the knowledge, and the coaching to achieve the outcomes you are expecting of them. If you are trying to be kind by giving somebody a director title without the proper preparation, then in the long run that is not kind at all. You are setting them up for failure. And that is not good for them, not good for the team, and not good for the business.
Three Questions to Ask Before Promoting Someone to Director Level
Before you promote somebody into a director-level role in your business, you need to ask yourself three questions:
- Are you crystal clear on the outcomes, expectations, and KPIs for the director-level role?
- Is the person you have in mind strategically capable of delivering those outcomes, KPIs, and results?
- If they are not yet there, what development do they need? What coaching, training, or external guidance would help them do the job properly?
That is the right way to approach it.
Building Proper Leadership Capability as Your Business Grows
At some point, your business will outgrow its management structure. The question is whether you are building proper leadership capability, or half-heartedly filling seats, so that everything comes back to you and your business hits a ceiling. The key distinction to remember is this: managers run functions, directors direct functions. You need to be brutally honest with yourself as to which one you need at your various stages of growth.
Do not put people into seats out of convenience or out of loyalty. Make the right decision for the business and the right decision for the person. The key question to establish is not who should be given a director title. It should be: who do we need in this function to take it to the next level, so that we can achieve the long-term aims for our business? That is what stops you from having to pick up all of that strategic slack. That is what stops you from being stuck in the day-to-day. You need a capable team of leaders who can help you move your business forward, so that you do not become the bottleneck.
If you recognise this pattern in your business, it is also worth reading Setting People Up to Fail for a deeper look at how well-meaning decisions can create the wrong outcomes for your team. For more practical business insight like this, explore the full Mind Your Own Business series or subscribe to the Marco Soares YouTube channel where new episodes are published regularly.
