You might have done a lot of reading up on MSP business models, with most of the focus on how your MSP relates to its customers (i.e., billable hours vs. fixed price models, service level agreement models, guarantee models and so forth). Matthew Dickerson covered many of those in his article titled “The key components in a modern Managed Services business.” But you might be overlooking another essential element in business success: how you relate to your employees and contractors. What’s your management model and is it the right one for your MSP? If you’re an entrepreneur who never went to business school, you might not be aware of management models and you might have never given much thought to your management style. In this article, we’ll take a look at some common management models and the benefits and drawbacks of each.
Team-based or top-down management?
The “old school” way of thinking structured businesses in a paramilitary fashion. That is, there was a very strict, well-defined chain of command. Those at the bottom – employees at the lowest level in the organization chart – reported to their immediately supervisors, who reported to their supervisors, and so forth up the chain. “Going over the head” of your boss was a cardinal sin, not just in terms of complaints, but even discussing the specifics of your job duties.
This has given way in recent years, particularly in the technology industry, to the idea of team-based management. All employees at all levels interact with one another, and anyone is welcome to throw out new ideas. Rather than each employee working on a specific task all the time, employees interchange roles on different projects. One may take on more of a leadership role on one project while another leads on a different project. Leadership is not based just on position or rank within the organization.
Neither of these models is necessarily right or wrong, but one may be more appropriate in a given situation. In organizations where life and death decisions must be made in a split second and instructions followed without question for safety reasons (such as police departments or hazmat operations), the paramilitary model makes good sense. In an MSP, providing technology services, the team approach can make for happier employees, more efficient operations and better coverage of all bases.
The “Theory X/Theory Y” model of managing personnel is well known in business literature and refers to the assumptions managers make about human nature and how to motivate people. This model was developed by a psychologist named Douglas McGregor and was based on the level of needs to which the management style appeals, taking into consideration Abraham Maslow’s Hierarchy of Needs. Theory X appeals to lower level needs (physiological and security needs), while Theory Y appeals to the higher level needs (social, esteem and self-actualization).
Theory X management focuses on motivating workers through intimidation and even fear (e.g., fear of loss of job or demotion). Theory Y management focuses on motivating workers by giving them more responsibility and letting them participate more in decision-making. Again, one style or the other may work better in different types of organizations, with different workers, or even with the same organization/workers at different times – but in general, a Theory Y management style is likely to get better results with the personality types who work in the technology field.
The motivation-hygiene management model takes the view that there are two levels on which workers are satisfied or dissatisfied with their jobs: the first involves the work environment and external factors (called “hygiene”) that include such things as salary, physical working conditions, personal relationships with fellow workers, supervisors and subordinates, and so forth. The second involves motivational factors such as recognition, responsibility, advancement, and enjoyment (or lack thereof) of doing the work itself.
The bottom line
Selecting the right management model can be a key factor in the success of your MSP. Managing people is one of the most difficult parts of running a business, and employee satisfaction makes a profound difference in how smoothly operations proceed, how customers and the public perceive your company and how much money you make. Whether you have a formally recognized management model or not, every company develops guiding premises that permeate throughout the organization.
Managers exist to make decisions regarding the goals and objectives, motivate workers to support those goals and objectives and coordinate workers’ activities toward those ends. You can do a better job of that if you understand the four dimensions of management, which are applicable regardless of the model that you ultimately choose. You don’t have to have an advanced degree in business theory to learn about management models and use them to your advantage.