Once you’ve built up your business, it may be time to delegate some of your responsibilities. Building an effective management team can be challenging, but the rewards of good leadership are usually worth it.

In the early years of running your own business, you may find yourself tackling many of the most important tasks yourself. But as your business grows and builds a larger customer base, it may no longer be practical to oversee day-to-day operations while juggling sales, accounting, marketing and hiring concerns. At a certain stage of maturity, introducing a team of managers to share duties and guide your business into its next stage of development becomes a worthwhile and necessary goal.

Establishing a management team can be a challenging process. At first, entrepreneurs may feel a sense of loss at relinquishing some of their duties to others and be compelled to micromanage decisions in the early stages. And although recruiting senior executives for startups is not as difficult as it once was, it may require some persuasion and a good eye for spotting talented managers.

“For all of these difficulties, however, entrepreneurs who have built strong management teams enjoy obvious rewards,” Inc.com explains. “They can rely on the skills of others to compensate for their weaknesses. They can focus on strategic issues while confidently delegating day-to-day tasks, such as managing people. And they can use their management team to secure outside funding and establish creditability with potential customers.”

Understanding the various roles in a management team is the most crucial part of building one. The most prominent position is likely to be the chief executive officer (CEO), who is responsible for how company resources are deployed and broad-based decision-making. As entrepreneurial advice resource IdeaCrossing explains, “The buck stops with the CEO, who must have a big-picture grasp of strategy and prove skillful at staffing.”

The company’s CEO should be adept at strategic thinking and evaluating current and future market conditions as they relate to the company as a whole. The CEO is typically a business’s most prominent figure, and although it may be hard for a company founder to cede authority, “You may be more likely to find happiness and satisfaction in your work if you pass the responsibility for daily operations to a seasoned executive who can ace them, [freeing you up] to focus on developing the company’s strategic vision,” Inc.com says.

The chief operating officer (COO) handles daily functions across the business, setting performance metrics, tracking measurements and responding to any operational problems as they arise. The COO’s primary skills are being detail-oriented, capable of multitasking and prompt in reacting to changing business needs. In smaller companies, the president may take on the role of a COO, but in other firms, the president fills any responsibility gaps between the COO and the CEO.

Other key management positions include: the chief financial officer (CFO), responsible for building and maintaining budgets and other financial data; the chief marketing officer (CMO), responsible for brand development, product positioning and distributor enlistment; and the chief technology officer (CTO), responsible for integrating new technology trends into broader company strategy.

Seeking out top talent and determining if they are a good fit for your company requires some planning. Using executive-search firms or headhunting agencies can provide you with a good list of pre-screened candidates, while networking within your industry can be an effective way to meet or hear about potential hires. Entrepreneur.com offers the following tips for evaluating candidates for senior management positions at your firm:

• Be sure the candidate really knows the job. This may go without saying, but having a CMO who is an expert on marketing or a CTO who stays ahead of the latest tech trends is vital for building an experienced team.
• Find out if they fit in with company culture. Talent isn’t always enough, as an executive’s personality can also affect how he or she will be received within the company. Do you trust the candidate? Do you see yourself or other people within the firm getting along well with the candidate?
• Talk to the candidate’s peers. Speak to the candidate’s former bosses or colleagues to gain a better sense of how he or she functions within a business or to verify certain background details.
• Look for smart people. According to Entrepreneur.com, “Every new hire should increase your company’s average IQ.” Try to bring the brightest on board whenever you can.
• Look for candidates who can learn. Try to determine if your candidate will be able to avoid making mistakes from the past and how well he or she will adapt to new circumstances.
• Ask for examples. Instead of asking about principles or hypothetical scenarios, ask candidates to provide specific instances that show their skills, values, strengths and weaknesses.

Convincing qualified candidates to join your company depends on what those candidates are looking for at that stage of their career. Some are concerned mostly with direct compensation rates, some prefer stock options or bonus plans, while others are more interested in opportunities for professional advancement.

Once executives are brought on board, it’s important to establish a unified goal for the management team. At About.com: Human Resources, staffing expert Susan Heathfield recommends setting clear expectations for the team’s performance, providing context for the company’s long-term goals and stressing commitment to the business’s success.

It’s also important to make smooth transitions when a management team member leaves and must be replaced with a new hire or a staff member promoted internally.

“As a management team learns to work together, it develops its own identity,” the Center for Information-Development Management explains. “When a manager leaves and a new one is hired, he or she is at a disadvantage coming on board with the team. Asking one of the senior members to be a partner for the new manager can help bring him or her along more quickly.”

“Entrepreneurship is about going for the things that are much bigger than what you could do alone,” Entrepreneur.com notes. “Your job isn’t to reach the goal; it’s to build a team that will reach the goal.”

Earlier

Who Will Inherit the Business?

Compensation Rates in Today’s Economy

Can’t Give Bonuses? Try Recognition

Resources

How to Build Your Management Team
Inc.com, April 1, 2010

Management Team Building Tips for Entrepreneurs
IdeaCrossing, March 9, 2010

Build Your Management Team
by Stever Robbins
Entrepreneur.com

Twelve Tips for Team Building: How to Build Successful Work Teams
by Susan Heathfield
About.com: Human Resources

Managing Managers: Building a Management Team
by Julie A. Bradbury
Center for Information-Development Management, May/June 2004