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Accountability for Owners

Written by Ed Callahan on December 10, 2012

Implementers EOS

One of the biggest challenges faced by owner-operators is accepting that they are accountable in a detailed way for the success of their business.

Too often the default behavior and underlying belief system is “Hey, I created this business; I get to run it any way I want and no one can tell me what to do, or what to pay myself, or anything else for that matter!” At the end of the day, those are true statements. No one can dispute them.

But an owner-operator who wants work life balance, who wants a team of leaders who care about the company as much as he or she does, must define the responsibilities of each management seat in the company, including the one they occupy. This brings clarity and excellence in execution. Our EOS clients accomplish this clarity by creating an Accountability Chart for each unique seat in their business. You can download a free copy here.

Letting go of the vine [management responsibilities and authority] is a real challenge, particularly if family members are involved, but the results are worth it. Read an earlier post about the Three Circles of Family Businesses here.

A significant additional challenge for a non life-style business owner-operator is deciding what to pay themselves. The best practice is for the owner-operator to break the compensation into two pieces – salary + operating bonus vs periodic distribution to owner(s) of retained earnings. In other words, compensation for what they do in the business vs compensation for their ownership. The latter is written about by lots of experts. EOS proposes that the former should be based upon industry and company standards for the seat the owner-operator occupies. There is public data available about what CEO/COOs of company of certain sizes in certain industries earn on average. The same is true for CFO’s, VPs of Sales, and most other positions.

To be as successful as you want to be, as an owner-operator you owe it to yourself to be transparent about what you are responsible for in your business and expect, and allow, your management team to help you hold yourself accountable. And for non life style businesses, paying yourself for the value you add to the business is the right thing to do. The results are worth it.

More Blog Posts: ← The Accountability Chart and the Three Major Functions | Make "Meetings" Your 2013 Business Resolution