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March 6, 2019

The Benefits of Leadership Vs. Management

By Josh Fiorini

As a business owner or leader, one question you probably deal with a lot is, “What exactly do you do?” When I was asked that question in businesses I previously owned or in which I held the top leadership position, I came up with what I thought was a very simple answer: “I create, maintain and improve the circumstances necessary for the employees to do their jobs.” I patted myself on the back for what I thought was such a concise and clever answer. Most of the time, if it was an employee who’d asked the question, they walked away with a thoughtful expression that told me I’d provided an answer of substance. But, what did my answer really mean?

Did it mean I stayed late to take the call with the supplier in California to make sure we had a good rate and could keep getting materials? Of course it did. But there was certainly more to it than that. Sure, some of those circumstances I was trying to create, maintain and improve were physical and easily measured. Just as many were intangible and not easily measured — and no less important (and possibly even more so) to the long-term success of a business. The more I thought about it, the less my “I create” response answered the question “What exactly do you do?”

No doubt, right now reading that you are coming up with answers to that question in your head. What bubbles to mind first will tell a lot about your style and where you lean on a spectrum that many executives and even business professors entirely forget — the existence of the spectrum between leadership and management.

What is Management?

According to Webster, management is “The act or manner of managing, handling, direction or control.” Simply put, it is directing your operations and your people.

Management is hard facts. It is knowing where your products or services are and how they were provided, knowing the characteristics of your business partners on the sales and purchasing sides and directing your team. Effective managers can analyze a complex situation and make intelligent decisions about where and how to deploy the resources at their disposal. They most often have goals to meet in making those decisions, whether those goals are self-imposed or from above.

In a nutshell, a manager’s job is to completely understand their professional domain and marshal (or create as necessary) the capabilities of their team, equipment and facilities in order to achieve them. The times where you’re giving a directive to an employee such as “This month we are going to focus on product/service x rather than y” or “I think we need to streamline this workflow by connecting Unit A to Unit B,” those are management decisions. Managing people and their expectations versus their talents, then folding them into the needs of the organization, is also a very necessary function of a manager.

While these types of tasks and the skills necessary to effectively discharge them are an unquestionable necessity in a business leader, they all have one interesting thing in common: they require the manager. If the manager is removed from the equation, chaos ensues.

What is Leadership?

According to Webster, “The position or function of a leader, a person who guides or directs a group.”

That sounds very similar to that of the definition given for management, but someone who studies organizations and the people within them can quickly tell the difference between the two.

Notice that the word “guide” appears in the second definition. That means that leadership is the act of inspiring success and motivating it, rather than physically driving and directing it.

Whereas management deals with the physical, leadership deals with the intangible. What is the culture of the company? How do people act? What do they expect of each other and those senior to them? What is the company’s mission? The answers to those questions go toward determining what the style of the leader is.

It is true that most employees show up for a paycheck. But there is more to it than that, as a paycheck simply makes someone work just hard enough not to get fired. Does your team show up motivated? Do they show up optimistic that this year will be better than the last? Do they genuinely care about the company and each other? Do they take pride in the fact that they work there? Do they understand and align with the goals and values of the organization? Is the company as a whole moving toward its goals (or does it have them)?

All of these questions go to two intangible characteristics of an organization, culture and vision. What those are and how they are communicated is up to you as a leader, and because these are the things that outlast management and can stand in its place or overcome its weaknesses when necessary, every organization needs leadership.

To steal an analogy from a popular writer, the job of the manager is the “what” and the “how” of an organization; while the job of the leader is the “why.” Everyone has different natural inclinations toward these unique elements, but the small business owner or entrepreneur must either possess or develop them all and take care not to mistake one for the other.

Practical Application Exercises

To apply the lessons in this article, here are some questions to ask yourself.

Immediately after reading:

  1. Which of my day-to-day tasks could/should be classified as management tasks, and why?
  2. Which of my tasks could/should be classified as leadership tasks, and why?
  3. Do I feel like I excel more in management or leadership?
  4. How strong is my culture?
  5. Do I feel as though my business is disorganized? Am I constantly “putting out fires”?
  6. How well would my employees continue to do if I was gone for a week, a month?
  7. Do my mid-level managers and supervisors act as I want them to? Are they an effective extension of me, and are they promoting the culture and style I wish for the organization?
  8. Based on the above, what do I most need to improve, my management or my leadership?

Three Months After Reading:

  1. Does my company culture feel stronger today and more aligned with my vision than it did?
  2. Is my business more organized? Are there fewer “fires”?
  3. Are my managers promoting the company’s vision, goals and values? Consider interviewing some line-level employees to answer this question. Ask them what they think the company’s goals are, and what they think your vision is for the company. See if they align. Ask about effective management, seek feedback to utilize for improvement.

About the Author
Josh Fiorini is the former CEO of PTR Industries, Inc. He spent the first decade of his career in finance, holding positions as an equity analyst and portfolio manager before starting his own hedge fund. This experience, along with a deep background in manufacturing, banking and private equity, has made him a sought-after contributor on numerous boards and discussion groups on political and economic issues for media outlets, corporations and community organizations. Fiorini currently invests his time and resources with non-profit initiatives and acts as a contributor and management consultant to various firms in the firearms industry as the founding and Managing Partner in the firm Narrow Gate Management

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