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Your Company Is Not a Democracy

Entrepreneur.com
Wednesday, June 30, 2010; 12:00 AM

Most problems that occur in small businesses trace back to one fatal characteristic: lack of adequate ownership and leadership.

I'm a big proponent of the "just view me as god" school of management. Burn your lovey-dovey management degree. Owning a business isn't a popularity contest, and you're not there for a social experience. You cannot be effective as the owner of a business unless you are feared and respected by your employees. Likability is nice but not necessary. You've got to demand what you want.

Small-business owners generally don't do this. They attend seminars and read books on sensitivity and how to make their employees love them. They want to be friends and colleagues. Hard and fast rules make them squeamish. They operate under the mistaken but widely held belief that they'll get more out of their employees if they're loved.

In today's warm, fuzzy, politically correct environment, where conventional wisdom is all about collaboration, fairness and listening to your employees, many small-business owners forget one important thing: They have to execute their battle plans with as few flaws as possible. A company is not a democracy. The only opinion that counts is that of ownership. Have a suggestion box in case someone comes up with a good idea, but don't make it a bible.

You might be able to get away with a lovey-dovey approach in an exuberant economy, but that party ended two years ago. Your employees won't thank you for being tough on them, but they will respect the benevolent dictator who keeps the business afloat and continues to cut them a paycheck. If they don't like the size of their paycheck, tell them to work harder and you may reward them if they meet your standards.

In the 6,000 small businesses we've worked with, the tough love school of management far surpasses whatever comes second. Ignore the human resources gurus who preach patience, calm, civility and multiple warnings. Let your employees respect but fear you. Your word is final and is always expected to be carried out without complaint.

Be a dictator, but also make sure there's a method to your enforcement of strict accountability and a plan behind your directives. Make sure you clearly define expectations of employees and set up a no-leak process that holds them accountable and pays for performance.

Here are the attitudes and practices that small-business owners should have--and if you don't have them, adopt them today:

Be a dictator. Your directives must be clear and absolute.Tell your employees: "Don't think--obey." You want them to do what you say, not what they think they should do.Forget your likability score. It's okay if your employees don't like you, as long as they respect you. Earn it by getting in the trenches with them. You have to let workers know you are in it with them.Be a feared general. Command the respect you deserve with clear direction and reward/penalties based on performance.Fear is the best motivator. Strict accountability and the fear of losing a job are highly effective employee performance enhancers.Penalize poor or negligent performance. Companies spend too much time worrying about incentives and not enough about penalties.Fire incompetent employees. And do it sooner rather than later. If you don't, the performers in your business will resent it, and you'll continue to lose money on payroll for someone who contributes only mediocrity to the bottom line.Enforce, enforce, enforce. There's no point in managing by the numbers or having a precise operational plan for profits unless you are willing to make sure that everyone follows the plan to the letter.

Always remember: You are the boss. If things aren't going well, it's your fault. It's not your job to dispense praise, affirmation, hugs and cookies to your staff. They have to respect you, not like you. Let them know that you are going to hold them accountable for their actions. Be in control and be controlling. It's better to drive your employees nuts than to lose money.

George Cloutier is the New York Times-bestselling author of

Profits Aren't Everything, They're the Only Thing

(HarperCollins),

no-nonsense advice from this ultimate contrarian and Turnaround Ace

. He is the founder and chairman of American Management Services, a management firm that specializes in turning around small and mid-sized businesses.

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