GM FUULL FORRM| What Is a General Manager (GM)?

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Definition:General Manager
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A business executive who is known as the General Manager (GM), is a general manager. A general manager is an executive responsible for the overall management of a company’s revenue, costs, and operations.

General Manager (GM)

By CAROLINE BANTON. Reviewed by MARGARET JAMES. Updated Dec 27, 2020

What is a General Manager (GM), and how do they work?

The general manager (GM), is responsible for the operations of a department or company, as well as generating revenue and controlling cost.

The general manager in small businesses may be the most powerful executive. In hierarchical organizations, GMs are above the majority of employees, but below corporate-level executives.

Companies may have different requirements and priorities, and these factors often depend on the organizational structure.

KEY TAKEAWAYS

  • The general manager will manage the company’s overall operations and help to increase efficiency.
  • The general manager’s duties include overseeing staff, budget control, marketing strategies implementation, and other aspects of the business.
  • General managers report to executives or managers at higher levels and oversee lower-level managers.
  • General managers can hold many titles such as CEO, branch manager or operations manager.

Understanding the Role and responsibilities of a General Manager (GM).

Lower-level managers are overseen by the GM. These managers, who may have several smaller divisions under their control, report directly to the GM.

Each department head is given specific instructions by the GM. As part of this supervision, a general manager oversees the hiring, training, and coaching of lower-level managers.

The GM might offer incentives to workers, assess the efficiency and provide strategic plans for the company based on company goals.

The general manager

General managers are responsible for overseeing all aspects of a company, including finances and daily operations. Due to the complexity of the role, effective delegation is a major part of the job.

To reach their goals, GMs work with executives and managers at higher levels as well as the employees they supervise.

This person is responsible to budget resources for marketing, supply, equipment, and hiring. Because of their complex duties and high levels of responsibility, GMs are more valuable than entry-level employees.

Qualifications for General Manager (GM).

Typically, a GM gains experience in a lower management position before being promoted or hired to the position.

GMs have the opportunity to move up in the ranks and become top executives or work for larger, more prestigious companies. They should have a good understanding of the operations of their company and be able to manage and lead employees and make sound business decisions. They should also be proficient in planning, budgeting, and strategy.

Different types of General Managers (GMs).

There may be many titles for a GM. Their role is to oversee operations and manage high-level functions such as marketing and finances.

In the c-suite, the chief executive officer (CEO) is considered the GM overseeing the entire company. The GM is responsible for a specific unit or segment of a company’s operations at the departmental level.

Just below the CEO is the GM

In terms of rank, the GM is just below the CEO in an executive suite. The CEO is the GM for all business lines in a company, while the GM manages a specific line of business.

In technology companies, for example, the GM may be referred to sometimes as the product manager. The branch manager is the GM at a bank.

A GM may be called managing partner or managing direct if they are working in a consulting company. Brand-focused companies that sell products often call their GMs brand directors.

Operations managers perform a similar job as GMs. Operations managers, like GMs create strategies to increase profit and efficiency for a company. They work closely with other departments to ensure the company’s overall effectiveness.

Take Note

A GM oversees all aspects of a company, but an operations manager only oversees production and operations. The responsibilities of a GM are much more extensive and cover marketing, strategy, HR and marketing. Operations managers are more experienced in a niche industry and tend to have a more narrow role.

Six Essentials for General Managers

By

The Magazine (July-August 1989).

The basic skills and plays

Fundamentals are what make a winning team. Great coaches emphasize this. The same goes for great general managers.

They understand that superior performance cannot be achieved by focusing on one-off improvements such as restructurings, cost reductions or reorganizations. They will take drastic actions when necessary or desired.

They want to avoid this type of situation. They do this by focusing their attention on six essential tasks that are the core of any general manager’s job: creating the work environment, allocating resources and developing managers, building the organisation, and overseeing operations.

It shouldn’t surprise that this list includes the basic elements of a general manger’s job. Its role as an organizing framework for general manager’s vast majority of activities is what makes it so important. It allows you to define your job and set priorities. You can also see the important interrelationships between these activities.

Enhancing the Work Environment

Each company is unique and has its own work environment. This legacy influences how managers react to opportunities and problems. However, no matter what the environment is that a general manager inherits, shaping or reshaping it is an important job. This is true for both small and medium-sized businesses as well as giants such as General Motors or General Electric.

The work environment of a company is determined by three elements: (1) its performance standards, which determine the pace and quality people’s efforts; (2) its business concepts, which define the company’s identity and how it operates; (3) and the people concepts and the values that are dominant and what it’s like for employees.

Performance standards are the most important of these three elements. They determine how hard the organization works. The general manager will set high standards and key managers will follow.

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If the GM’s standards for quality are too low or vague

Subordinates won’t do well if the GM has low standards or vague expectations. High standards are the main way that top general managers can exert their influence across the business and use their talents.

If your company or division does not have high standards, the single most important contribution you can make to your immediate and long-term success is to raise performance expectations for all managers, not just yourself.

This requires you to be conscious about the tangible measures that constitute superior performance, where your company is at the moment, and whether or not you are willing to make tough decisions and take the necessary steps to get there.

Important standards a GM sets are the company’s goals

The company’s goals are clearly one of the most important standards a GM sets. The best GMs set goals that push the organization to reach them.

This does not mean that you should set unrealistic and arbitrary goals that will be lost. But rather, goals that will motivate everyone to compete in a tough arena.

I still vividly recall a general manager refusing to accept a plan that produced nice profits and a high sales gain for the third consecutive year.

They felt the plan was too demanding and not competitive. The GM advised them to return with a plan that maintained the same volume but reduced base costs by 5%. This would be a better option than allowing them to increase in volume.

It was a difficult task but he believed the goal was important because he anticipated that their chief competitor would reduce prices to regain market shares.

The company drastically changed its cost structure.

The company made significant cost savings over the next few years through innovative cost reductions in production and distribution, purchasing, corporate overhead and product-mix management.

It was able to achieve record profits and share-of market gains despite significant price erosion. Without that clear goal in front of management every morning, I doubt they would have ever achieved these results.

This same mindset is evident in comments made by a Japanese CEO when asked by a U.S. trade negotiator about how his company would be able to compete if the yen fell from 200 to the dollars to 160. He replied that he was already ready to compete at 120 yen per dollar. “So 160 doesn’t bother us at all.”

The highest standards are not just about achieving high goals. Top general managers, like military leaders or coaches, set an example by their long hours, dedication to success and consistent quality. They also set high standards and reinforce them in small ways that quickly add up.

Managers of heirs need to be familiar with the details of their business and function

Instead of complaining, they reject poorly-prepared plans and “bagged profit targets” but accept them nonetheless.

Managers must be able to understand the specifics of the business or function they are managing, and not just the overall picture. Marginal performers are not likely to stay in key positions.

The most effective GMs have strict deadlines and enforce them. They are difficult to please. Once the sales, production, or R&D department meets one standard they will raise their expectations and continue to improve.

For example, a general manager asks key managers to rank their subordinates annually on a scale of one to nine. He reminds everyone that the same performance required to earn a six-year old will result in only five years.

This approach can cause additional stress and frustration. This approach reduces complacency and encourages personal growth. It also yields better results.

The second aspect of the workplace environment that GMs influence consistently is the company’s basic business concepts.

These chosen areas will be a success for the company

Top-notch GMs know what they want and how they will compete. They have a clear overview of the areas they are interested in and the ways the company will succeed. This includes the balance between centralization or decentralization, the role and responsibilities of staff, the rewards that will motivate employees to reach their goals and the skills required to be a leader in the industry. This overview explains how the company will be different from a group of completely independent businesses.

A business environment is always changing, so the best general managers ask themselves: What type of business do I want to run?

Are we in the right areas? Are we still in a position to succeed in each of these areas? What should we do to restructure the business? This process results in a set business concepts that move in small ways but in a consistent direction.

Johnson & Johnson is a great example. Johnson & Johnson, which has a solid corporate record over many decades, is determined to be the leader within the lower-tech growth sectors of health care. It has a wide-based business that faces smaller competitors around the world.

James Burke, CEO, feels that he and the managers are better off together.

James Burke, the CEO, believes that to be a leader, he and his team must excel in spotting new markets early and tailoring products to them. This is possible through the help of a small group of around 100 independent operating companies.

This highly decentralized company is adept at product innovation and marketing. It has a corporate credo to support it.

J&J’s managers know exactly what they want to accomplish and how they will do it. J&J has a competitive advantage because of this carefully constructed corporate overview.

J&J’s overall success is not in doubt. However, J&J now has to compete with new conditions that force managers to rethink their business models.

Customers have made clear that they desire fewer suppliers, better integrated distribution and more administrative services in many areas of J&J’s business. J&J is working to find a way to keep its decentralized divisions intact and all that they represent, but also compete with companies offering more coordinated products and services.

The company’s people concepts are closely linked to the first two. Managers in fast-paced, innovative companies require different skills than those who manage businesses that are slow-growth and grind-it out.

The emphasis is on high volume and cost control.

The company’s people strategies are closely linked to the first two. Managers who are innovative and fast-paced will need different skills than those in businesses that are slow-growing, low-volume, but still competitive.

One example: A company that is aggressive and growth-oriented decided it needed a mix of high potential managers, not just a few great managers at the top with implementers down; innovative managers who act as owners, not administrators happy to pass the decisions up the chain; ambitious quick learners, rather than people content to climb slowly up the corporate ladder.

This pattern will not work for every company. A GM must ask two questions to determine what applies. How can we attract, motivate and retain these people?

These GMs are more successful than those who don’t pay enough attention to the skills and styles required to win their specific battles. They ask the right questions and then act on them.

The CEO of Cummins Engine

Henry Schacht, Cummins Engine’s CEO, is an example of a great GM who gets deeply involved in determining the company’s values.

He is able to see the type of organization Cummins should be. He carefully considered how to cut the company’s workforce by half, while still keeping it fair and understandable for everyone.

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Cummins has the same high standards and concern for employees as Irwin Miller, which is why they have this company. Employees don’t need to follow any rules or policy manuals in order to act ethically. They just do it.

This may seem obvious but I have seen many general managers end up with inconsistent cultural values and behavior norms. They don’t know what is important.

There are always those who have flawed or expedient values, but are nevertheless successful in the short-term. However, over time, character flaws and inconsistency can catch up to people, causing serious problems for the GM as well as the company.

A Strategic Vision

The general manager is the only executive that can commit an entire organization to a specific strategy. Therefore, the most successful GMs are involved in strategy formulation and spearheading it. They have a clear vision of the business or quickly develop it when they are appointed to new jobs.

Ned Johnson, who took over Fidelity Management & Research in 1994, saw two problems with mutual funds. First, competition was based upon who has performed the best lately. Fund managers were able to live or die based on their performance each quarter or year. Second, customers were constantly moving funds due to poor performance or poor service.

investment focus plus superior service.

Johnson imagined a superstore of 50-60 funds offering customers every possible investment focus and superior service to avoid these problems. Customers are able to blame the manager of a fund if it doesn’t have a record-breaking year. Customers can easily switch to another Fidelity funds thanks to the superior service provided by Fidelity. Fidelity has four to five winners every year, thanks to its many funds.

Many “experts” recommended that David Farrell diversify from the dying department store business when he took over May Department Stores. Farrell recognized a potential opportunity in the fact Sears was diversifying into financial services while other specialty shops were opening up.

He refused to follow the crowd and instead focused on his company’s merchandising and operational leadership in each market of the department store business. He centralized merchandising, price aggressively, eliminated losers departments, created strong execution-driven local managers, and took control of the costs.

It was the result: Allied, ADG and Federated, which were once key competitors, fell flat, May emerged as a large, well-run, publicly owned company in its field. It’s not the best in every market. But overall, it’s better than the average-sized, weak performer Farrell left behind.

The strategic vision of the GM

Both cases were influenced by the GM’s strategic vision which considered the customer and the industry. It also took into consideration the competitive environment. This led to innovation that was targeted at a certain competitive position. This is what separates a useful vision and the slew of meaningless generalities that GMs use when describing their business strategies.

Next, high-impact GMs view competitiveness gaps in products, features, and service as crises. These gaps are their top priority and not a business problem. It is a difficult task for most GMs to understand how their products, costs, and systems compare with their competitors.

For example, how many GMs would have disassembled a competitor car to show their production staff what was happening, like Honda’s U.S. President did? Too many GMs, not just those in Detroit, base their strategies on unsupported assumptions and wishful thinking about the comparative performance of their competitors.

The cost structure

For example, recently, I was shown a report by a consultant comparing the cost structure for a major U.S. producer of electronics components with that of its Japanese counterpart. The Japanese company spent more money on R&D and had a lower percentage of sales.

It received fewer rejections, better products and more market share. This resulted in higher earnings per share. Guess who changed his mind five years too late about where his company was and what was needed to regain market leadership?

Strategy is not complete without mentioning how you can give customers more value than your competitors. But talking about the idea and actually putting it into practice are two completely different things.

Excellent GMs are personally committed to better customer service and better products. They don’t look inwardly, but learn about their competitors by speaking with knowledgeable customers and distributors. This knowledge gives them the confidence to make things happen, and give them a competitive advantage.

Realizing that it is difficult to create lasting competitive edge, the best GMs draw on their strengths and seek out new opportunities for advantage. They increase sales and profits in the strongest markets with their strongest distributors.

They then use the faster returns to fund future edge research. Pepsi’s strengths in the 1970s included its grocery chains and heartlands, as well as new large packages. Pepsi, on the other hand, spent so much money and effort in the 1960s trying to support weaker markets, products and channels that it didn’t have the resources to invest in areas with greater potential.

It was the opposite.

Worse, the managers believed it was simpler to increase a market share of 5% to 10% than to grow 30 to 35%. It was actually the opposite, as it is with most companies. Building on your strength means that competitors are more busy responding to your efforts, which makes it harder for them to launch their own.

The best GMs anticipate their competitors to retaliate to any strategy that works and plan for the worst-case scenario. They can also win games that they are not able to win. Heinz, for instance, was known for creating more soups than Campbell over the years.

Managers realized that they were copying Campbell’s product, and not their own. Campbell would then use its brand acceptance and distribution power to overtake them at the point-of-sale. Heinz decided to shift its focus away from beating Campbell and instead made money selling soup. It cut costs and focused on the low-priced niche that didn’t appeal to Campbell.

Marshaling Resources

General managers all agree that they allocate resources to support competition, maintain the company’s economic health, and generate high returns. If you look at the processes in most companies you will see that there is a lot of support for marginal businesses and low-paying projects. This makes it difficult to understand the business’s operating needs. In short, no strategic focus.

The most successful GMs focus more on situations that offer the chance to gain a competitive advantage, or improve on an existing one.

They were ready to shift the emphasis in order to get more bang for their buck long before restructuring was popular. One new GM did exactly that when he assumed control of Frito-Lay late in the 1970s. The company was building new potato chips plants each year at the time to increase market share in the low return business.

Instead of following the lead of his predecessors

This GM decided to invest a fraction of his resources in productivity and process improvements that increased the chips’ margins, rather than continuing the practice of his predecessor. After the investment paid off, he recommenced plant construction at a significantly higher ROI.

The way top GMs deal with money is another difference. It sounds funny until you consider one of the most serious weaknesses of professional managers: They spend company cash like it belongs to someone else. Even owners who aren’t entrepreneurs often invest in projects that they wouldn’t have thought of funding if the company belonged to them.

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Outstanding GMs, on the other hand, think like owners

Outstanding GMs, on the other hand, think like owners. To get decent returns, they avoid projects that require everything to be 100%. They are willing to delay or rethink high risk investments and shortchange low-return business in order to marshal resources for winning strategies.

They are also very strict about who gets what, because they know that outstanding returns do not come from giving money to subordinates who promise high numbers (despite the low odds) or key managers who want to keep them happy. They are not risk-averse, but this doesn’t make them any less cautious. They can improve their odds by focusing on less bets and backing them more aggressively.

Top GMs also protect major investments from the negative. Promising ideas are often unsuccessful in the marketplace, as everyone knows. Many GMs will bet on the company even before they are certain if a new strategy is going to work.

Marshaling Resources

General managers all agree that they allocate resources to support competition, maintain the company’s economic health, and generate high returns. If you look at the processes in most companies you will see that there is a lot of support for marginal businesses and low-paying projects. This makes it difficult to understand the business’s operating needs. In short, no strategic focus.

The most successful GMs focus more on situations that offer the chance to gain a competitive advantage, or improve on an existing one.

They were ready to shift the emphasis in order to get more bang for their buck long before restructuring was popular. One new GM did exactly that when he assumed control of Frito-Lay late in the 1970s. The company was building new potato chips plants each year at the time to increase market share in the low return business.

Instead of following the lead of his predecessors

This GM decided to invest a fraction of his resources in productivity and process improvements that increased the chips’ margins, rather than continuing the practice of his predecessor. After the investment paid off, he recommenced plant construction at a significantly higher ROI.

The way top GMs deal with money is another difference. It sounds funny until you consider one of the most serious weaknesses of professional managers: They spend company cash like it belongs to someone else. Even owners who aren’t entrepreneurs often invest in projects that they wouldn’t have thought of funding if the company belonged to them.

Outstanding GMs, on the other hand, think like owners

Outstanding GMs, on the other hand, think like owners. To get decent returns, they avoid projects that require everything to be 100%. They are willing to delay or rethink high risk investments and shortchange low-return business in order to marshal resources to win strategies.

They are also very strict about who gets what, because they know that outstanding returns do not come from giving money to subordinates who promise high numbers (despite the low odds) or key managers who want to keep them happy. They are not risk-averse, but this doesn’t make them any less cautious. They can improve their odds by focusing on less bets and backing them more aggressively.

Top GMs also protect major investments from the negative. Promising ideas are often unsuccessful in the marketplace, as everyone knows. Many GMs will bet on the company even before they are certain if a new strategy is going to work.

They decide to go ahead and build a factory

They plunge ahead and build a factory, hire lots of overhead, and launch new products quickly and aggressively–presumably to beat competitors to the punch. This flat-out approach is a disaster if the idea fails to succeed immediately.

Many little things, such as renting machinery and pilot runs to farmers, are done by the best GMs. This helps them limit their exposure in front-end. They avoid using processes that cannot be used for another purpose.

They are reluctant to increase overhead. To test the market and reduce costs, they do regional rollouts. They then go to war when they are certain the idea will succeed.

Top GMs will always look for non-productive assets to bring them up to standard or get them off the books. They also follow up on large capital expenditures to ensure that the benefits are realized.

Each business unit is charged with the management of its balance sheet, and they carefully evaluate its return. They also put pressure on the organization in order to increase productivity.

James Robison was the former GM at Indian Head. He expressed his opinion in a humorous way. He’d add, “Every Friday evening, we start a new ball game.” This means that every machine, business, job, or plant is open for question.

It’s off our list if it doesn’t produce an adequate return. We look for ways to eliminate it if we are unable to quickly improve the situation.

Developing Star Performers

Everyone understands the importance of attracting talented managers and developing them quickly. But not everyone is able to do this. Very few companies actually do this. Low standards are the main reason for poor performance.

The best GMs are willing to make tough decisions in order to improve an organization. They aren’t trying to justify inaction by hoping more experience will somehow turn a weak manager into one that is stronger or a solid performer into one that excels.

They have better managers in key spots each year than a group that is only one year older.

People decisions must start at the top

The top must be able to make tough decisions about people. Managers will delay action, rationalize marginal performance, and mistakenly recruit one or two outsiders as real upgrading if they don’t. The best GMs conduct annual personnel reviews and don’t delegate that task to division heads or presidents.

They are able to use difficult job assignments to accelerate the development of high-potential managers and remove obstacles to securing new opportunities. They are also aware of the importance of job rotation and can break down functional empires that prevent them from doing so. They also influence key appointments by offering their subordinates a list of candidates or exercising a veto.

They involve line managers in the process of upgrading by requiring periodic, hard-minded appraisals of individuals or groups.

They constantly question their high-potential employees about their work.

They are constantly curious about how their high-potential employees are doing and how their managers are handling their people issues. Action is more important than asking questions, especially when it comes to the lowest performers. They ensure that the process yields better results every year and that it is pushed further down within the organization.

The most successful GMs understand that compensation is a tool to achieve a goal, not an end in and of itself. Performance is tied to rewards.

They will pay the best performers more even if it means that they are paying average performers less than what they expected. They are also open to taking the heat by cutting bonuses in poor years instead of pretending that it never happened.

The best GMs surround themselves with people who are capable of achieving, not loyalists or cronies. They don’t just hire in their own image, but they are open to accepting and even encouraging a wide range of styles.

Their talent pool grows every year because they are constantly building critical mass based on the belief that there is never enough good people. This way, opportunities don’t need to be created in order to fill a gap in one area of the business.

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