The Middle Management Gap

My name is Paolo Kalaw and I am the co-founder of DTI Dental Technologies Inc. We operate 16 dental laboratories in Canada and the United States ranging in size from five employees to 100. When I first became active in the laboratory business, it was 1997 and we had seven employees. I was a bright-eyed, 30-year-old with a degree in microbiology. I had never run a laboratory before. What was I doing in the laboratory business? I still remember the day we received 20 units in the laboratory. To this day it is one of the most memorable milestones in my business life.

Today, DTI has 300 technicians (388 employees) that produce 20,000 or so units per month. By the time this article goes to print, we would have also announced the sale of DTI to a New York based investment firm. I feel like by the age of 39, I have experienced the life cycle of the lab business. Yet one of the aspects of the laboratory business that continues to amaze me is: Out of the thousands dental laboratories estimated to be in business in North America, why more than 90 percent of those laboratories never grow past 12 employees? My focus in this article is what I consider one of the biggest challenges I see for most laboratories: The middle management gap.

What is the middle management gap?

More often than not, what I see are very talented technicians who start their own laboratories with a handful of clients. As they get busier, they add one employee, than another, than another and sooner or later you have five. At this stage, the owner typically touches every case that leaves the laboratory, the owner is the point of communication with every customer, deals with all the business issues, works 19 hours a day, and is the center of that laboratory’s universe. The ability to break through this stage is key to growing past five employees and yet at least 80 percent of laboratories never break through. Another 10 percent, by working 24 hours a day, get to 12 employees. What I refer to as the middle management gap is the lack of supervisors or managers that are actually trained in managing as opposed to producing.

Why do we have a gap?

Let’s take a look at the personality profile of a great technician: artistic, very astute attention to detail, super human ability to concentrate, impressive focus and attention. As a laboratory gets bigger, these qualities are the same qualities that make an owner want to touch every case and control every aspect of the business. As the business grows to five employees, these same traits start to create a bottleneck that constricts the business from growing further. Through sheer effort and by working 24 hours a day, the laboratory may even get to 12 employees. At some point, however, the owner’s job evolved from being a producer in the laboratory to being the big picture guy. Yet often, they are too busy working to realize the switch and they have nowhere to go for training and support if they did realize it. In the early stages of a laboratory, it is the owner’s job to exert focus and attention. Yet, inherently, most owners have no source of training to transform themselves from producers - those that actually produce the crowns to managers - to one that focuses on managing the millions of things that go on in the life of a business. Most importantly, if the owner has not realized what it is like to manage, how can they train others to do the same? Hence the middle management gap - you can’t teach what you don’t know.

How do we fix it?

In my experience, many laboratory owners and managers believe that if an employee does not create a crown, he or she has less value to the business. The most important step to take in dealing with the gap is to change this mindset. In order to grow your laboratory to the next stage, one needs to create a true organization that is not dependent on a single individual.

Then, one has to be willing to put their time and money where their mouth is (pardon the pun). If you decide that you want to build a management team, you need to realize that the more time you spend on the bench, the less managing you do. You therefore first need to invest in yourself. Start focusing on management programs either in your local colleges or universities or with programs like NADL University (the NADL deserves credit for recognizing this need and addressing it). I would encourage you attend and open your eyes to what is available to you. Even when you attend the laboratory conferences, focus on management programs being taught by other laboratory owners. Unfortunately, most dental laboratory conferences have been focused on the technical aspects of the business as opposed to the management aspects of the business. There have been very few places to get quality laboratory management courses taught by experienced and successful laboratory owners.

I strongly encourage the industry as a whole to focus as much on management courses taught by laboratory owners as they do on technical courses taught by master technicians.

Once you have developed a feel - and yes, laboratory management is all about a feel for the laboratory, find at least one person to start delegating to in your laboratory. You can’t manage if you are tied to the bench. As your laboratory grows, you repeat the same process.

Why should I care?

Financial Security - the right management team will generate more income for you and the laboratory than doing it yourself. I emphasize right team as in many cases, I see laboratories with individual technicians that don’t function as a team, let alone a management team.

Quality - again, having the right management systems in place actually leads to better consistency and quality. How often have you heard from dentists that when the laboratory owner is on holiday, the quality goes down.

Resale - if the laboratory revolves around you, it has less value to any buyer (sometimes it has no value). That is why most laboratories eventually just close their doors.

Burnout - I see too many laboratory owners burnt out from working too many hours. Is this the way you want to live your life? More importantly, what happens to your business and your family if something happens to you?

In closing, I would like to share with you what some of my friends and co-workers jokingly call a Paoloism:

Every now and then I meet a laboratory owner who talks about one of his or her employees as a diamond in the rough - a potential manager for the future. Just remember, diamonds in the rough are called CHARCOAL. It is only after a million years and thousands of pounds of pressure that the charcoal becomes a diamond. Filling the management gap is the same - it takes time, training and talent.
If you have any questions or comments, please feel free to email me at pkalaw@dtidental.com. Pls. put Bridging the Gap in the subject line so that I may respond promptly.