Thursday, November 29, 2012

Making Business & Customers For Life

There is nothing more important in business than Making Business.   For that reason, every employee of the company is in Sales, whether they know it or not because every interaction with a client or customer is a selling process.  Clients and Customers need constant validation that they made the right decision when they chose a particular company, service or product.   As such, the sale really begins after the contract is signed, with service implementation. 

At a time of high unemployment, it is really critical that all employees understand that the goal is Customers For Life and that their jobs really do depend on it.   In essence, clients and customers are making our mortgage and rent payments, since in many instances about 70% of company revenues go to pay total employee compensation and benefits.  
So when an employee provides great service and or says thank you to a client or customer,  it should be done with a recognition that the client or customer is providing our income and life style.   The relationship is direct.    The employer is just a pass through entity in this process. 

And, even though it may sometimes involve hard work and more stress, it is the most demanding clients and customers that push organizations, often guilty of inertia, to continuously improve processes and practices.   These clients and customers do us a big favor when they make demands that may seem unreasonable; but could be the basis for innovation.  

Services should be built from the client and customer back, not from operations, or internal administration out.   We, who work in service companies, should adjust to client demand, not the other way around.   Companies should never allow "the way we always do it" to be the dominant force behind business decisions.   All to often, we hear all the reasons we can't do something, rather than all the reasons we can do something from many employees in a company.   That attitude is a road to client losses. 

The fact is that as long as practices are legal and ethical, there is nothing companies can't do to satisfy the needs of clients and customers.   This does not mean maintaining unprofitable clients, or sloppy management, or ever losing control of the back office; but it may mean a willingness to consider alternatives.   Making business is everyone's job at every company.   Maintaining profitable Clients and Customers for Life is the critical imperative in this process.      

Wednesday, November 28, 2012

No Risk - No Business - No Wealth Creation

Years ago when I served on our Home Owners Association Board, we had to shut down a kid's lemonade stand because it was on one of our busy common area streets and was causing a road hazard as cars stopped to buy a glass of lemonade.   This 10 year old kid had invested his time and resources, or more likely his parent's resources, to buy the raw materials to make lemonade, only to lose his whole investment when our HOA Board shut him down.   

I hope the lesson learned by the kid was do your homework before you risk time and money, rather than never run a business again.   This CEO Blogger has been a risk taker and entrepreneur my entire life.   I have signed my name more times than I can remember, beginning with the first investment condo that we bought when I was 29 years old to all sorts of other property investments, loan guarantees and the starting of new businesses.   I like to think that I take prudent risk based on 33 years of business experience.  

But I know that without taking risks, there is no business and without business, there is no wealth creation.  The American dream is predicated on Free Market Capitalism and people taking risks, which is the basis for innovation and success.   And while Free Market Capitalism results in boom and painful bust cycles, it has created more wealth, for more people and a higher standard of living than any other economic system in human history.  

Even so, Risk Takers don't just arise by accident.   Risk Takers are the product of nurture and nature.   Parents create Risk Takers by encouraging creativity, independence and sometimes crazy ideas when their kids announce them; rather than teaching kids to be fearful about everything that happens in life.   While my dad was indifferent to my new ideas, my mom always knew that when I said, "Guess What", I was about to tell her of my latest idea, or plan.   Never once did she say, don't do it; though she always said are you sure you want to go down that path.   The decision was always mine from a very young age.  When I said I am going for it, she always encouraged me, without knowing it, to be a Risk Taker. 

Clearly, in addition to my mom's encouragement, I inherited the Risk Taker gene from my immigrant grandfather who came to America with nothing and lived the American dream as a business owner.   So the nurture, nature component is critical to risk taking.   Most people are not Risk Takers because they fear failure.  Thomas Edison failed many times before he invented the light bulb, as is the case with many entrepreneurs.  

Certainly, not every business I founded was a success; but enough have been successful to insure a life time of business expansion.   I was the kid with the lemonade stand and the lesson I learned was what Winston Churchill always said, "Never Give Up, Never Give In" and success will find you.  Without risk taking, there is no business and no possibility of wealth creation. 

Tuesday, November 27, 2012

The Perfect Boss

It has been more than 20 years since this Blogger CEO has reported to a boss, or even a Board of Directors, since I am the majority owner of a global company; though ultimately, I do report to God above, our clients and customers.  In any case, in the prior 20 years of my professional life, I probably reported to 12 or more bosses.   Several of the men I reported to were empty suits, when men still wore suits.   They looked the part; but with a scratch below the surface, they were a one inch deep lake because there was no there, there.   A few of the women I reported to were smarter; but overly controlling and sometimes distant. 

Even so, I made the best of it and learned something from all of them, both what to do and what not to do in order to be successful in business because each of us is the sum of our experiences.   To be clear, I am hardly the Perfect Boss; but having worked for so many, I think I can describe the attributes of the Perfect Boss, even if I don't always practice what I preach. 

The Perfect Boss is a good listener seeking all sides of an argument before making decisions.   The Perfect Boss is smart, well educated, articulate, detail oriented, when necessary and a good communicator.   The Perfect Boss is able to delegate work to other people because working through others is the only way to succeed.   The Perfect Boss is a change agent always looking for better ways to get things done.   The Perfect Boss is a problem solver, able to bring people together, to get big things done.  

The Perfect Boss is able to sort information quickly to turn gray into black and white.   The Perfect Boss is empathetic in dealing with other employees.   The Perfect Boss knows how to manage up, down and sideways, within an organization, using personal relationships to achieve success.   The Perfect Boss is decisive, particularly in bad times, or in the face of a company crisis.  Finally, the Perfect Boss is a mentor to direct report employees to assist them with their career development. 

This CEO Blogger has never worked for the Perfect Boss.   And, it may very well be that the Perfect Boss does not exist.   All of us, in a management position, can only strive to be the Perfect Boss.   It is a big hill to climb. 

Monday, November 26, 2012

The Perfect Employee

This CEO Blogger has encountered many employees in my 33 years in business.   Some have been great, some have been good and some just did not understand the concept of "work".   There have been employees that to this day are the basis of very funny stories that are often told by management after a few drinks.   I am actually chuckling to myself as I wrote the last sentence because some of the employee stories could have been published by Ripley's Believe It Or Not.   Those are the employees that when Human Resources calls and starts the conversation by saying, You Are Not Going To Believe This One, when recounting the behaviors, or actions of an employee.   Oh well, they say laughter leads to longer life. 

In any case, the Perfect Employee is a team player who is smart, well educated, hard working, positive, flexible, funny and willing to do anything and everything legal and ethical to insure the success of the company.   This is a glass half full personality that always makes lemons into lemonade.  I love these people because their energy is infectious. 

The Perfect Employee sees change as a new challenge and runs toward it, rather than away from it.  The Perfect Employee is not a complainer.  The Perfect Employee would never utter the words, "That Is Not My Job" when asked to do something new, or to help others with their tasks.  By the way, I HATE those words, "That Is Not My Job" and if I ever hear it from one of our employees, it is the kiss of death.   

The Perfect Employee is a natural teacher, without being a know it all.   Other employees look to the Perfect Employee for learning because they all know that the Perfect Employee will always stop to help by providing whatever information is requested.   In fact, the Perfect Employee is not an information hoarder.  If 100% of all employees were the Perfect Employee, companies would all be that much more successful.   If it was possible, we would be in Business Heaven.   It would be Nirvana.   This CEO Blogger can always dream. 

Saturday, November 24, 2012

Career Development - The Employee's Responsibility

Most companies are very focused on assisting employees with growth and development.  As such, training is often provided that is both job specific, as well as,  related to general skills development.   However, many  employees believe that career development is all about what the company can do for them.   As President Kennedy said during his Inaugural Speech, "Ask Not What Your Country Can Do For You, Ask What You Can Do For Your Country.   To change this adage to apply to business, Ask Not What Your Company Can Do For You, Ask What You Can Do For Your Company.   As such, employees must create personal value by developing job skills and or additional knowledge that can be used  to foster the company's growth and development. 

There are many employees that believe that job tenure should be the basis for promotion.   NOT.   While tenure may be a factor related to promotion, it is probably the least important.  Talent, experience and education are always the basis for promotion, particularly in a global business environment.   Without all three, what I call the package, employees will hit a glass ceiling.  Employees with just a high school education and little job experience are woefully ill prepared to work for a global company.  We need employees with higher education, significant experience and preferably multiple foreign languages to be really successful.

People are not born with global mindset.   It is created by natural curiosity, world travel, education and experience.   While vacations to the beach are relaxing, they don't build much knowledge of a country, or culture.   In addition to business travel, to the degree possible employees should use vacation travel to gain exposure to the world.  Learning should be a life long quest.   This Blogger CEO is amazed by how few employees take advantage of company paid tuition reimbursements, that are rather common, to further higher education.   This is particularly the case for those that have no university degree.   What a deal, when a company is willing to pay for some, or all of a university education. 

Career Development is ultimately the employee's responsibility.  Companies can only do so much to help someone become more valuable.   The employee must create an individual developmental plan and then work the plan.  Even though there is high unemployment in many countries, jobs go unfilled because of the talent gap.   Fill that gap and have a great job for life. 

Tuesday, November 20, 2012

Assessing New Business Opportunities

In the course of doing business, new concepts surface that may either be related to core services, or products, or be completely different.   The discussion usually centers on investment opportunities in an attempt to grow the business.   Naturally, when ever the word investment is used along with it comes the risk involved in the deal.   So, if company management decides to enter into a new venture requiring investment, or more important borrowing funds to do an acquisition, the real question is how likely is there going to be a return on investment and in what time frame. 

Short term thinkers in business are always looking for the quick hit to the bottom line in a few years.   Long term thinkers may be looking out 10 years or more in terms of return on investment.   This Blogger CEO is some where in between.   If we invest money in a new venture, I surely would like to see a reasonable return on investment in 5 years or less.  If that does not happen, it probably means that the concept was not well founded.  And, as they say in cards, you have to know when to hold them and when to fold them.   At some point, new concepts that don't work out and remain a drag on the company need to be ended.   Pulling the plug is often the right decision; though no doubt there will be emotional arguments, especially from those directly involved, to stay the course. 

Staying the course is fine for a time as long as it is not a road to nowhere.  Assessing New Business Opportunities is often about synergies and always about return on investment when all is said and done.  Some new concepts and acquisitions work out, while others do not pan out.   That is the reason why after much hoopla about an acquisition, within five years or less, companies often bail out and sell to the highest bidder.  It usually happens because the numbers that were the basis for the deal just were not there.  CEO's should always be open to new concepts, or acquisitions; but they should not pursue them without very careful due diligence.  What looks good on the surface often turns out to be an ugly duckling, which is the reason many acquisitions and mergers fail. 

Monday, November 19, 2012

Business Maturity - Just Take A Deep Breath

As someone who has worked in business for 33 years, during good and bad times, for great bosses and lousy ones,  I must say that this CEO Blogger really appreciates Managers that have Business Maturity.   No matter what the business decision, change in organizational structure, or other factors impacting a company, or staff members, life is not going to end for anyone.  Yet, some managers react as though life or death is at stake any time change occurs.  Frankly, the emotional drama is not very attractive, or warranted. 

To put this all in perspective, life events like serious illnesses, divorce,  death, or perhaps a job termination are justifiably filled with emotion.   But work is work requiring a steady hand, not emotional highs and lows often exhibited by Managers and other employees when ever their cheese is moved.   So what if a reporting relationship, or job changes.  Gosh, while working at Merrill Lynch for six years, I had 8 bosses that were the result of promotions, or their terminations.  Life went on as I never allowed any of it to impact my success. 

And, when things change at work as they always do, just go with the flow as long as the change is legal and ethical and don't worry about it.   Remember, you should be in it for the long haul; not a short sprint.  Look, I really appreciate employees that are passionate about their work; but the reality is that there can be many effective ways to accomplish tasks.   So keep an open mind and don't get crazy when the way it has always been done is changed.   Life is all about change and then we die. 

Thinking outside the square (the Australian version of thinking outside the box) is a good thing even if it is very threatening to many employees.   It should never be the basis for self imposed stress.   Take a deep breath and realize that new ideas are the basis for innovation.   Business Maturity is critical to success in any business.   Managers who exhibit it tend to get promoted.   Those that don't are on a road to no where. 

Sunday, November 18, 2012

Can Do People In Business

There are both Can Do and Can Don't people in every company.   Entrepreneurs are Can Do people.    We dream big and worry about the details later.   Can Don't people are all those in a company that immediately get into the weeds to identify all the reasons why a new concept won't work.   These people are a real downer and not much fun to be around.   It is a good thing Thomas Edison and Henry Ford were Can Do people; otherwise, the light bulb and the automobile might never have been invented, or perfected.   Even so, at the time, I am quite sure they had to deal with Can Don't people that told them they were chasing windmills.   And so the story goes with virtually every new idea, or product ever conceived.  Success has many parents, while failure is an orphan. 

Can Do people see things through very different glasses.  This Blogger CEO, as an entrepreneur, sees opportunities in virtually everything.   There are too many golf courses in the United States and so many of them are in trouble.   At a recent party with friends, in discussing this problem, as someone familiar with the concept of highest and best use in real estate, I suggested that many of these golf courses, the ones not built in the middle of homes, could be turned into cemeteries.   Instead of a hole in one, the slogan could be one in a hole.  75 million Baby Boomers are going to die in the next 30 years.   We will need more cemeteries to bury them. 

By using up unnecessary golf courses for cemeteries, it will make the ones left more viable.   This is a good thing.   When I first mentioned this idea to my friends, they chuckled; but I guarantee you when the first golf course is turned into a cemetery; no one will be laughing.   Can Do people make big things happen in spite of the Can Don't people around them.   Can Don't people usually just get pushed aside to get big things done. 

Friday, November 16, 2012

Managing the Company Calendar

In addition to establishing, well defined, measurable Performance Objectives, for every functional area of a company during annual Strategic Planning, it is important to finalize the Company Calendar for the new year.   Success does not happen by accident and since there are many conflicting events, it is important to establish a pattern that works for management to make sure that company goals are being met on a monthly basis. 

This Blogger CEO must plan my work/life a year in advance.   While this may seem rigid, it is the only way I can control events to the degree possible and the overall management of our company.   As such, after we factor in dates of the events we must attend that we cannot control and company holidays in various countries, we can then implement our usual pattern of monthly department, division and subsidiary meetings.   In addition, in our case, since financial management is critical to our success,  our Senior Management meetings are usually the fourth week of every month, since we need financials from the prior month to ascertain our standing to date, compared to budget. 

Once the Company Calendar is established, it is hard to make changes since all other dates are predicated on various meetings, conferences etc.   But, this does allow our Management group to plan vacations and other personal days off in keeping with the Company Calendar.   The best way to manage a company is to plan the work and work the plan.   Clearly, a well thought out annual Company Calendar is part of this process. 

Thursday, November 15, 2012

Fifth Grade Math In Business

This Blogger CEO focused on History, Political Science and Foreign Languages, while spending several years at university, which in many ways prepared me to manage a global business.  While I studied Algebra and Geometry before university, it was fifth grade math that prepared me to actually deal with daily management of a company.   Of course, those that studied higher level math, who no doubt are much smarter than me, would probably beg to differ; but then it takes them much longer to make management decisions because rather than trust their instinct, they must use computers to do basic addition and subtraction. 

And then, there is the smell test related to numbers.  If it doesn't smell right, or seem logical, it is probably wrong.  I think I learned that in fifth grade math too.   Fifth grade math is all about common sense.   Profit and loss can be analyzed using fifth grade math; though many in business attempt to make it more complicated.   A company is either making money, or not.  What part of that concept is hard to understand. 

The concept of "Show Me The Money" is always applicable.   And, since hope is not a strategy and cards talk and numbers don't lie, the numbers are either there or not.   Pie in the sky is a tasty road to no where.   So, what could have happened, or should have happened related to numbers doesn't add up either.   My old Italian grandfather, who only had a fourth grade education in Italy, was one of the smartest guys I ever saw when it came to numbers. 

My grandfather was in the grocery business for more than 40 years.   I always marveled at his ability to deal with numbers that were all in his head.   In his case, he used fourth grade math to manage a successful business, while amassing wealth the old fashioned way through hard work.    My grandfather understood that Cash Is King.

So, when the brainiacs at many companies start talking about sophisticated analysis to make decisions, let them have their fun; though it does slow down decision making.   At the end of the day, if the CEO of a company can't do a deal on the back of a napkin, using fifth grade math,  he or she probably doesn't understand the business. 

Wednesday, November 14, 2012

Management Control Freaks

Every company has employees that are Management Control Freaks.   These are usually very hard working, well meaning Managers that just refuse to give up work, even when given the opportunity to delegate to others.   These Managers just can't see it working any other way without their direct involvement.  They will give a million reasons why it is virtually impossible for work to be accomplished, unless they do it themselves.   This often happens because of the fear factor.   Control Freaks fear that others just can't do to it right.  Sometimes, there is an element of martyr syndrome attached to these Control Freaks, as well.   I call them self flagellators. 

For the sake of the individual and the organization,  we must help these Control Freaks recognize that they will be more effective it they can just let go of the things that are better done by other people.   So, it becomes necessary to literally pry work away from them, often by executive fiat, as the only way to make it happen.  

Ultimately, work should always be delegated to the lowest level possible within any organization and this should include an off shore option.   This CEO Blogger gets very frustrated when Managers assume that just because an employee has a particular job title, or job level that they cannot possibly do "higher" level work.   I don't buy that for a minute.  Hearing a manager say that certain work requires "thinking skills" and therefore some employees are incapable of accomplishing a particular task begs the question if someone does not have thinking skills, why did we hire them in the first place. 

My assumption is that with the right training all employees can achieve most tasks assigned to them.   Of course, we will never know if we don't give people a chance.   However, the Control Freak is so afraid of failure that they often say, "I would just rather do it myself than risk mistakes".   Or, the best one is that "I am just too busy to train someone else to do the job"; hence delegation never occurs.  

Senior Management must save Control Freaks from themselves.  They way to do it is to suggest highest and best use for their time and skill set.   In doing so, it may be possible to help the Control Freak see the big picture in terms of the best use of his, or her skill set.   Most important, the Control Freak cannot be allowed to continue hoarding work, when there may be better, more cost effective ways to get the job done. 

Tuesday, November 13, 2012

Developing Corporate Listening Skills

We all hear what is being said to us through a filter of personal experience, education, cultural differences, baggage and our own personality style, which in many cases means that we don't hear at all.   This Blogger CEO is often very frustrated during company meetings to realize that what is being said is not being internalized by many Managers in the room.   That is case because these filters often get in the way of real understanding.   For that reason, it cannot be assumed that all staff member attending a meeting are walking away with the right operative, or information.  This can be the reason work does not get done, as directed, or in the time frame necessary.  

There is also the notion of "teachable moment", that is people will internalize information only when they need to act on it.   Otherwise, information can become nothing more than superficial knowledge.   It is clear to me, especially during long meetings, that constant confirmation is necessary to make sure staff members are hearing what is being said.   The way to do that is through frequent engagement with key members in the meeting to see if they are really hearing what is being said.   Tangents that arise in the discussion are an indication that staff members are using their particular filters to sort information.   Sometimes this is positive and valuable, while other times it can be a waste of time. 

Developing Corporate Listening Skills is necessary to meaningful communications within a company.   Anyone managing a meeting must assume that only about 25% of what is being communicated is being internalized.  This percentage will go down further the longer the meeting.  If the goal is to promote learning during a meeting, then there must be some means of actually manipulating the information, which forces 100% attention by the participants.   Even then, validation of learning must take place.   While people can appear to be listening, more often than not, they do not completely hear, or understand what is being said.   So, the burden for developing understanding is on the business leader running the meeting, not the participants in attendance.   

Monday, November 12, 2012

Measureable Performance Objectives In Business

This CEO Blogger comes from a teaching background where we were taught about implementing behavioral objectives.   In business, this would translate to Performance Objectives, either for a department, division, subsidiary, or employee that are completely measurable.   So to put this simply, if the objective is to achieve cost savings, there must be a basis for measuring success.  

Very often, when management is asked to formulate Objectives, they are often very general and some times just feel good Objectives.  That does not work for me.   Since we measure Objectives by specific ratings including a Met Some, Met, Exceed or Far Exceed Rating, I want to see how these standards are met, or not met as the case may be.   I don't like subjective feel good Objectives.

Managing by specific Performance Objectives is the only way to determine if the company's goals are being achieved.   This system is also a pay for performance basis for both merit increases and any bonus program.   Years ago when I was a young manager at a major company,  I had no idea how or why I earned bonus because there were no specific Objectives in place.  It was always nice to get the money; but in many ways instead of buying good will, it bought bad will because I could never tell how my efforts contributed to the company's success.   Defined Performance Objectives that are measurable is the best way to manage any company. 

Saturday, November 10, 2012

Attending Conventions - Maximizing ROI

Every year, companies spend a lot of money attending Conventions.   And, while it is always fun seeing industry colleagues,  there must be a return on investment to make Convention attendance worth while.   Let's face it, while learning can come from the sessions at Conventions and that is a good thing especially for younger employees,  companies send Senior Management, Sales people and Account Managers to Conventions, either to protect current client relationships, or to foster new ones. 

The old rule that if you are not talking to your client, the odds are pretty good that a competitor is talking to them is valid.  As a result, the job of Account Managers attending Conferences is to further relationship building with existing clients.  And, since some amount of entertaining is always involved, that is not too hard to do. 

In some ways, the more important goal is for Sales people to meet as many prospects as possible during a Convention.   That can happen formally while doing booth duty, or informally during sessions, at the bar, or just about anywhere in the Conference facility.   The purpose is never a hard sell; but rather name recognition and relationship building to make sure that when the client goes out to bid that the company being represented is included in the process. 

All companies attempt to identify leads during Conferences.  That usually involves some sort of gimmick, or prize given away at the booth.   Ideally, leads should later be turned into face to face appointments.   And, while thousands of dollars are usually spent attending a Conference, it really only takes one signed client to provide a good return on investment. 

More and more, Conventions are also used to connect with partners in a company's supply chain.   Since everyone is in town at the same time, it is very common and cost effective to have partner meetings before, or after the Convention.   This usually requires that those in charge of a company's Business Alliance function also attend the Convention.   This becomes an important aspect of booth duty, since generally company's want their Sales people talking to prospects, rather than suppliers.   This then leaves the Manager, Business Alliances with the job of dealing with suppliers that come up to the booth. 

Attending Conventions is becoming increasingly expensive.  Companies should be careful not to send too many people because there can be a diminishing return.  Anyone who is sent to a Convention must recognize that it is work; not fun and games.  As such, prior to the Convention a well organized plan should be discussed with all staff members attending the Convention.   And, then it is important that those attending a Convention work the plan.  The goal must be to maximize return on investment, which by definition should be signed new business that was the result of the Convention attendance.   

Thursday, November 8, 2012

Information Technology Applications

It goes without saying that computer hardware, telephones and other equipment must function 7/24 in order to properly support a global company.  However, it is Information Technology Applications, software management that is critical to the daily operations of a good sized company.   Many companies use different software to manage various aspects of their business.   Efficiencies can be gained, if and when different software platforms speak to each other, through automated integration.  However, it can take lots of time and resources to get that done.

The challenge for those managing Information Technology Applications is establishing the right priorities to get the job done.   End users always ask for more and more software development to support their particular business areas.  Some of it is important, while a lot of it is "nice to have" enhancements.   Without management and sometimes even senior management intervention,  requests for software enhancements will far outpace the resources committed to this important function.  

The reality is that no matter how many people are assigned to Information Technology Applications, the number is never enough because End Users are never satisfied.  In addition, to best support a global company's Information Technology Application needs, an offshore component often needs to be part of the picture, since programming in India and other countries can be done much cheaper than in the United States, or Europe. 

As such, prioritization should begin from the client and customer back, rather than Operations out.  In other words,  what enhancements to software will make the customer and or client experience more beneficial.   Next, companies should look for operational efficiencies, presumably to improve productivity, though this Blogger CEO has never really seen big improvements to productivity from software enhancements.  In fact, the need for more and more information to support Operations, Clients and Customers is often more labor intensive, not less.

Information Technology Applications is a critical company function.  Managing it properly is challenging because everyone wants more and more information at their finger tips.   Since no company has endless resources to spend on any one function, management of Information Technology Applications priorities is imperative.  Rome was not built in a day and neither is it feasible for every function in a company to get all they they want in software development in a business year. 

Wednesday, November 7, 2012

Community Involvement Is Good For Business

Successful companies should encourage employee community involvement.  Giving back should be an important part of company culture.   There are several ways to do it.  Obviously, companies can always make donations to local charities.   And, or in cases of natural disasters, when people really need help, giving to the Red Cross, or other organizations that provide assistance is a very good thing in terms of the message it sends employees, clients and customers. 

In addition, in our case, we provide matching grants to encourage our employees to get involved with local charities.  We even will actually pay a small amount per hour to a charitable organization, when one of our employee's donates time to that organization.   This is all based on the honor system.  We believe in helping people in need; but particularly in charities in business to change lives, not just provide food for a day; though we do that too. 

Group projects, some times organized by activities committees to assist a particular charity, is not only a great way to build camaraderie and relationships within a company, it is a wonderful way to benefit those in need.  Those involved in charitable endeavors should be recognized each year, which is the reason we provide an annual monetary Community Service Award to the employee selected by committee as most deserving. 

Community involvement is good for business.   In helping others, we really get back far more than we give.  Companies definitely have a role to play in assisting those less fortunate within the community because government cannot do it all.   

Monday, November 5, 2012

Hiring The Right People

There is no more important decision a company can make than Hiring The Right People.   This is the reason, though this Blogger CEO does not interview all of our new hires, I do review the resumes of the people we are hiring before a job offer is approved.   This is possible because we are Mid Sized company.   In larger companies, this process would be impossible; but nevertheless my premise is still correct.  

I am looking for people with the "package"; appropriate experience, education, maturity, attitude, neat appearance and stability.   When I see a resume with lots of job hopping, we often pass on that candidate.   This is frequently a problem for millennials that think they can just move from job to job, every year or two, without a negative consequence.  That does not work for me. 

It is impossible to see "attitude" in a resume.   Attitude is exposed during the interview process when it is always best to ask lots of open ended questions.   The answers not only display attitude, we can see communications skills, which are really important in a service business.  For my purposes, when we look at candidates for hire, I am not only interested in determining if the candidate can do the job in question; but also future jobs we may have in our company. 

As a result, I look for flexible people that will not get flustered when we make changes, which happen frequently in all companies.  In addition, really talented people can multi-task working on many things at once, which is really important because work does not always happen in neat little boxes. 

Finally, I have written about the personality styles.   Certain jobs require certain personality styles.  Hiring a Lucy, the creative, zany personality style in Accounting will not work.   Conversely, hiring a Fred, the quantitative personality style in Sales is probably not a good idea either.  This is not about intelligence; but rather mental orientation and work style.  Clearly, Hiring The Right People is the most important decision any company can make.  It takes time and due diligence; but it is well worth the resources to get the job done.    

Sunday, November 4, 2012

Using Social Media & Networking

When this Blogger CEO began in business 33 years ago, the IBM Selectric Typewriter was considered state of the art technology.   There were big box main frame computers; but there were no desk tops, cell phones, Internet, email, or even voice mail.   We had fax machines, (I think) and teletype machines that were often used for international communications because international calls were very expensive.   Yet, in spite of it all, somehow we conducted business. 

This all changed in the early 90's with the advent of the desk top computer.   In fact, as a side story, desk tops used to come with a little sticker that said "Intel Inside".   So one day, I called my stock broker and told him I wanted to buy 100 shares of Intel stock.  First, he said what is that.  Then when he looked it up, he tried to convince me not to buy it, saying it was too risky.  I told him I wanted to buy it anyway.   The price was around $18 a share.   Suffice to say, I made a pretty good decision because my Intel stock has split many times. 

In any case, we have come a long way since those IBM Selectric Typewriters.   A small Server today is many times more powerful than those big mainframes.  We have global connectivity with live data around the world.  Email and video have made communicating so much easier.  And, we have now started using Social Media and Networking to communicate a company's message.   This old timer writes two Blogs everyday; one political and this one, the Business Management Forum.  I also do a weekly political radio show.  After some convincing, I finally went on Linked In.   Today, I have over 1,500 contacts from throughout our industry and the world.  For my purposes, it is a great talent pool that I look to when ever we need to recruit new employees.  I usually implement several webinars each year to disseminate information, which allows me to extend my reach without traveling and after 5 million air miles, that is really great. 

A company must regulate the use of Social Media and Networking to make sure that this powerful tool is not used to the detriment of the company.   As such, most companies have developed policy related to what is, or is not acceptable.  This is particularly true related to Face Book.  Employees must understand that what they put on the Internet could come back to haunt them and their employers.   What might seem funny might turn out to be very damaging.   

The use of Social Networking and Media will continue to expand.  It is difficult to imagine where this is all going; but one thing is for sure, this trend is not going away anytime soon.   Company management will need to harness this energy to positive effect.   This is a new frontier of communications that will require more time to mature.   Who knows, this Blogger CEO may never have to travel again. 

Friday, November 2, 2012

Managing Tax Liability

Companies are often measured on the basis of Pre-Tax Profit.  That is the percentage earned by subtracting expenses from revenues; to reflect perhaps a 10 or 12% profit.  But that is just part of the story.   It is not what a company earns that is important, but rather what a company gets to keep to make further investment in the growth and development of the company.   Governments all over the world impose Corporate income tax rates ranging from about 12% to the highest in the world in the US at 35%.   The US corporate income tax rate does not include state corporate income taxes, which can add another 3 - 10% depending on the state. 

As a result, companies that do business in the US may be paying as much as 45% of their Pre-Tax Profits in corporate income taxes, unless actions are taken to Manage Tax Liability.  This does not imply doing anything illegal; but rather taking advantage of lower tax states, or countries to cut corporate income tax liability.  In essence, when corporate income taxes are too high companies, just like people, often vote with their feet when determining the site of a new plant, or office location. 

Today, that decision is made on a global basis as companies choose to locate operations in countries that levy lower corporate income taxes to attract business   So, in addition to considering other cost factors, like labor, shipping and materials, more and more, tax considerations play a big part in locating a new plant or office.    

This Blogger CEO has watched and been involved in business migration for the last 30 years.  In the US, many companies have moved from high tax to low tax states.   For example, California that 30 years ago had 250 major companies with 5,000 employees or more, today only has 106 such companies because California has very high corporate income taxes and regulations that make doing business in that state difficult.   As such, large and mid-sized companies have been leaving California for years.

The same thing has been happening related to movement from country to country.   Since the United States has very high corporate income taxes, companies have moved operations to other countries with lower corporate income tax rates for years.  Accountants are paid millions of dollars every year to legally assist companies with Managing Tax Liability.   Again, it not what companies earn that matters, it is what companies get to keep to invest in future growth and development that is important.   

Thursday, November 1, 2012

Re-engineering Processes To Increase Productivity

Several years ago, this Blogger CEO determined that we needed to increase productivity to cut costs.   There were two ways this could be accomplished.   I could have just slashed staffing by 10% and unnecessary work would have just been eliminated because there would have been no one to do it, which was my preferred approach.  Or, I was convinced by our Senior VP of Operations that we needed to implement re-engineering to more scientifically eliminate unnecessary processes and practices, which ultimately proved to be a road to no where.    

In any case, a multi-disciplinary Task Force was convened to get the job done.   The group spent almost two years, looking at every detail of our core services.   The end result was that work was just shifted from one group to another.   They squeezed the balloon and work just popped up some place else.  With the exception of one department, that did make some tangible productivity gains, absolutely nothing was achieved.   Ironically, it was that department's back office accounting work that was eventually off-shored to India at my insistence to cut costs.   This CEO Blogger had been snookered.  It is important to note that the particular Sr. VP who suggested re-engineering is no longer with our company. 

And, then there are the productivity gains that are supposed to come from increased expenditures in automation.   With the exception of the elimination of many old style secretaries that has occurred over the last 20 years because of word processing, gains in productivity as a result of more advanced automation is questionable because of the staffing requirements necessary to support the automation and the time needed to actually implement and use it.   

In fairness,  increased tracking of work is necessary today because of various client reporting requirements; although, we have added many automation bells and whistles over the years that staff members and sales people, in particular, tell us are absolutely essential to both supporting existing clients and signing new ones that clients never use.   As a result, this Blogger CEO is often very skeptical of promised productivity increases that are supposed to come from advanced automation that just never seems to happen.  We have state of the art automation today; yet just as many people implementing our services as before.   Go figure.

In a service business 65 - 70% of expense relates directly to headcount.   And, when dealing with any manager with direct reports, he or she will tell you we are under staffed in his or her department because if you go looking for unnecessary work, you will always find it.  Since re-engineering failed to increase productivity in our company and there is a natural tendency toward growing staff, today this Blogger CEO approves all headcount additions, salary adjustments and promotions.   This is possible because we are a Mid-Sized firm.  

It would be impossible in very large firms for the CEO to take on these responsibilities.   Instead, what happens in big companies is employee creep; that is staffing grows by a pretty good percentage each year in good times.   Then when bad times hit, the CEO orders mass lay-offs as the way to control headcount and resultant costs.  That is the reason it is often reported in the news that a big publicly traded company will lay-off 10% of its workforce, or several thousand people reflecting boom and bust cycles. 

Be leery of project based re-engineering because it can be a path to no where and nothing more than a stalling tactic.  Instead, practice continuous improvement always asking the open ended question, why do we do that?  Since I spent 15 of my 33 years in business providing complex Consulting Services, this Blogger CEO has a great advantage in that Consulting is all about asking lots of questions.  In addition, 33 years of multi-disciplinary experience in the trenches allows me to apply the smell test across business functions.

If it smells fishy, there is usually something wrong.  Finally, just apply common sense and the principles learned in 5th grade math to improve processes and productivity.   As a management principle, cards talk and numbers don't lie.   Show me the numbers is always a good approach.  It doesn't take two years and lots of wasted time to figure out that something is not working.  This Blogger CEO got snookered once related to re-engineering.   That will not happen again.