Monday, December 31, 2012

Don't Sweat The Small Stuff

Very often in life and in business, people sweat the small stuff, rather than focus on the big picture.  Employees are often very concerned about job titles, job grades, office size, the equipment they are given, back office support and tasks they are asked to do that may not be in their job description.   None of this stuff matters.  When all is said and done,  it is pointless to worry about stuff you can't control, particularly when it is used as an excuse to do a poor job. 

Valuable employees ask for more work, or certainly step forward to help others with their work when they can.   They never complain about the work they are given to do and they never, never use the words, "That is not my job".   Valuable employees get promoted, or maybe even more important, when there is a downturn, they are rarely get laid off.   Valuable employees don't sweat the small stuff.   They are in it for the long haul and they realize that there will be up's and down's in any job, or business; but life will go on just fine anyway. 

Taking the small stuff in stride eliminates a lot of unnecessary stress on the job for everybody.   It also reflects a mature business personality.  I can also say from a Senior Management perspective that employees focused on the big picture, instead of the small stuff, are a lot more productive and enjoyable to work with.   This CEO Blogger just doesn't have time to focus on the small stuff.   People who continue to focus on the small stuff test my patience; usually not a good thing in any company.   It also shows that they are small thinkers, when it is big thinkers that are valued most.   Get the picture. 

Saturday, December 29, 2012

See The Train Coming Before It Runs You Over

Both in life and in business, it is really important to see the train coming before it runs you over.   Instead, people are often shocked when bad things happen to them when in fact, they failed to see the indicators that were staring them in the face all along.  This is particularly true when an employee is terminated and it is a big surprise to the employee. 

This CEO Blogger always plans for the worst case scenario and if the best case scenario happens, we are just that much further ahead.   That strategy has served me well my entire working life.  That is really true related to budgeting.   I just do not allow pie in the sky budgeting because I know more often than not unrealistic numbers never come to fruition.   

But it is not just about numbers.   It is important to see threats that could negatively impact a company long before they occur.  These could include threats coming from competition, government, new laws, outdated business practices, poor performers, etc.  The same thing is true related to personal life; just the threats are different.  A problem employee must be dealt with quickly rather than allowed to harm the company.   It makes no sense to retain clients that are not profitable, no matter how big the name.  Security issues must be anticipated and dealt with to prevent a potential tragedy.   There must be thorough business continuity planning in place in the event of a natural disaster, or civil strife that could shut down a business, or local office.    This is all about thinking ahead to anticipate the What If 's to prevent bad things from happening to good people and good companies. 

Years ago, when we off shored critical accounting functions to India, I asked about Disaster Recovery Planning.   Of course, our partner in India had very good redundancy in place to deal with normal events; but then I asked about the Nuke issue.   There was a puzzled look on the faces of their management.   I went on to say that India and Pakistan both have nuclear weapons pointed at each other.   Since Pakistan is so unstable and often hostile to India, I asked what would happen if there was a nuclear exchange.  

Since our employees in India would likely be dead, or very seriously injured, including those that could provide any redundancy,  we put mechanisms in place to bring those functions back to the United States quickly, if this horrible event ever occurred.   Since this is a critical company function, though we would grieve the loss of our staff members, we just could not chance losing this service capability.   This is an example of seeing the train coming, even when some event seems far fetched. 

A good Senior Manager must have survival instincts and what I call radar antennae.   My antennae go up when ever something does not pass the smell test.   I guess after 33 years in business, I am inherently suspicious and somewhat distrustful and always ready with Plan B.   If something appears too good to be true,  it is usually because it is not true.  People and companies that fail to see the train coming are often run over, or eventually end up out of business.   This is probably the reason many new businesses fail within the first few years of founding.  When it happens, there are always a million excuses; but in the end, it is really just a personal failure to see the train coming, whether in life, or in business. 

Friday, December 28, 2012

What Doesn't Kill You Will Make You Stronger

Both in life and in business, what doesn't kill you will make you stronger.  This CEO Blogger comes from very humble beginnings.  Though my immigrant grandfather was a successful businessman, I watched my blue collar parents really struggle, living pay check to pay check, like so many other Americans.  While we always had food on the table, clothing and a roof over our heads, there really wasn't much of anything else; no vacations, no eating out, no luxuries of any kind, no fun. 

I determined at a very young age that I would not be in this position, which caused me to begin working at 12 years old, while other kids were enjoying their childhoods.  By the time I was 17, I worked at a pet shop, a dog groomer, a grocery store, the Ontario Speedway, selling programs and peanuts,  the LA Zoo as a vending machine operator and Dodger Stadium running souvenir stands.  

Now at University, once I turned 18, I started selling ladies shoes in Beverly Hills to rich women, including many movie stars, that shopped for a living.  This turned out to be very fortunate for me because I began earning more money, on commission, than many adults working full time and double what I earned as a first year teacher.  As such, no student loans for me.  I was never a starving student, that's for sure.   Ultimately, after earning several university degrees, I ended up teaching in the barrio in East Los Angeles for six years and then joining Merrill Lynch as a very young manager at 29 years old.   The rest is history and today I own a global company. 

Years later, during a family discussion, while I was not complaining,  since I never asked for any help, I mentioned to my Dad that he never gave my brother or me; one dime for university, or anything else.   My father responded that he would have helped; "but I didn't need it".   To which I said, I didn't need it because I worked my butt off, going to university full time, while working 30 - 40 hours a week.   Dad quickly retorted,  "And, you are better off for it and stronger because you did".  Though this was many years ago, Dad went on to say, "Look where you are today because of your hard work".   I never realized it at the time, but my father did me the biggest favor of my life by giving me nothing.   It created my relentless drive to succeed and survival instints that continue to this day. 

This CEO Blogger only recounts my personal story to demonstrate that anyone can come from humble beginnings, with enough hard work, Focus, Discipline and Passion, to accomplish big things and eventually become wealthy.  Many employees make excuses for their lack of success.  If you are a 9 to 5 employee in a 7 to 7 world, get with the program, or live with your fate.  If you hate your job, or boss, as I often did when I was a kid, do it better than anyone else to get a better job.  If you have been passed over for a promotion because you don't have a university degree, get one.  If you are living pay check to pay check, first get your life in order and second, get the job skills to make more money.   I can attest that what doesn't kill you will make you stronger.  I know.  I have been there, done that. 

Thursday, December 27, 2012

The CEO Is Always Right - Really

The CEO of any company should provide the vision for the firm, the structure that results in orderly management and general direction to achieve the company's goals and objectives.   In this CEO Blogger's case, I am also very focused on new hires and properly recognizing key performers because I know that our success is entirely dependent on our people.   That means having the right people in the right jobs.  

Generally, once all the right elements are in place, company management should be able to deal with day to day management of the firm.  However, there are times when the CEO must step in to alter course, or make corrections because something is not working and the managers closest to the problem are too vested in current approaches, or practices to make the necessary changes.  

The CEO is always right, sort of.   If the CEO is right more than 80% of the time, that is probably as good as it gets.   If the CEO is not right at least 80% of the time, the odds are that he or she will not be CEO for long.   In publicly traded companies, there will be calls for ouster of the CEO, if he or she is not right most of the time.   In privately owned companies, a failing CEO will either cause bankruptcy, or in some cases the sale of the company because of poor results.  

If the CEO is also the founder and owner of the company, the real question is can this Entrepreneur actually manage the firm.   In many cases the answer is NO and it does not take long to see it.   If that Entrepreneur came to the CEO job just from a good idea, or concept, rather than solid business experience, in addition to the Focus, Passion and Discipline necessary to manage an enterprise, the odds are pretty good that the CEO is not be the best person to manage the company.  

When that happens, the job must be entrusted to an experienced President with the authority to manage the firm.   That means that the CEO/Entrepreneur/Founder must be smart and wise enough to realize that it is one thing to come up with a brilliant idea and quite another to execute on that idea to achieve company growth and success.   That is also part of being right most of the time.   

Tuesday, December 25, 2012

The Multi - Million Dollar Idea

Years ago, this Blogger CEO and a business colleague of mine ran into Jerry Seinfeld, the famous comedian, whose show, perhaps the best comedy show of all time, was still running in prime time.    When we saw Jerry who was getting into his Porsche Carrera in front of a hotel, we told him that we could write for his show because we knew the characters so well that we felt certain we could take an idea and build a show around it.   Remember, this was a "show about nothing". 

Without missing a beat, when we told Seinfeld that we could write for his show, he retorted, "Sure You Can NOW".   The point to his comment was that he had come up with the Multi-Million dollar original idea and so of course, it would now be easy for others to work off his idea.  Seinfeld had developed the zany characters and the basic plot that made the show so successful.   Since it was a "show about nothing" that worked for years and is still in reruns, just as funny as ever, it all looked so easy.    But instead, the concept was an act of genius, rarely repeated in television.  

So too in business, the innovator, who first comes up with an idea, particularly if risky, is deemed crazy if unsuccessful and a genius if a good idea turns into a multi-million, or billion dollar business.   The line between lunacy and brilliance is often just success.   And, it looks so easy after the fact to all of those wannabes that never came up with a good and profitable idea in their life.   Further, in some cases, there is even jealousy, or resentment, when the innovator gets rich after pursuing such a "simple idea", presumably that anyone could have thought of; but didn't.    Seinfeld's simple idea made him a multi millionaire.   Good for you Jerry, you earned it the old fashioned way by coming up with a great idea we all loved, just like often happens in business.    

Sunday, December 23, 2012

The Pitfalls Of The Successful Salesman

This CEO Blogger believes that successful sales people are born, not made.  While training can be provided to enhance sales ability,  some one either has the sales gene, or not.  That is probably the reason why 80% of the business is usually sold by 20% of sales people.   And, it is also the reason why there is usually high turn over in Sales.  Those that don't have the gene are usually terminated and move on to another company, until they are terminated again, or leave because they know termination is coming, for lack of performance. 

By definition, a sales person should be signing several accounts, or new clients a year to be deemed successful.   Of course, this is dependent on the particular industry, since sale cycles can vary dramatically.   Usually, however, within a year or two of hire, we know if we have a successful sales person, or not.   This is a totally quantitative analysis because cards talk and numbers don't lie.   No matter how much we may like a sales person, if we don't see a healthy pipeline and signed new business, within a year or two, it probably will not happen in year three or beyond.  It is what it is. 

Successful sales people must be careful that they don't fall into two traps.   The first relates to EGO.   Some times the successful sales person becomes impossible to deal with and therefore others within the company are often offended by the EGO based behaviors they see.   When that happens, other staff members will not be supportive of the sales person, even if he or she is signing business.   And, when the day comes that the sales person has a dry year, they will push for termination to get rid of someone they see as obnoxious and disruptive.   Instead, the most successful sales people should be humble and collaborative, recognizing that new business is signed as a result of team, not individual effort.   Thanking those involved in the sale is essential to good relationships. 

The second trap many successful sales people fall into is living way beyond their means as a result of variable commission.   When that happens, the sales person is on a thread mill and path to self destruction.   It would be best to save and or invest at least 50% of those commission dollars because there will be years when commissions are lower causing financial stress, which is avoidable with proper planning.  

Successful sales people make a lot of money.   The key is where they will be at 50 years old.   With proper planning and investments, the successful sales person will be set for life.   Or, at 50 years old, he or she will look back at all the money they have made and ask where did it all go. 

Wednesday, December 19, 2012

All Work Is Not Equal - Funding Departments

Arguments can be made to fund every function of a company.  But the truth is that all work is not created equal, or even important.   And, that is certainly true about every function within a company.    Prioritization is absolutely critical to prevent headcount creep.  Since headcount in most service companies is about 65 - 70% of expense,  Senior Management must guard against requests for additional headcount to accommodate nice to have tasks; but not necessarily need to have tasks.  That can be difficult because all tasks are presented, by those involved, as a life or death proposition, when in fact life will go on just fine when some tasks are eliminated. 

Further, based on the company's strategic plan, some departments should just be in a maintenance mode, rather than expansionary, in order to fund other functions focused on growing the business.   Without continuous business growth, enhancing various department functions won't matter much anyway.  Necessary tasks should always be prioritized from the customer, or the client back to determine the most bang for the buck.   This should never be an emotional discussion; yet those directly involved will always be emotional about their department functions. 

Years ago, this CEO Blogger attempted to do some process mapping related to a particular service we were providing.  There began to be market resistance to paying for this service, which was the telling tale that all the bells and whistles we were providing were not valued by the client.   In meeting with those involved that had created the service, I simply asked the question, "Why Do We Do That" related to each aspect of the service.   It was the equivalent of telling those Managers, that had developed the process, that they had an ugly child.  Suffice to say, we did not get very far because every task was justified on the basis of "quality" that presumably would be seriously diminished if the task was eliminated.  

Quality is frequently used as the excuse to maintain various tasks and the resultant headcount needed to accomplish it.   Quality is not to be confused with the accuracy reasoning to keep doing something, which is a much better sell to Senior Management.   However, the market demands high quality only better, faster and cheaper, which requires out of the box thinking instead of same old, same old.   That means that some tasks, or even whole departments must occasionally be eliminated in favor of work that is more meaningful to better allocate resources to foster the company's growth and development.  It is often an emotional process; but it is what it is and it must to be done to insure the health of the company. 

Tuesday, December 18, 2012

Business Management 101 - Show Me The Money

While company's in business to earn a profit should do what they can to support various charities and other good causes, as responsible members of a community,  company's are not charities.   That means there must be a sense of urgency among company managers to build the business to generate profit.   In doing so, it may also mean making tough decision about divisions, or subsidiaries of a company that are not performing well.  

At some point, if a business model is not working, it may be time to shut it down, or sell it off.   Managers must approach these discussions without emotion.   As they say in cards, you have to know when to hold them and when to fold them.   If losses are consistent, it may be time to take the write off and move on to greener pastures.  

It really does not matter whether results are poor because of market reaction, or a talent deficit.   If after trying various approaches and perhaps making management changes, in the end cards talk and numbers don't lie.   A company must decide where to best commit talent and resources to grow the company related to return on investment.   If there are better places to put money and people, management has an obligation to act in the best interest of the stockholders of the company.   This is just Business Management 101. 

Monday, December 17, 2012

The Law Of Unintended Consequences

Every action results in a reaction, in business and in life, which sometimes involves the Law Of Unintended Consequences.   As a result, in taking any action, it is important to think through the likely downsteam reaction.   So for example, if certain headcount is eliminated to save costs, which on the surface may seem beneficial to the company, what is the likely outcome.   Will it cause other employees to leave the company?   Will it result in poor service that could cause client and revenue loss?  

Decision making isn't simple because of the Law Of Unintended Consequences.   Years ago, in working with one of our clients, a Director level employee was terminated for cause.   That one termination resulted in five employees being relocated to fill various jobs that became open as a result of this one termination.   There was a domino effect.   At the time and this was years ago, the cost to the company was over $300,000 as a result of the unanticipated relocation expense and that did not include the severance cost to terminate the employee, which was sizable.   This one decision cost the company about $400,000 when all was said and done. 

Of course, no one knew this was going to occur when the employee was terminated.  And, since this was a big company, management actually did not know this was happening until all the moves took place.   After it happened, company management was stunned by the outcome and the cost.

Things like this happen all the time in business and in life.   It is the Law Of Unintended Consequences that often runs us over like an out of control train.   This is the reason hasty decision making, without considering all the consequences,  it not a good idea.   Take the time necessary to consider all the ramifications of a decision before moving forward.   This does not mean months of deliberation; but it does mean a due diligence process to at least try to understand the end of the story before it happens.   It could save a lot of pain and suffering for all concerned. 

Saturday, December 15, 2012

Violence In The Workplace

With the recent tragedy and murder of school children and others in Connecticut, we are reminded that there can also be violence in the workplace.   From time to time, we have seen employees go "Postal" coming to work with a weapon to do harm to other employees.   This CEO Blogger's wake up call happened when the bi-polar, divorced wife of an employee came to one of our offices with a knife in hand presumably intending to harm her former husband.   From that point on, we installed security systems in all of our offices making it impossible for anyone to just enter our offices without being identified and buzzed in to our facilities.   We also have cameras in various locations in our buildings so that we can monitor both internal and external activities. 

These simple precautions are the least we can do to protect our employees.   In addition, we do drug and credit screening in an attempt to weed out potential new hire employees that may have issues that could impact their behaviors.   But these steps, in and of themselves. are not enough to guarantee a safe work environment.   Many families are dysfunctional dealing with marital and family issues, divorce,  substance abuse and serious financial issues.   As such, given the seriousness of these problems, this CEO Blogger is often amazed that employees can function at work at all, at any level of competence, when facing these issues.

Sometimes it is obvious when an employee is in crisis, while most of the time these things are happening below the surface.   However, any manager with direct report employees must be vigilant in trying to identify employees in crisis.   While there are privacy issues that must be considered,  it is critical that when we see an employee in crisis, we point that employee in the right direction for help.   Most companies have Employee Assistance Programs designed to provide counseling and assistance.   Providing this crisis intervention is very important to preventing the potential for work place violence. 

Finally, in many cases the violence that has occurred in the work place happened after disciplinary action, or terminations.   As such, not only do these employment practices, that happen every day, need to be documented, they must be done sequentially giving the employee time to digest and internalize the process.   Termination should never be a surprise, out of the blue.   If someone is not performing in the current job and there is no other suitable position within the company, providing the employee the opportunity to resign, rather than be fired, is the best option.  

Still, if dealing with someone unstable, precautions must be taken to make sure that violence is not the end result.   Sadly, violence in the workplace is a fact of life.   The best we can do is take very step possible to make sure we maintain a safe working environment. 

Thursday, December 13, 2012

The Know It All In Business

This CEO Blogger has worked in business for 33 years.   I have certainly been around the block a few times; but I still continue to learn new things everyday.  While I know a lot after many years in business, I  don't know it all and neither does anyone else, no matter how smart, or how experienced they may be.    There is nothing worse than the Know It All In Business, or maybe even in life. 

Know It All's are often too busy talking to learn anything new, which tends to stunt their growth and development.  Ironically, in some instances, the most powerful person in a room is sometimes the person that says nothing at all, choosing instead to listen to all sides of an argument before making a decision.   In fact, the best positioning is to ask lots of questions, rather than make lots of statements, to get at new information. 

Know It All's can be pretty obnoxious and after a while, they will be avoided by other staff members, tired of hearing Know It All opinions, which may have no basis in fact.    This is not to be confused with genuine teaching, or training that can come from experienced people helping others within an organization to grow and develop. 

If you encounter a Know It All, avoid confrontation because it is a waste of time.   Tolerate the behaviors for as little time as possible and then go about your business.   Know It All's, Know It All, so there is no point in trying to communicate with them because there is nothing you can say that will provide them additional enlightenment.   So why bother! 

Wednesday, December 12, 2012

Developing A Global Mindset

The odds are better than 50/50 that kids going to school today will work for a global company.   As such, parents and schools need to work on developing a global mindset from a very young age.  This means studying other languages and being exposed to the world throughout elementary, secondary and university years.   And, if possible, at least in some years, travel to other countries is a great way to expose children and young adults to the world, they will eventually face at work. 

As a former history and government teacher, this CEO Blogger will be a teacher for the rest of my life.   As a result,  we used vacations, not just for fun; but to educate our sons.   We were very fortunate since as a result of my business travel, we always had lots of airline and hotel points, which allowed us to travel for free.   While I had traveled to various cities in the United States by the time I was 20, my first trip to Europe happened the summer I was 20.   Our sons, on the other hand, not only saw many major cities in the United States, by the time they were 18, they had been to Europe several times and one of them to Japan before university graduation.  

Obviously, this is not possible for most families because of the cost, as was the case when I was growing up,  so out of natural curiosity, I turned to book learning and studying various other languages, which provided not only a window to the world; but cultural training and orientation.  Ideally, if I was advising a young kid today, I would suggest getting an undergraduate liberal arts degree to learn about the world, including learning two or three other languages, followed by an international MBA to learn about business.   This is the perfect and necessary education to prepare anyone to work for a global company. 

Those working for a global company today, that did not come into the workforce with this exposure, must fast track the development of a global mindset.   There is no other alternative.   This means business and vacation travel to numerous countries; but it also means using the Internet and some book learning, including studying other languages.   Yes, it is fun to have a beer in a local pub in another country; but that is the tip of the iceberg related to developing a global mindset.  

Understanding the religious, historical, linguistic and cultural heritage of a country is the key to doing business in that country.   That knowledge will not come from just business, or vacation travel.  Developing a Global Mindset involves travel, serious study and interaction with locals.   There really is no other way, if it did not happen early in life.   

Tuesday, December 11, 2012

Achieving Your Potential In Business & Life

Most employees never achieve their potential in business, or life.   This happens because they are not risk takers and or because there are nay sayers every where eager to tell you all the reasons your ideas are goofy.   Believe me, I know from experience.   I have been different my whole life.  If someone had told me 33 years ago that one day I would own a global company when I was a young teacher in the inner city in Los Angles, in my wildest dreams, I could never have imagined how that would happen.   Yet, here we are today because I signed my name many times, taking risks and because I trusted my own gut instinct, over the many people who told me along the way, that the odds of success were minimal.

The fact is that if you are reasonably smart, not necessarily a genius and willing to work very hard, you can achieve anything you set your mind to do.   Of course, it takes the Focus, Discipline and Passion I have previously written of; but if you don't dream big, you cannot achieve big dreams.   Forget about all the nay sayers.   If you do, one day they will be working for you.  

Don't be afraid to be different, even unique because those who are the same rarely achieve big things.   Don't strive to be rich, strive to accomplish big things and be successful and riches will follow.   Keep your eyes open for opportunities because they are every where around you.   And, when opportunity comes knocking, open the door.   As an entrepreneur, my problem is that I see too many opportunities, literally in every interaction that I have, so sorting is necessary for me to stay focused.

You and you alone are in control of your life.   Look to your inner strength for inspiration, not other people.   Stop making excuses, or blaming others for your lack of success.   You can do a lot more if only you step up to the plate and accept responsibility for your success.   Remember, if you don't  achieve something big today, it is gone forever.  So don't waste the day achieving little of importance.   

Sunday, December 9, 2012

Creative Thinkers In Business

In general, companies are hostile to creative thinking and creative thinkers in business, preferring instead tried and true methods that have evolved over time.   This is probably true because companies inherently fear risk.  However, creative thinking is the basis for innovation, which is essential to beating out the competition.   Do creative thinkers sometimes wreak havoc within a company?   The answer is Yes because status quo personalities, naturally resistant to change, are often offended by new ideas, particularly if the new idea is perceived as the replacement of "the way we have always done it".  

In many ways, it is the role of senior management to act as an arbitrator to determine when the old ideas, or practices really do need to replaced by new ideas.   To get buy in, tenured employees within the company must participate in development and implementation of new ideas.  And, there can never be too much communication and training to fully incorporate a new idea into daily operations.   Still, there will always be old timers, longing for the good old days when we did things "right", instead of the way we are doing them today.   That's OK as long as status quo employees don't become negative obstructionists.   If and when that happens, it may be time to move an employee into another job, or if really bad, out of the company.   

It is possible to teach an old dog new tricks, sometimes kicking and screaming; but it is not always easy or fun.   New processes, or technology are presumably the basis for higher productivity and efficiency.   As always, companies must look for better, faster, cheaper ways of getting work done.   This is a never ending process of change that often is predicated on creative thinking.   Creative Thinkers, no matter how disruptive to an organization, should be recognized and rewarded.  

This CEO Blogger is just pleased to see New Thinking, when ever and where ever it happens in the company because innovation can and should happen from the bottom up; not always the top down.   However, many employees, particularly those that are not risk takers, are on automatic pilot, preferring instead to be told what to do and when to do it.   As such, it is really fun to see Creative Thinkers in action.   All companies need more of them. 

Thursday, December 6, 2012

Compensation & Benefits - Squeezing The Balloon

Most American companies commit 65 - 70% of revenues to employee compensation and benefits.   That leaves roughly 30% of revenues to pay for rent, computers and other equipment, travel, marketing and other non-employee expenses.   This really does not leave much for investment in new initiatives that might represent future growth and development, which is the reason some companies borrow money to fund new initiatives; though that just means money needed to go into debt service.   Yet, some times employees just don't understand why they don't receive higher merit increases, bonuses, or other incentives.   Unlike national governments, companies can't print money and going into debt to pay employees is a road to fiscal disaster. 

Employees often focus on base salary and perhaps bonuses, or other incentives as their compensation, when in fact benefits can add any where from 25 - 100% times base salary to arrive at total compensation and benefits, depending on country.   So in the United States, as medical premiums have been going up by double digits for years, it has meant meager merit increases, while at the same time every US employee is costing American companies more and more.    The employee does not necessarily see it because monthly paychecks have not gone up much; but most companies certainly feel it as cost continue to increase.   This is the reason many jobs have been off-shored to lower cost countries.  

Ultimately, there is only so much a company can charge for its goods and services.   As such, it is a pipe dream to think that any company can just ignore rising employee costs in many countries.   In some cases, where unions in the private sector have been involved, using collective bargaining to extract unreasonable compensation and benefits,  companies have been forced into bankruptcy.   The most recent example is Hostess Brands; but the same could be said for General Motors and Chrysler that ultimately did file bankruptcy, even with federal government bail outs.  

Benefits are becoming a bigger and bigger part of total compensation.    And, as cost go up for medical and other benefits, this is just squeezing the balloon because then there is less money for higher salaries and for funding  the growth and development of a company, which has future implications.   It is really important for all employees to understand this reality.   The role of Senior Management is to balance resource demands recognizing that the first job of any CEO is to insure the financial stability of the company.  

This is the reason this CEO Blogger approves all headcount requests, whether for replacements, or new positions.    Since every time we add employees, there must also be a corresponding increase in revenues to insure profitability, there is probably no more important decision a CEO can make than approval of headcount.  

In big companies, it often works in reverse.   Big bureaucracies are self perpetuating and often just grow and grow until one day the CEO realizes that revenues and expenses are out of kilter.   When that happens, we hear of thousands of employees being laid off by a company.    Small or Mid Sizes companies are often closer to this process, since adding people becomes a more obvious decision, as part of day to day management.   Clearly, an important part of minding the store is dealing with Compensation and Benefits.  While it would be nice to give employees more and more, it is a road to bankruptcy and that will never happen as long as this CEO Blogger is in charge.    

Wednesday, December 5, 2012

Managing Work - Variety Is The Spice Of Life

For some reason that is often puzzling to me, Managers with direct report employees often pigeon hole their staff members related to the specific work they are requiring them to do.  Many Managers only see work in neat little defined boxes, predicated on job descriptions and titles.  While job descriptions and grading are necessary for hiring purposes, they should not become a straight jacket making it impossible to assign other duties and tasks to particular employees.   Job titles and grade levels can be an even bigger problem as employees often get hung up on their status visavis other employees.  As long as money is not being taken away, what difference does it make what job title, or grade level an employee is given.   

And, then there is the whole problem of reporting relationships.   Who can, or cannot work for who.   In some cases, life will just end if a direct report relationship changes.   So much so, that this Blogger CEO has often said ultimately everyone works for me because my name is on the bottom of their paychecks.    In order to be successful in business, we need employees that can multi-task and that are flexible related to their job duties.   We also need Managers that understand how best to use the human resources under their management. 

All employees within a department should be cross trained to do multiple jobs.   And, while there is something to be said for specialization, there is also a lot to be said for variety.   As the saying goes, "variety is the spice of life".   Variety can make work more challenging, interesting and fulfilling.   All Managers have to work at managing the work to best use the skill set of their direct report employees.   This also means dealing with different personality styles to make the best use of an employee's talent. 

Many employees aspire to management, only to find it once achieved, very frustrating.   The reason it can be frustrating is that people are messy.  This reality is only made worse by Managers that are rigid and unable to deal with managing the work by working through other people.   Some battles are worth fighting; while others are a waste of time related to getting the job done.  Most important, work must be fulfilling to retain employees.  Notice I did not say fun because there are lots of tasks that are not fun.  This CEO Blogger believes that variety is the answer to creating a fulfilling work environment.   And, it is management's role to make work fulfilling to achieve personal and company success. 

Tuesday, December 4, 2012

Show Me The Profit - Grandpa

In a recent senior management meeting, our Chief Financial Officer, who is a CPA, reminded this CEO Blogger that in considering a new business venture, it is not about the revenue potential; but rather the profit potential that counts.   Of course, this is Business Management 101 and a lesson I learned at the foot of my Italian grandfather when I was about 10 years old.   My grandfather only had a fourth grade education when he came America from Italy, speaking no English, to pursue the American dream, so he learned about PROFIT hands on, not out of a book.  

Grandpa started with a horse and buggy selling olive oil and eventually ended up selling fruit door to door, owning a successful grocery store, importing grapes from California by the box car when people made their own wine, selling fish by the lug and Christmas trees during the holiday season.   Grandpa told me that the PROFIT on each of those 10 or more box cars of grapes, he imported from California to Ohio, each year, 60 years ago, was $13,000.    A new Buick in those days cost about $2,000.   So, by any standard, Grandpa understood the concept of PROFIT, even though he only had a fourth grade education and frequently lectured me about it, when I was a kid during his winter visits to where we lived in California, once he finally retired. 

My grandfather took the PROFIT he was earning and bought real estate with it to secure his family future because he knew one day he would not be able to work 24/7.  Because he was very community minded, my grandfather worked with others in the small town in Ohio they lived in, to build the Catholic Church, that still stands today, where many of our family members, born in the United States, were baptized.   Yep, Grandpa knew that it was not what he sold the box car of grapes for that mattered; but rather the $13,000 in PROFIT, per box car that was critical. 

In fact, Grandpa never told me how much he paid for the box car of grapes, or how much he sold the grapes for to determine PROFIT.   All he described was the PROFIT because that was the number that stuck in his mind.  Maybe if he had been a CPA, like my Chief Financial Officer, he would have given me all the details.  Oh well, since my Grandfather only had a fourth grade education, I guess he only learned about the bottom line in fourth grade math.   That is a lesson everyone in managment in any business needs to learn.  Thanks for showing me the PROFIT grandpa.  This CEO Blogger learned those lessons well.   

Monday, December 3, 2012

Managing Through Uncertain Times & Icebergs

This CEO Blogger has worked and survived through multiple Recessions, real estate crashes, high interest rates and generally bad times.   However, what we face today, particularly in the United States and Europe is uncertainty as a result of national debt, financial turmoil and the inability of politicians to deal with all of it.  2013 is a real question mark as a result of this uncertainty.   Various countries in Europe are already in Recession and it is likely to get worse.   The US is just staggering along, experiencing slow, or no growth and the potential for going back into Recession in 2013 is real.

Yet, as managers in business to provide goods or services, presumably profitably, we have to figure out what path to take in spite of the many factors we don't control.   So what's new, only now it is seemingly a bit worse?    If a long term strategic plan made sense before the economic uncertainty we face, it probably still makes sense; however, the only question is timing.   It is time to enter a new market, or business.   Does it make sense to invest in new technology and or people.   The watch word until the dust settles is probably caution.  This is certainly not a time to throw caution to the wind.  Instead, due diligence in decision making is even more important in bad times. 

It does not make sense to get too far ahead of markets for a new product or service in bad, or uncertain times.   In many ways, related to some businesses, in bad times, it is better to let those with deeper pockets be the trail blazer, presumably learning from their mistakes.   That may not be true related to technology where getting there first can often provide a commanding lead that is impossible for others to overtake later on. 

This CEO has always said that bad times are what make great managers.  It is easy to manage a business during good times when everyone is fat and happy.   Steering the ship during bad times to avoid the icebergs in the market place takes talent, experience, courage and the ability to make tough decisions.    There is no glory in being the captain of the Titanic, which was once the biggest passenger ship ever built.   One thing is for sure, this CEO Blogger never intends to be at the helm of a sinking ship and as such what ever decisions are needed to insure the financial stability of a company should always be management's first priority.  

Sunday, December 2, 2012

Focus, Discipline & Passion In Business

The ingredients necessary to success in business and in life are Focus, Discipline and Passion.   Those people that exhibit these characteristics are much more likely to rise to the top.  Not everyone is born rich; yet many people become successful and often rich through hard work and Focus, Discipline and Passion.   Success is also about the ability to deal with delayed gratification.   Certainly, it would have been a lot more fun for this CEO Blogger to go out partying during my university years; but my studies, which lasted for more than 11 years and resulted in multiple degrees, along with working my way through school, so no student loans, took priority.   Marriage and children also came later. 

And, then there is paying one's dues.  Most people don't start at the top in any business.  And, not all work is fun.  There are usually a lot of crappy jobs along the way to success, not to mention working for lousy bosses in dysfunctional companies.   SO WHAT!   Don't use any of this as a reason to fail.   Stay Focused on success.   Have the Discipline to get the job done, no matter what distractions there may be.   And finally, be Passionate about your work.   Do the job better than anyone else and success will find you. 

Many people blame others for their failures and or rationalize their lack of success as a result of factors they can't control.   That is a bunch of Baloney!   You and you alone are the master of your own destiny.   Man or Woman Up and take control of your life to make it all it can be.   Yes, there may be sacrifices along the way to get ahead.   Yes, it will be very hard work and you will have to take risks, particularly if your goal is not just success; but wealth accumulation.   But assuming you have average, or above average intelligence,  you can achieve whatever you set your mind to do if you have Focus, Discipline and Passion.   What are you waiting for?   Success does not happen by accident.   And, hope is not a strategy.