Wednesday, December 23, 2015

Multi - Channel Sales & Marketing to Increase Revenues and Profits

Companies often hit road blocks to increasing revenues and profits.  It can come in the form of increased competition, pricing pressures, industry disruptors, or economic factors beyond a company's control.  For that reason, all companies should look to use existing skill sets, with perhaps some modifications, to seek out new customer opportunities.  In other words, find someplace else to sell your products, or services that are different from current sources. 

While all companies should do this cost effectively, small or mid sized companies must do it cost effectively by using current employees wearing multiple hats.  Don't put a whole new structure in place to deal with these new customers until warranted by volume of business.  Use the structure that you have, even if it means stretching current employees to both sell and service new clients and customers outside the normal selling channel. 

To provide a very simplistic example.  A donut store is used to having customers come to it to buy donuts.  Very often churches serve donuts on Sunday mornings after services.  Why not contact all churches in town to put annual contracts in place to deliver donuts every Sunday morning to the churches interested.  This could be an opportunity to sell a hundred dozens or more donuts to each church, each week. While perhaps sold at a volume discount, it is another way to get to the customer that might not otherwise come to the donut store on Sunday morning.  The only addition to cost other than volume related overhead, is perhaps the delivery guys; but that will be young kids at fairly low wages creating jobs in the process. 

The point is that Multi-Channel Sales and Marketing is a way to gain new customers and expand revenues and profits.  In this particular case, the business owner has time Mid-Day to make telephone contact to set up annual contracts with churches and or perhaps other organizations that have regular meetings where donuts would be welcome.  In all probability, with focused Multi-Channel Marketing, it may be possible to double or triple revenues and profitability without adding much to fixed costs that already exist.  In this case, selling more donuts to spread the fixed cost over will increase profitability.  Everybody wins because everybody loves donuts.   This same principle can be applied to many businesses. 

Saturday, December 19, 2015

The Challenges of Managing Millennials

Several years ago, this CEO got the bright idea that we would hire Millennials, recent college grads, put them through intensive training that we called Boot Camp and bring them into our company as entry level, front line employees dealing with our customers.  So, we hired a class of 13 of them with high hopes that this would be the answer to our future recruitment requirements.  Well guess what, this experiment failed miserably. 

Some did not last 3 months.  Some made it to 6 months; but none was in our company a year later.  These young people just could not handle the riggers of a demanding job where they had to be on the phone from 8:30 am - 5:30 pm dealing with our customers.   While it is usually not wise to use a sampling to form a general impression, if this was just a few of them, it would be easier to assume that Millennials were not up to the challenges of these jobs; but 13 employees was a big enough sampling teaching us to never do that again. 

This may be a societal issue.  I remember when our sons were playing soccer.  When Johnie missed the goal, his parents would yell "nice try" giving Johnny a false sense of achievement.  This CEO never yelled "nice try" when our sons missed a goal.  I said nothing unless they made the goal.  Too many Millennials have been told they are wonderful for doing nothing important.   That does not work in business.  We found that some of our Millennial hires wanted to be recognized for just showing up for work.  They thought showing up warranted a salary increase and promotion.  Some of them just did not have the physical stamina to do the job.  I recall a few of them in the back of our building with their heads down on our picnic tables taking naps in the middle of the day.  I don't know if that was from playing too hard off work, or just because they were exhausted by the demands of the job.

Suffice to say, since our experiment failed, we will never attempt it again.  If we hire young people, it will be to lower level jobs to allow them the time to learn how to work.  Only then will they be promoted to positions dealing with our customers.   And, we will look to what they did working their way through university as an indication that they have the discipline to handle a full time job.   Work is not play.  If it was play, it would be called play.  My advice to Millennials is to accept a position out of school and stick with it to gain valuable work experience that is marketable.  Jumping from job to job, in less than a year, as is common with Millennials is no way to build a resume.    

Wednesday, December 16, 2015

The Cost of Generating New Business

It is very, very expensive to generate new business.  Considerable investment in Sales and Marketing is needed to sign new accounts.  Depending on the industry, it may be necessary to spend as much as 10% or more of top line revenues, each year, to develop new business.   And in budgeting for Sales and Marketing, company management must look forward not backward.  In other words, if Sales results in the current year were not as good as desired, that is no reason to cut the Sales and Marketing investment for the next year.  In fact, an argument could be made to increase it.  New business is the life blood of any company, particularly since there is no guarantee today of keeping existing business, even when doing a great job. 

Yes, it is possible to lose a client even if great service has been provided as a result of client management changes, mergers, acquisitions, or just normal procurement regular bidder processes shopping for lower prices.   For that reason, lost clients must be replaced to continue any kind of growth mode.   Sales and Marketing expenses break down into several line items.  The fully loaded cost of Sales and Marketing Staff makes up the biggest expense, which often includes significant travel expenses of a company's road warriors. Beyond that are numerous other discretionary expenses for Conferences, Advertising, Website Development, Social Media, Collateral Materials and many other items that are necessary to both establishing and maintaining brand identity. 

Sales and Marketing is a cost center, not a profit center.   That means that revenue producing subsidiaries of a company must pay for the cost of Sales and Marketing in Good and Bad sales years.  Naturally, if all Sales targets have been achieved everybody is happy to cover the expense.  In bad Sales years, Sales and Marketing is often an orphan and that is when business heads start second guessing the process.  Often, there is finger pointing as to why Sales targets were not achieved. 

Obviously, poor performing Sales people usually get the axe because if they are not closing business, they are of little value to the corporation.  However, Operations must produce quality services, or products that create raving fans as references, which is better than even the best of salesmen to help create new business. 

Sales and Marketing is a never ending process.  Companies that fail to invest in Sales and Marketing usually do not remain in business for long.  In fact, even in bad times, the last things that should be cut are Sales and Marketing.  It does not matter how good a company's story is if Sales and Marketing does not exist to tell it.      

Tuesday, December 15, 2015

Dealing With Corporate Allocations - What Fun

When establishing an overall annual Corporate Budget, the subject of Corporate Allocations always comes up.  And, it can get pretty ugly.  Naturally, the business entities of any corporation want to pay as little of the Corporate Overhead as possible because it impacts their bottom line, bonuses etc.  So there is a selfish motivation in this process.  However, the reality is that a Corporate Holding Company that owns various subsidiaries is not a profit center.  Therefore, for the most part no revenues are booked to the Holding Company.   Somebody has to pay for the CEO and other Senior Management of the company and all other shared services.  This CEO has been involved in these discussions, that are really more like negotiations between the business heads of the Company as they attempt to provide all the reasons why they should not be hit with a particular Corporate expense.  This discussion can get pretty heated; but it is actually very funny to watch.  At the end of the day, the CEO must be the arbiter of last resort when agreement is not automatic. 

The real issue is that if anyone in the company touches a specific subsidiary in any way, there must be a charge back one way or another, whether a desired end result is achieved or not.  So, just because Sales did not achieve a sales target does not make the expense of Sales any less.  So to argue that as the basis for not paying for Sales is counter productive. Direct expenses are simple to deal with.  Obviously, any employee devoted 100% of the time to a particular subsidiary is a Direct expense.  There is never an argument about Direct expenses.  It is all the shared services including the Senior Management of the Holding Company that comes into question that is the subject for debate.   This is much an art as it is a science because sometimes it is impossible to come up with precise Corporate Allocations.  In those cases, the best that can be done is to do a gut check.

In other cases, specific formulas are easy.  For example, it is simple to allocate the cost of Human Resources on a headcount basis as of December 31 of each year if the budget year is January 1 - December 31 and or as of the cut off date when the annual budget is formulated.  Information Technology is harder because it is difficult to establish the precise amount of time that IT staff members spend working on IT, which often includes communications support, for a particular subsidiary.  This also includes all shared services aspects of an IT budget.  The same thing is true about departments like Marketing.  In this case, a gut check is as good as wasting a lot of time coming up with some sort of precise calculation that in any given year is likely to be wrong anyway.

As the CEO of our company, my role is to be fair to all of our subsidiaries in determining Corporate Allocations.  Sometimes this is a lesson in Accounting 101, particularly when a senior manager postures illogical arguments as to why their subsidiary should not share in a particular expense.  This is an age old discussion.   At the end of the day, the subsidiaries of the company, where the revenues reside, must pay all the bills.  The devil is in the details and that is both the art and the science of Corporate Allocations.  It is what it is.    

Monday, December 14, 2015

Using Profit Sharing As Your Bonus Plan

While many companies pay commissions to salespeople and various incentives to others to drive  desired transactional results, privately owned companies can use Profit Sharing as their Bonus Plan for other designated employees.  It is actually not too complicated to accomplish.  The process begins by setting an annual Pre Tax Profit Margin target that must be met before Profit Sharing takes place.  That percentage would depend on what is common in a particular industry.  All companies would like to earn a 20% or higher Pre Tax profit; but that may not be possible in a specific industry.  Being more realistic, let's assume a 10% Pre Tax profit is the goal.  With Profit Sharing in place, any amount of money above the target becomes the Bonus Pool.   This will motivate bonus eligible employees to work smarter. 

Then the question arises as to how to divide the Bonus Pool among those eligible.  First of all, to earn a share of the Bonus Pool, the employee should have been on the payroll by no later than March 1 of the year in question so that he or she was in a position to make a contribution to the company's overall profit.   That configuration determines eligibility.  Then, a company must determine the number of shares of the Bonus Pool that will be provided to each eligible employee.  So, perhaps from the lowest level employee eligible to the highest senior manager in the Pool, the multiplier could go from 5 to perhaps 40 shares to best recognize the contribution to profitability and the responsibilities of each individual eligible for Profit Sharing.  Again, this has nothing to do with base salaries, which are based on experience, talent, education etc. 

By multiplying the total number of shares eligible for Profit Sharing and dividing that number into the amount of monies available for distribution, the share price is established.   So, if the share price is $500 and the employee is eligible for five shares, the Bonus would be $2,500.  At the same time the senior manager eligible for 40 shares would get $20,000.  However, there is one last aspect of the process and that should be used to determine the amount paid and that is the overall Performance Review Score.   First, to begin with, the employee must achieve at least 70% of his or her overall Performance Objectives to be eligible to earn a Bonus.  So, if the employee achieved 90% of his or her Performance Objectives and the full amount earned based on number of shares allowed was in this example $20,000, the employee would earn a Bonus of $18,000.    

Profit Sharing is a great way to motivate bonus eligible employees to work cost effectively because they know they are getting a piece of the company's actual profits.   This results in better expense management and looking for other ways to increase profitability.   Profit Sharing is a win win for all concerned and perhaps the best way to provide a Bonus Plan that ties monies paid to actual annual results. 

Friday, December 11, 2015

Using Linked In For Recruiting

This CEO Blogger has more than 2,000 people in my Linked In Data Base.  For the most part, these are people in the relocation, household goods, real estate, or mortgage industries; but they also include others that may have valuable skills that we may one day need in our company.   As the CEO of a global company, I presume many people in the work force are interested in being in my Linked In Data Base.   They may think that one day, they will be selling a product or service to one of our companies, which could be true.  I see it very differently.   I see these 2,000 people as a talent pool, at my fingertips, from which I can draw candidates for job openings we may have at our holding company, or one of our subsidiaries. 

Though our Human Resource function is also involved, in some ways, I have become our company's Recruiter in Chief mostly because I like seeing what talent is out there and available to us.  When I have the time, whenever we have a job opening either in management, or sometimes even for one of our lower level positions,  I look to my Linked In Data Base for candidates to fill the particular job.  This capability works really well for small to mid sized companies.  Larger companies can use their Human Resources functions to achieve the same result.  More often than not, I can find the talent we need by just doing a Linked In Search.   It really is pretty simple.  I send an email advising the candidate of the job opening.  Should he or she have an interest, I ask that they email me a resume, which I then forward to the hiring manager within our company.  Further screening and interviews are then set up as appropriate.

We have hired a number of people off my Linked In Data Base that technically were not looking for a job.  It is a very powerful took that can not only be used to connect with prospects, clients or customers; but in my case as CEO of our company to bring talent into our company.  I really like having this talent pool available to me at a moment's notice.  It also saves us a lot of money because more often than not we don't need to use a Recruiter to identify talent.  I like that a lot. 

Thursday, December 10, 2015

Compensation & Benefits - The Whole Picture

Very often employees think of their compensation as their base salaries plus bonus, incentives, or commissions.   Worst yet, employees look at what they are paid as take home pay because that is what they have to spend on the necessities of life.  The problem is that this is far from the big picture for the employer.  On top of these monies, many employers are subsidizing, or paying for the full amount of various benefits like medical, dental, disability, Workman's compensation and unemployment insurance, in addition to Social Security and Medicare contributions.   So, on top of base salary and other compensation, adding these other benefits into the picture often adds another 25 - 45% of total salary to formulate what is called the "load factor".

But there is more.  Vacation, holiday, sick time, other paid time off is not free either.   These benefits cost the company money.   Obviously, when employees are not at work; but are being paid as though they are, the company is not getting the benefit of the fruits of their labor, which impacts the ability to provide goods and or services to customers and or clients to generate revenues.  

Employees rarely see the big picture related to compensation and benefits.  To be sure, a married employee, with family that receives $65,000 in salary is actually costing a company well over $90,000.  And, that does not include the full cost of maintaining that employee related to management, rent, phone, computer etc., which may add another $35,000.  So when all is said and done, a $65,000 employee, fully loaded may in fact cost a company $125,000.  

In order for a company to be profitable, revenues must be generated over and above this fully loaded cost.  As such, it is really, really important for employees to understand the full cost of their compensation and benefits and not take any of this for granted because a lot of these benefits are discretionary.  What they receive in their paycheck every two weeks, or monthly is only part of the picture. 

Wednesday, December 9, 2015

Hiring The Right People

That hardest and most important job for any manager is hiring the right people.  At our company, we are only interested in A or B players that could grow to be A Players.  If we get it right, we have a long term, successful employee.  If we get it wrong, we invite the employee that is a poor performer to work for one of our competitors.   Sometimes what is not said on a resume is more important that what is said.  Prospective employees that move around a lot are probably not a good bet.   Applicants that have gaps in employment that are not well explained probably should not be hired. 

So much time and money are spent training a new employee that getting it wrong not only sets the company back to square one searching for another candidate; but can also cost clients or customers.   Bad hires can do long term damage to a company, which is the reason new hire candidates should be well scrutinized.   In addition to validating the information on resumes, or job applications, our company does both drug testing and financial checks.  Obviously, we don't want to hire anyone addicted to drugs.  Neither do we want to hire someone that cannot manage their own finances because financial problems can be a distraction at work. 

While there is no way to know and it illegal to ask, many people live in dysfunctional families, which can impact job performance.  It may be the reason for frequent job changes, which would be evident in a resume.  Clearly, anyone that shows switching jobs every year or two probably has issues of some kind and is not a get bet. 

Finally, references are of minimal value because it is often illegal for a former employer to give out more than employment dates.  On the other hand, if we don't get a positive reference in glowing remarks as in, "we would hire the person back in a minute", it probably means that the employee is not a good performer and or that there were other problems at work that caused a voluntary, or involuntary termination.  Again, sometimes what is not said is more important than what is said. 

Tuesday, December 8, 2015

Holiday Parties - Buying Good Will and Doing Good

Two recessions ago, our company used to host lavish holiday parties that included dinner, entertainment, liquor etc.  Our employees enjoyed getting all glitzed up for these parties.  We were spending well over $60,000 a year doing a few of these parties for our bigger offices, plus other dinners we did for our smaller offices.  When bad times hit, we just could not justify this expense.  And, we stopped doing these parties for two other reasons, as well.  Many of our employees over did it at our open bar on alcohol, which resulted in liability for our company.  And, in some cases, we had single employees that were not dating anyone, which often made them feel left out of the couples fun.  As a result, some of them actually stopped coming to our holiday parties.

Fast forward several years later and we figured out that it made more sense to implement holiday luncheons, instead of dinners just for our employees and to make them fundraising events for local charities.   One of our core values is giving back to the communities that we work in so what better time is there than around the holidays to do something good for others in need. 

We found that in addition to the fun we created, many of our employees made this a team building exercise as they both selected the local charity for our donations; but then planned the actual holiday luncheon.  Ultimately, our company funds gifts that we then use as prizes.  Our employees buy raffle tickets to win these gifts that range from $10 - $50 in value.   In some of our offices, we even hold an auction of these tickets, since the rule is that the employee can only win once.   As such, the tickets they hold become of no value to them after winning a gift, so we auction them off to the highest bidder seeking a better chance of winning a gift.   Many times our higher level managers, with direct reports, purchase these auctioned tickets and then give them to their employees as a little end of year thank you.  It can get very competitive; but also lots of fun.

Our employees can purchase raffle tickets by writing a check to the designated charity selected by the office, or by writing a check to a charity of their choice so that they receive the tax deduction for making a charitable donation.  When all is said and done, our company matches all these donations to double the money going to the charities selected.  The cost for all of this is not nearly what we used to spend on our evening dinner holiday parties; yet the benefit to our company, our employees and the communities we work in is so much more. 

At least for our company, holiday parties are both about buying good will with our employees, having some fun and doing good for others in need.  Through trial and error, we have found a winning formula. 

Monday, December 7, 2015

The Company's Image - Worth Millions of Dollars

Years ago, when I was a young manager at Merrill Lynch, I created my own stationary that we used for proposals and projects.   It had two black fine lines to create a border for the page and the Merrill Lynch Bull down at the bottom right hand corner.  I used that stationary for about a year, until one day I got a call from the Merrill Lynch Bull Police at corporate headquarters in New York City.  I had no idea who was calling me; but the woman spoke with great authority.  She told me that it had come to their attention that I was using the Merrill Lynch Bull in an unauthorized way.  At first I played dumb admitting to nothing; but then she said they had seen the stationary I was using.   And,  she went on to say that I must cease and desist, or that I would be terminated. 

Wow.  The woman went on to explain that the Merrill Lynch Bull was an important part of the company's image and that it could only be used in authorized ways when tied to the company logo.  I learned a great lesson from that encounter and that is never mess with the company's logo, or image because in some cases they can be worth millions of dollars in investment, over a period of time, creating the company's persona.

Very large companies have big marketing departments and even use outside Consultant's to create their image.  But in small or medium sized companies, the CEO of the company needs to very involved in creating the image of the company and or in approving any dramatic changes to that image.  Image is not built in a day.  It is created over a long period of time with sizeable investment in all sorts of media.  Image is designed to leave a lasting positive impression in the marketplace.  

There may be instances when the image of a company becomes negative because of some occurrence; scandal, bankruptcy, product failure etc.  When that happens, it may be time to reinvent the company's image to signify the new and improved version.  However, when such things have not occurred, company's should tread very lightly on tampering with a company's image built over years.  A fresh look in a digital age is fine; but the substance of a company's image should only be built on an existing foundation that has worked for years.   

Sunday, December 6, 2015

Expanding Into New Markets and Services

Companies that stand still die.  That is why in addition to constantly improving current products and services, company management must use the foundation already created to move into new products or services and even into new markets.  Sometimes this is done by acquisitions, which can be a legitimate strategy provided the purchase price is not influenced by emotion, rather than bottom line common sense.

In other cases, it is perfectly logical to ask the question internally, what else can we be doing and for whom.   Look for a need in the marketplace and fill it. A company's assets include its talent pool, credit lines, supply chain, office locations, balance sheet and the good will that comes from years in business.  Money in the bank and financial stability is also important to growing any business.   All of these assets can be used to grow into new products, services and markets.

Many in the company, vested in current businesses, may be threatened by this diversion of effort and resources into new products and services.  Employees really do not like change.  Instead, help them see the potential opportunity that could come from expansion, not just for the company; but for them personally.  The best way to get buy in is to involve old timers, with the company for years, in new businesses.  If they have the talent to survive the up's and down's of business cycles, they have the talent to deal with new business concepts.  In fact, company experience to build from is a great way to move forward.  Companies that are not moving forward are moving backward and usually not for long.   

Saturday, December 5, 2015

Managing Work Place Security

Several years ago, we had the bi-polar wife of one of our employees going through divorce enter our Chicago office with a knife.   It was the first time we had ever experienced anything like that.  As the CEO of our company, I immediately ordered that all of our offices install card key, cameras and other security systems to help prevent something like this from ever happening again.   While it is very unlikely that a company would ever be struck by Terrorism from a foreign source, though the threat is real around the world, Terrorism can come in many forms.  We do have to worry about disgruntled current or former employees or customers, marital problems, or deranged people that for whatever reasons might strike one of our offices.  

When I was a teacher years ago in the LA inner city, our school, with very high fences, was always on lock down mode to keep potential gang members, with guns, off campus.   While theoretically someone could have jumped over our very high fences, the LA City School System has its own police force constantly on campus and on patrol. We were working in a hardened site to help prevent gun violence on our campus.

While company offices are not fortresses, management must be vigilant to make sure that only people authorized to be in our offices are in our offices. We must take security seriously to prevent a tragedy. Management’s first job is to insure the safety of our employees at work. Given the world we face, we must take necessary precautions to make sure that we maintain a safe and secure work place.

Sunday, October 25, 2015

Sharing Information Is Critical To Corporate Success - Dealing With Information Hoarders

Sometimes in business, we encounter Managers that are control freaks and information hoarders.  I am not talking about sensitive personnel information, or other information that cannot be shared for privacy, or other good business reasons.   I am talking about information that is necessary to team work and the ability for others to do their jobs.   When this is encountered, the Manager involved must be counseled because information hoarding is a source of organizational stress.  In addition, when discovered and it will be discovered, information hoarding creates distrust among other Managers, since for better or worse,  an ulterior motive will be assumed. 

Clearly, mutual respect and open communications are absolutely critical for an organization to grow and perform optimally.  Managers that hoard information usually have a problem with delegating responsibilities as well, which is very counter productive.  Work, or tasks should always be delegated to the lowest level employee possible to achieve maximum productivity.  Higher level employees that can't delegate, using training to replicate their capabilities, usually fail at management.

When senior management sees Information Hoarding happening, which is counter productive to the organization, senior management must step in to open communications.  This may require a formal process to force interaction; but short of terminating the Information Hoarder, who may otherwise be a good performer, what other alternative is there. 

Wednesday, October 21, 2015

See The Train Coming Before It Runs You Over

Very often in business, it is easier to do nothing than to deal with issues causing problems, which may require confronting other managers, whether internally, or externally.   That is really faulty thinking because ignoring an on coming train is a sure way to get run over by the train.  When that happens, it then becomes necessary to raise a bloodied hand in an attempt to solve the problem in a reactive mode, rather than a proactive mode.   By that point, trying to solve a problem in reaction to it, is that much more difficult because of the emotions that often come into play. 

It is much better to be proactive to address issues, or problems before they are evident and that includes process improvements that may be needed to improve service, or products.  Sometimes these things occur because of some change in the law, or other circumstance that makes business as usual problematic.  There is no point in waiting for the particular situation to occur before addressing the issue.  Instead, the best time to address the issue is before it becomes a service problem.

This means having a big picture orientation and understanding of how all the pieces of a puzzle fit together so that when something changes, the disconnect becomes obvious.  As soon as that happens, bring people together, that are important to decision making, to address the issue and change course, even if it means forcing the discussion.  It is critical that this be done to avoid internal frustration and organizational stress.  Successful managers are proactive, rather than reactive.       

Tuesday, October 20, 2015

Managing Business Partnerships To Close New Business

From time to time, company's are asked to partner with other organizations to sign new business.  This can be mutually beneficial as long as everyone understands the rules and ego's don't get in the way.   First, both companies must recognize that the potential client is driving the discussion.  It is pretty easy to determine the basis of the deal by just reviewing the Request for Proposal.  It really does not matter who owns the business relationship, provided the long standing relationship does not get in the way of signing the new business.  In other words, in every deal, there is a dog and there is a tail.  The tail can never be allowed to wag the dog, even if the tail has the business relationship with the client. 

We have certainly learned this lesson the hard way.   In one instance, we dealt with a business partner with a very arrogant, obnoxious, rude sales guy, who was the Account Manager for the particular client.  As such, he wanted to control all aspects of the bid process, even though he was ill prepared to do so and the client was not bidding his services.   That was not only evident in the RFP; but became particularly obvious during the Best and Final Presentation when the client contact made it clear that this bid was all about our services, rather than the services provided by his company with the existing relationship.  As such, the BAFO Presentation, controlled by Mr. Obnoxious, missed the mark.  Though we tried to quickly recover during the BAFO, by switching gears, it must be assumed that the prospect surmised that we did not respond to their needs, since we were not selected to provide our services.  Though Mr. Obnoxious protected his commission and his company's business interests, the deal for our services went to one of our competitors.  Given our investment of time and resources, never again, never again will we allow another company's salesman to control our company's fate.   

This was a lesson well learned by all concerned.  First of all, don't partner with an arrogant, obnoxious, rude sales guy because doing so rarely ends in a positive result.  In this case, we could see these behaviors right from the beginning of this process.  And second, though this should be obvious and pretty simple, just listen to the prospect/client and respond to the Request For Proposal.  No doubt, we may find our company someday being the tail, with the existing business relationship.   Hopefully, we will be smart enough to collect a booking commission, or referral fee of some kind for referring the business to another company, when the client is asking for the dog.  In doing so, the best thing we can do is to make the introduction and endorsement, be present at meetings and just get out of the way and let our business partner close the deal.  This is another one of those lessons in business learned the hard way.   

Monday, October 5, 2015

No Fear Allowed - An American Dream Story and Book

Perseverance is NOT just a word. It is a belief system, a way of life fortified by the battle cry of No FEAR ALLOWED. That is what Entrepreneur Laura Herring has that enabled her to grow her company from just an idea to a $50 Million organization.

Herring's book, NO FEAR ALLOWED, A STORY OF GUTS, PERSEVERANCE & MAKING AN IMPACT, comes out TODAY, Oct 6th. This is a book worth buying as it tells an amazing story of the American Dream of starting a company with nothing more than an idea to help others. Laura Herring turned her idea into a global company serving over 250 Fortune 500 companies.

Laura was a psychologist and just wanted to help relocating families have a smooth transition. But her journey took her far beyond and is a great read for anyone wanting to fulfill their dreams-any dream! The secret to her success is her unfailing passion to make a difference and her unrelenting perseverance to keep going. Herring openly shares her failures that would have stopped most people in their tracks. Laura Herring failed numerous times and does not hesitate, nor apologize for those failures. Instead, she shares with her readers the lessons learned at the end of each chapter, in hopes of preventing others from making the same mistakes.

At first glance, most people would think this book is just for entrepreneurs. However, several people have said they loved the story so much and kept rooting for Herring's success, that they are buying copies for each of their children and their nieces and nephews because they want to show what persistence truly looks like. Those buying this book want to help future generations understand that success is possible, in spite of numerous failures.
This Blogger can recommend this book as a perfect case study for budding entrepreneurs in entrepreneurial studies at colleges and universities. Others say, it is just a good read, filled with stories that will have you cheering for Laura Herring's success.

Laura Herring is fearless. In this book she teaches others how not to just be fearless, but how to find their passion and make NO FEAR ALLOWED their battle cry. She teaches how to turn fear into your personal GPS that allows you to : STOP, EVALUATE, CALCULATE AND THEN ACTIVATE A PLAN to move forward.

Laura Herring's journey is a great lesson in American business and how anyone can make it, even after failing numerous times. You just need guts and perseverance. This is an important lesson for today's young people. With heavily financed start ups and fancy mezzanine financing, this book shows how, if your goal isn't about making money fast, but serving others, you can patiently make your way to financial success.

You can go to Nofearallowed.comtoday and order your copies. Herring is offering special bonuses, if the book is purchased on October 6 for ordering from her site. Most important, Laura Herring is donating 100% of her profits from the sale of her book to Breast Cancer Research. A two time breast cancer survivor, Herring is tenacious about finding a cure for Breast Cancer to prevent this disease from impacting other families.

Thursday, October 1, 2015

Free Market Capitalism & The Profit Motive

Free Market Capitalism is under attack.  Of course, those that promote Socialism and Communism have always hated Free Market Capitalism because they believe in government control and redistribution of wealth, rather than individual control of wealth.  The only problem is that wherever these ideologies have been practiced in world history, Socialism and Communism have resulted in poverty, misery and in same cases even murder.  The reality is that Free Market Capitalism, with all its warts and boom and bust cycles, has created more wealth for more people than any other economic system in the world. In addition, Free Market Capitalism has done more to eliminate poverty than all the government programs that have ever been conceived.

Today, we hear about income inequality with the assumption that the poor are poor because the rich are rich.  Nothing could be further from the truth.  The poor are poor because they very often lack fortitude, job skills and education.  And, many of the poor live in dysfunctional families, impacted by substance abuse that makes getting out of poverty even harder.    The best thing that can happen for the poor is economic development that comes from lower taxes and less regulations to create jobs.  There is no poverty program better than a job.

We hear people attack the Profit Motive as though making money is bad.  The fact is that without Profit, there are no government tax revenues,  or money to invest in new businesses.  Pre-Tax Profit is the difference between Revenue and Expenses.  In most cases, employee compensation and benefits make up 70% or more of a company's expense line.   So of the revenues generated for a product, or service, 70% is often going to pay employees. Companies are very lucky if they have a 5 - 15% Pre-Tax Profit, which then is taxed by state and federal governments.  What is left can be used to make additional investments to create jobs and or to pay dividends to shareholders, the owners of a company. 

Finally, successful people today are often under attack being referred to as selfish or even greedy, which is ridiculous.  Successful people, particularly if they are self made, work very hard for years and often make incredible sacrifices to achieve success and presumably wealth.  This CEO knows many wealthy people that support the arts and numerous charities; not to mention being the job creators in our country.  No one ever got a job from a poor person.  I don't know any of these "selfish and greedy" rich people that are often vilified by those that hate Free Market Capitalism and the Profit Motive.  All the rich people I know give back to the communities they live in and way beyond. 

Sunday, February 22, 2015

Establishing a Company's Annual Budget

Well run companies are focused on managing to an Annual Budget.  This CEO Blogger has always been rather conservative when establishing our Annual Budget.  I don't believe in spending money we don't have, borrowing extensively to fund the company, or pie in the sky budgeting.  That means we budget based on business we know we have; not business, or assumptions, that might never materialize.  We budget based on the desired Pre-Tax Profit we would like to earn.  In some cases, that could mean Rightsizing the Company, which is just another term for potential lay-off's when necessary.  Since generally in service companies, people represent 65 - 70% of overhead, it is the first place we must look when budgeting to determine our expense line. 

Marketing expenses, not to be confused with Marketing staffing, are completely discretionary so they are another place to look to find savings if and when necessary.  Finally, occupancy cost make up a good percentage of overhead.   An aspect of Rightsizing also involves getting rid of excess space that is no longer needed and as quickly as possible to impact the budget year. 

For our company, the budget process actually starts no later than September of each year for the next year as we anticipate what we will face in the new year.   If we have to make cuts to expenses, they often start in the fall of the preceding year so that we get the full impact of those cuts in the new year.   Sometimes the budgeting process is used to change the company's direction.  Establishing a budget each year is critical to running any business.  Cards talk and numbers don't lie.   The Annual Budget usually tells the company story in real terms.  

Friday, February 13, 2015

Performance Reviews - Talent Management By Another Name

Most well run companies use annual Performance Reviews to judge and rate employee performance related to specific objectives for the job.   Ratings, or scores, are often used to determine a merit increase percentage and or bonus potential.  Performance Reviews should also be used to identify areas for improvement.  These discussions, if done properly, are really Talent Management, by another name.  This CEO Blogger has been managing people, in one capacity or another, for more than 40 years.  I have worked through all the Human Resource jargon, with the latest being "Talent Management" to basically do the same thing. 

A manager, who has direct reports, has as a primary function, the role of helping people grow and develop.  Constructive criticism, within an annual Performance Review, is a good thing.  In fact, employees interested in promotional opportunities should ask for it.  Every employee, even "A" players, can improve their performance and contribution to the company.  In providing suggestions for improvement, the manager does the employee a great service. 

Performance Reviews should be taken very seriously.  They are not just about determining the merit increase percentage, or bonus potential.  Performance Reviews should be used as an integral aspect of Talent Management in building a bench within the company.   That bench is the basis for Succession Planning as people retire, or otherwise leave the company.  Performance Reviews should be used to identify and promote long term employee growth and development.  The time spent on Performance Reviews, which can be considerable, is time well spent.          

Sunday, February 8, 2015

Creating Company Value & Higher Share Price

Whether a company is privately owned, or publicly traded, employees are hired to make the company more valuable by managing expenses and growing revenues and profitability.  Companies are usually sold based on some multiple, which varies by industry.   It could be 3 to 10 times annual profit, or some other industry specific formula.  It does not matter if the company is for sale or not, the shareholders of the company, that have risked their money to invest in the firm, are always concerned about shareholder value.  Naturally, shareholders expect a return on their investment that could come in the form of dividends, or upon sale of the company, presumably as a capital gain. 

A company is technically not in business to create jobs; but rather to create jobs that can provide a return on investment to the shareholders.  In well run companies, employees will benefit by creating value and a higher share price, in the form of higher salaries, incentives, bonuses, commissions etc. to share in the wealth that is created.  Ineffective employees are actually a drag on shareholder value, which is why performance objectives are used not only to measure individual performance; but to determine if the employee should remain in the company. 

Rightsizing, or lay-off's occur to cut expenses in response to lower revenues than anticipated.  Sometimes employees have a hard time understanding why lay-off's are necessary, even when presented with cold hard facts that make continued employment impossible.  This is particularly confusing when the company is hiring others, at the same time it is laying people off, to fill other positions that can better create value.  However, when all is said and done, Senior Management is responsible to the shareholders of the company and must act to protect their interests as the owners of the company.  At the end of the day, profits come from subtracting expenses from revenues.  What is left over we refer to as Pre-Tax Profits. 

Some businesses, like grocery stores, are high volume; but very low margin.   Those companies may be content to earn a 3% Pre-Tax Profit.  Most companies are focused on earning a 10 - 20% Pre-Tax Profit.   Of course, there are some companies that earn much more because they offer products, or services, with little or no competition, which allows them to dictate price.  That situation usually does not last for long as other companies enter industries deemed to be lucrative.

Most important, all employees must realize that their jobs are completely dependent on creating company value, higher profits and the higher share price that results.  It may seem cruel; but in a free market capitalist economy, creating company value is what makes everything work.   And, nothing works better.  We have seen the end result of Socialist and or Communist economics, where theoretically everybody is guaranteed a job.  I say "theoretically" because ultimately those systems have led to loss of freedom, misery and poverty.   Free Market Capitalism, with all its boom and bust cycles, focused on creating company value has created more wealth for more people than any other system in the history of the world. 


Saturday, February 7, 2015

Diversification & Resource Allocation

As someone who has managed through recessions, real estate down turns, the highest and lowest interest rates in American history, stock market corrections, 9/11 and the most recent fiscal calamity, this Blogger CEO has had to make many tough decisions and quickly for our company to remain in business and financially sound.  It hasn't been easy and sometimes painful rightsizing and off shoring has been necessary to cut expenses; but the goal must always be to remain standing to fight another day.  Sometimes that means taking two steps backward to take one step forward.  Since our company has been in business for 24 years, when many others do not even make it through the first few years after opening the doors, it would be fair to conclude that for the most part the actions that we took to deal with all of the issues we faced were correct.  Could we have done somethings better; of course, but the fact is we are still in business and focused on our company's growth and development. 

What this Blogger CEO has learned through it all is that it is not good to have all your eggs in one basket.  And for that reason over the years, we have focused on diversification in an attempt to ride out the business cycles.  The logic is that when one business is down another might be up to help weather the storm.  All of this boils down to resource allocation.  Management ultimately needs to decide where it will put company money; whether specific to a department, division or subsidiary.  Though emotional ties often get in the way, this should be done related to Return on Investment.  At the end of the day, if a company invests a dollar, the question must always be, where will that dollar achieve the highest return in profits to the company.

There is both a short and long term view related to investing company money.  Certainly some amount of funds must be invested in existing core businesses.  However, it is important to ascertain their future growth potential.  If margins are shrinking in a core business because of too much competition, then it may be time to implement a diversification strategy, both to protect the company from business cycles; but also to obtain higher profit margins.  Most important, the CEO of the company must always see the train coming to avoid being run over by it.  The CEO that fails to see the train in time will lose control over his or her destiny one way or another. 

When implementing a resource allocation strategy that takes money away from core businesses and invests it in new businesses, it is very likely that employees working in the core business will be very resistant, if not hostile to the changes taking place.   Some who are short sighted may even leave the company.  They may see this resource allocation adjustment as an attack on the business that is near and dear to their hearts because they are too close to it.  The CEO's job in that case is to make all employees understand that the growth and development of the company is in every one's interest and that it represents the best opportunity for promotions across business lines. 

Diversification and Resource Allocation happens every time a new annual budget is formulated and approved.   Senior Managers are always picking and choosing where they want to put money.  Companies in business for many years, probably are doing a pretty good job of it.  Those companies that fail to put money where it will provide the best return on investment, probably will not be around for long.   

Friday, February 6, 2015

Nurturing Talent In An Organization

Every manager in an organization should be focused on nurturing talented people in the company.  That responsibility is obvious related to direct reports; but this includes other employees, as well.   If "C" players can be turned into "B" players, within a reasonable amount of time, it is worth the investment.  If it does not happen, "C" players should be invited to leave the company.   Nurturing talent is really about turning "B" players into "A" players and realizing all the benefits to the organization that can come from "A" players.

Sometimes, companies are structured in silos that stifle employee development.  That is the reason why this Blogger CEO often makes the point that everyone in the organization actually works for me, regardless of the reporting relationships that may exist.  This allows me to assign special projects to individuals and or to prioritize work that I want done that is the interest of the company.  The CEO is often able to see the big picture better than anyone else because he or she is not tied to the day to day running of the company.  This also allows the CEO to recognize under utilized talent in small and mid sized companies.   In very large companies, the CEO must rely on a talent management structure and process to achieve the same effect. 

Generally, employees can do anything asked of them even when they initially think it is impossible.  Though, I know that look when someone is given a task that he or she thinks can't be achieved.  However, this CEO Blogger has faith in people and I have rarely been disappointed.  Using special projects is a great way to nurture talent and help employees grow into a promotion.  Since employees are the single biggest investment in most companies, particularly in service industries, there is really nothing more important than talent management to achieve the organization's objectives.  Ask a lot of employees.  Demand excellence and don't settle for anything less.  Keep raising the bar.  Really talented employees will always rise to the top given the opportunity.    

Sunday, February 1, 2015

Dealing With Promotions

Some employees think that they should be promoted and or make more money just because they have worked for the company a long time.  Nothing could be further from the truth.  Promotions are earned by hard work, dedication and contribution to the growth of the company, regardless of years with the company.  And, it is impossible to be an "A" or "B" Player without having a great attitude and the ability to work with other people. 

Communications Skills are critical to getting a promotion and are probably the key to successfully working with others.  When we hire and or when we promote, this CEO Blogger is always looking for the "package", which includes education, experience, attitude, flexibility and problem solving skills.  The employee who has the "package" never needs to worry about getting a promotion, or more money.  These things will come automatically because really talented people are always rewarded and usually without asking.  These are the employees that go the extra mile without ever being asked to do so. 

As the CEO of a mid sized company, I know which players in our management group are really critical to the organization.  Not that all managers are not important, or we would not employ them, but I am particularly aware of outstanding performers and I make sure that they are properly recognized, one way or another.  Recognition is not always about more money; but sometimes salary adjustments are warranted for really outstanding performers.

In some cases, the money issue is addressed automatically for people on incentives, commission and or various bonus plans as a source of reward.  Outstanding performers on these plans are already paid for performance so it is really more the recognition of their contribution that is important.  It goes without saying that outstanding performers are promoted, sometimes into jobs that are completely unfamiliar to them because their work history is so good that there is an assumption that they will succeed no matter the job.   That has always been my experience.    

Saturday, January 31, 2015

Winning As A Team - The Only Way

While there is a place for sole contributors at every company, the reality is that organizations win and grow when they have a team in place that can work together to achieve big things.   It would seem simple to put a cohesive team in place focused on company objectives, but it is perhaps the hardest thing to do.  Employees come to companies with personal baggage and in some cases an inability to work with other people.  As someone who had many bosses, both good and bad, before founding our company, this CEO Blogger is often amazed to hear an employee declare that they just can't work with, or for, a particular person. 

Personality conflicts can be a huge detriment to organizational success.   When they appear, Senior Management must step in, making it very clear that people are being paid to work together to achieve the company's objective.  No one is asking anyone to love another employee; but rather to be civil, establish a working relationship and to stay focused on the growth of the company above all else.  Ultimately, an employee that can't, or won't work with other employees in a constructive manner must be invited to leave the company.

Companies spend lots of money on various team building exercises.  One of the easiest and most beneficial things to do is to encourage employees to work together to implement the organization's charitable goals.   Hopefully, giving back is something all employees should see as a good thing.  It is an opportunity to put aside petty rivalries in the process of helping others.  In addition, spending quality time together during company meetings is also important to establishing internal relationships.  Team exercises that are fun have a real purpose so that when the Team must come together to accomplish big things, there is a history of working together in a cooperative manner.    

Tuesday, January 27, 2015

Know When To Hold Them And When To Fold Them

This Blogger CEO has often waited too long to terminate ineffective employees and or business initiatives.  In reference to employees, there is always the hope that with just a little more training, or direction that a "C" Player can be turned into a "B" or even "A" Player when the reality is that it will never happen.  Further, hope is not a strategy.  And to be candid, I have always been too loyal to long term employees to take action when action was long overdue.  When I finally did approve termination,  I have always been sorry that I did not do it sooner to end the misery.   

Specific to business initiatives that have achieved poor results, the thinking has often been that with just a little more time, or tweaking, the concept could be turned into a success.  The reality is that cards talk and numbers don't lie.   At some point and not in the distant future, it is critical to put emotion aside and recognize that the numbers tell the story.  Whether dealing with an ineffective employee, or a business initiative that has failed, a good manager knows when to hold them and when to fold them.  And, most likely by the time the typical manager takes action to end the misery, it is long overdue. 

The signs are easy to see.   A salesman who is a nice person that everyone likes; but has not closed any deals in a year or more, probably isn't a salesman.  A manager who can't manage people, causing high turn over among direct reports, probably isn't a good manager.  And, people who make excuses for their own failures and or who seek to blame others for those failures are just not good employees.  Finally, someone who is has a disruptive personality style is incapable of changing.  All of these employees should be dealt with sooner, rather than later and invited to leave the company. 

Business initiatives that fail to produce results measured in profitability, or real process improvements probably need to be discontinued long before the plug is pulled.  Good managers should move to terminate both ineffective employees and failed business initiatives much sooner than normally occurs.  But in many cases, as a result of emotional attachment, or the general inertia that exists in many organizations, it takes an economic downturn, or bad times to rid the company of both ineffective employees and business initiatives that have failed because when it becomes necessary to cut expenses, neither can survive the axe.  It would be better if this was done in the regular course of doing business, using reason and facts as the basis for decision making.  In the long run acting to end the misery will be better for all concerned.    

Sunday, January 25, 2015

Cash Management - Now More Important Than Ever

This Blogger CEO has written that Cash Is King.  That adage is now more important than ever because many multi billion dollar corporations have as an objective delaying payment for goods and services as long as possible to work off their supplier's money.  It is certainly not that they can't pay sooner, but rather that they want to maintain the float on funds as a source of income for their firms.   This is understandable; but is it wise in the long run.  Procurement Departments are very focused on payment terms seeking longer and longer days, or even months to pay for the goods and services they are receiving.  In many ways, it is just a game because it can force supplier's to use their credit lines, assuming they have them, to fund operations.   When that happens, well run companies must factor the cost of funding into pricing, so in the end the client is paying for delayed payment terms one way or another.   Many clients may not care, even if it results in higher fees and even interest charges because they assume that their money can be better invested in other ways. 

This trend particularly hurts smaller companies that may not have access to credit lines.  Once they have delivered goods, or implemented services, they often cannot afford to float the business for a big client.  As such, they might have to decline the business.  In the end, it hurts big clients because less competition will usually result in higher prices.  In addition, smaller companies are often more flexible and more innovative than bigger companies, so what the client may find over time, is less flexibility and higher prices as the trade off for longer payment terms. 

All companies need cash in the door as soon as possible to fund operations.  So the goal of every supplier is the shortest payment terms possible.  That could mean 30, 45, 60 or 90 day payment terms; but usually not longer.  In some cases, suppliers may provide a discount for quicker payment terms, recognizing the cost of money.  Whatever the arrangement, this is just squeezing the balloon.   It would be a fool's game to assume that longer payment terms do not impact the price of goods and services, one way or another.  Failing to properly manage cash is a road to bankruptcy.    

Friday, January 23, 2015

Niche Marketing - Choose Your Clients & Customers Wisely

Small or Mid Sized companies need to choose their clients and customers wisely, particularly when competing with bigger companies.  Since resources are finite, it is important to define a Niche for specialization.  The Niche could be regional, national, or international.  The Niche could target certain size clients, with a particular mix of business as a requirement for Sales focus.  This can be  difficult because very often today when Procurement goes out to bid they will cast a wide net to test the market.  The temptation to bid on every Request for Proposal that comes in the door is great.  Certainly, sales people, working on commission, would prefer to practice the Spaghetti Theory of Sales, which is to throw every deal against the wall in the hope that some with stick.  The problem  with this approach is that it becomes less possible to focus on the deals that would be in the best interest of the company.

Completing increasingly complex Requests for Proposal, that come from major clients, cost time and lots of money.  Before doing so, it is critical to ask many questions of the client to determine if bidding makes any sense.  If the prospect declines to answer those questions, the odds are pretty good that the bidding process is just a requirement every three years, rather than a real opportunity.  If we can't get good answers to our questions that would allow for an intelligent bid, we pass on the opportunity. 

Further, it is important to establish a client or prospect business profile that is most advantageous to the company.  In our case, this relates to the mix of business.  If the mix will not provide suitable profitability, then it makes no sense to bid.  Since today clients often go out to bid every three to five years, it would be a mistake to absorb losses up front believing it could result in a long term relationship.  More often than not, the client that requires that the supplier lose money to get the account, will change suppliers as soon as a fee increase is requested. 

There are some clients that believe it is a privilege to do business with them just to have their names on a client list.  They expect major investments up front with no guarantee of future business.  These companies often go through suppliers every few years looking for lower and lower pricing.  This CEO Blogger is not interested in that business. It is very disruptive to an organization and will only lead to big losses and lay-offs in the future.   

It is critical to identify a Niche for Sales success.  It is just as important to focus on clients and customers that are likely to result in a long term business relationship.  If a client has a history of changing suppliers every few years, it could be a sign that all that matters is price.  In a cost driven world, partnerships are still the key to maintaining successful business relationships. Partnership are more likely when both the supplier and the client are suited for each other; just like in any marriage.  Business Partners strive for constant process improvements and cost savings in the normal course of doing business.  This is the sign of a successful business relationship that evolves over time and only gets better. 

Thursday, January 22, 2015

Compensation & Benefits - Getting The Right Mix

Many employees, including Managers, often do understand the concept of total Compensation and Benefits.  Wages are not just about base salary or even bonus, incentive or commission; but rather the total weighted cost of employment, which must include benefits like vacation, sick time, pension and various other benefits.  In addition, the company is also contributing its share of Social Security and Medicare reimbursements, which can be 7.65% of salary or more depending on country.  So when all is said and done, it is the total load that matters.  Beyond regular wages, companies often pay 25% - 40% of wages, depending on family size, to support an employee.  Of course, this does not include facility and equipment expenses to pay for the space and or employee equipment usage necessary to support an employee. 

This is the reason adding headcount or Full Time Equivalents (FTE's) are so closely managed by most companies.  FTE's usually make up 65 - 70% of a company's expense line.  As a result, in our case, as the CEO of the company, I approve all new job actions, headcount and even replacements because it is such a big part of our expense line. 

In dealing with Compensation and Benefits, all aspects represent trade off's.  Most jobs involve base pay; though some are straight commission based on industry practice.  In the private sector, many exempt jobs also include various incentives, bonus or commission plans presumably to drive behaviors.  Getting it right can be complex.  It took this Blogger CEO 25 years in business to figure out that there needed to be a correlation between Sales Commission and Profit Margins.  The higher the margins achieved, the higher the commission percentage.  Otherwise, if commission percentages are fixed, there is little motivation for the sales person to achieve higher profitability for the company.  Further, bonus plans really should be predicated on pre tax profit in a way that represents profit sharing earned by achieving individual performance objectives.  Transactional incentives should drive specific behaviors to achieve the desired end result.  And, all of this must be weighed against the cost of benefits to come up with the total package. 

Getting the right mix of compensation and benefits is as much a science as it is an art.  And, this is a never ending process to some degree based on trial and error.  Each year some tweaking may be necessary to drive the right behaviors and properly reward employees for their contributions to the company.    

Tuesday, January 20, 2015

Losing A Big Client - Opportunity For Change

In the life of every company, the day will come when a big client is lost.  Today, this can happen even if great service was provided for a variety of reasons.  More and more Procurement Departments at major companies are controlling buy decisions.  Procurement Managers, presumably as a result of their objectives and perhaps bonus structure are often looking for short term gains in terms of cost savings.   In the process, great service and technology are a given, so they are usually not the final determining factors in choosing a supplier any more.  The notion that a client receiving great service would change to another supplier just never happened 10 or 15 years ago.  Instead, the concept of partnership was used to achieve process improvements and cost savings as a normal aspect of doing business.  This Blogger CEO won't say this is all dead; but I will say that the good old days were better when relationships really mattered, particularly during tough times.

In any case, when the day comes that a company does lose a big client for whatever reason, no matter how painful, after a short grieving period, which is normal and trying to learn from the experience, it is a great opportunity to reinvent the organization from top to bottom.  First, take a look at the company's businesses in terms of viability and profitability.  This could be a good time to change direction and or emphasis.  Cards talk and numbers don't lie, which means use numbers to determine company direction, rather than emotional attachment.   A good manager must know when to hold them and when to fold them.  It may be time to limit investment in some business, while increasing investment in other businesses that could be more profitable. 

As part of the process, doing a talent assessment makes sense, as well.  Losing a big client could result in downsizing and lay offs.  It is a good time to determine the talent needs of the organization going forward.  Obviously, employees directly tied to the lost client, if they can't be reassigned to other clients, or functions, may have to be laid off to cut costs.  However, if it makes sense for the company to change direction or strategy, it may be that other employees, working in other functions and or locations are no longer a good fit, resulting in elimination of those jobs, as well.  This may seem heartless; but at the end of the day, the CEO's job is to insure the survival and financial stability of the company in order to fight another day. 

Finally, a facility assessment should be done.  If the loss of a big client results in having too much office or manufacturing space, it is best to get rid of unnecessary space as soon as feasible to eliminate expense, even if it results in a write off. 

Losing a big client is never a positive experience; but it can be a real opportunity to actually grow a company.  Most important, it is not the end of the world.  When times get tough, the tough get going.  Good managers use use losing a client as an opportunity to learn from the experience and if necessary to change direction to insure the success of the company. 

Monday, January 19, 2015

Losing A Good Employee - An Opportunity For Change

This CEO Blogger has been managing people for over 45 years, in one capacity or another, either personally, or through direct reports.   As far as I am concerned everyone at our company works for me.  In doing so, while I directly have terminated very few employees, I have been involved in approving the termination, or lay off of many employees through my direct reports.  Terminating employees for cause, when necessary, though often unpleasant, is just part of a good manager's job.  It is actually more difficult to lay off employees in a downturn, or for other business reasons; but that responsibility too comes with a manager's job title.  Losing a Good Employee to voluntary termination is in many ways the most difficult and troubling aspect of a manager's job, since no one wants to see a Good Employee leave the company. 

It happens for a variety of reasons.  Some Good Employees that leave may think that the grass is greener someplace else in seeking another career opportunity.  The reality is usually not so; but it may seem so because of a few more bucks, or perhaps a new job title, or role.  Good Employees can usually do just as well, over time, staying right where they are; but in the short term, perhaps leaving does provide some opportunity for career advancement.  More often than not a Good Employee leaves the company because he or she does not have a good relationship with his or her direct report manager.  Over the years, I have been told by certain employees that if forced to work for a particular manager, that they would quit.   If departures happen frequently because of a particular manager, it is probably time to deal with that manager.   Good Employees often leave to go to the competition, or sometimes to try something new outside the industry.  In some cases, Good Employees retire, or stay home to take care of children.  In a rare case, a Good Employee may die prematurely, which is probably the hardest departure to accept. 

However, whatever the reason a Good Employee leaves the company, it is never the end of the world.  Life always goes on.  This CEO Blogger has seen other employees go into a real funk when a Good Employee leaves, as though the company will cease to function.  Of course, that is ridiculous. When dealing with anything bad that happens in business, or even in life, should a Good Employee leave the company, a good manager allows him or herself a short time to grieve and then immediately moves on to Plan B.  Actually, when any employee leaves the company, for any reason, it is a great opportunity to take a hard look at the job function and the company in general.  Sometimes when a Good Employee leaves, it forces decision making that probably should have happened anyway and sooner. 

It may be time to change direction for the department, division or subsidiary and or to eliminate the job entirely giving out responsibilities to other employees of the company.  One employee leaving could create a promotional opportunity for another employee and or it could be a chance to hire someone more experienced and or talented to replace the employee that left.  When we have a Good Employee leave our company, we always turn lemons into lemonade, one way or another.

This Blogger CEO has more than 1500 professionals in my Linked In from both within and outside our industry.  These are people who could fill lower level jobs all the way up to senior managers.  I will accept a link to anyone that I think might benefit our company one day, one way or another.  When we have a job opening, I frequently check my Linked In to identify candidates that might be suitable.  I contact those candidates to determine interest in our job opening and to arrange  interviews.  In many ways, I am our company's Recruiter in Chief, which I see as a good use of my time, since we can only succeed by hiring and retaining good people.  We have hired several people from my Linked In contacts.  So while losing a Good Employee is never positive and can be challenging until a replacement is found, or reorganization is accomplished, it really is an opportunity to bring in, or to advance other talent that can benefit the organization.   Most important, all employees should see losing a Good Employee as an opportunity to benefit the organization.