Category Archives: Conversations with a Consultant

Series of 4 blog subjects regarding strategy, effectiveness and Management best practices

Can YOU beat earnings with lower revenue?

Ironically, today’s earnings report from Wal-Mart proves the point I made in my Blog      “Low earnings /Low Profits – What to do?”

I have a love/hate relationship with Wal-Mart.  I often shop their begrudgingly. I would prefer to support a local business, but when I am buying toothpaste my choices are generally a Wal-Mart, Chain Drug Store, or grocery store.  There really aren’t too many local businesses to buy toothpaste from.  Wal-Mart is cheaper, and there are always other items that I get while there.  They save me time and money and there for they are a value.  I support local when possible, but frankly I couldn’t afford to buy as many things if I shopped only local and I am a typical American who wants as much stuff as possible.

Yesterday Walmart announced that 2015 Q4 revenue was down, and they expect very little sales growth for all of 2016.  Same store sales were reported to increase less than 1% in 2015. To insure they can meet or beat earnings, they have decreased operation costs and reinvested in Human Capital, choosing to focus on culture over new market channels.

Announcing the closure of 269 stores worldwide and releasing close to 10,000 workers will surely get a lot of attention.  But Wal-Mart is focusing the narrative on developing its Culture.   Wal-Mart is investing by raising the wages of it workers. This is very strategic since they have a history of Legal and Public Relations issues around wages and practices.  Improving employee engagement will help drive business into their well established retail presence.  I support this strategy, but I think they have a lot of work to do besides raising wages.

Walmart recognizes that the growth of online shopping has impacted brick and mortar and they have already begun testing new strategies to target these areas.  Experiments in the Grocery offerings (Organic Product selection & home delivery), introducing their price matching app (which is awesome), the ever expanding electronics section, and the “No Questions return policy” to name a few will go along way to exceed customer expectations and build loyalty.

So…… sales are stagnant, they are giving nearly everyone a raise, and adding to their operational costs….how is this a good plan?

Well to start, the Thursday announcement also mentioned that they beat earnings and brought in a higher dividend than forecast.  Earnings came in at $1.49/ share on a projected $1.46 and quarterly dividend was .50 on a projected .49.  At the open of today their stock is down ~4% and they have fallen ~27% over the last 12 months.

But they still had a 2% increase in dividends and profit!

What would your business do in this situation?  Can you bring in a higher profit while loosing expected revenue?  Would you give a raise to help increase store sales?

Proper planning, strategy, and vision makes the difference.

Carpe diem!

Low Earnings / Low Profits? What to DO?

Stop – Breathe – Plan

Financial Earnings have been reported lower for 8 quarters in a row for the S&P 500(source). Many economists are weary of another recession even though there are some positive signs.  But at the very least Janet Yellens recent announcement of a “mixed picture” ahead speaks to a challenging 2016 and most Financial Advisors are warning of a volatile year.   Large companies are having to do more with less to maintain their budgeted profit lines and meet earnings projections.

Because of this, Big Business has….

  • less overall revenue
  • less people to do the work
  • less quality
  • less R&D
  • less room for error
  • less money to reinvest in smaller businesses

 

Wall street has had to make changes because they need to keep investors satisfied,..

..but Main Street USA needs to do this to stay open!

It is one thing to look at efficiency to help shave money off production or operating costs, but making adjustments due to drastic loss of Top line revenue or disintegrating Market channels is a different problem that will effect the future of your business.

Sound familiar?

There is no difference between what the larger companies are experiencing verses small businesses or Non Profits.  It is simply a matter of scale, everybody has to do more with less while maintaining stakeholders.  Everybody is concerned how these changes will be noticed by their customer base or how it will effect loyalty and future revenues.

But in order to keep things moving, something has to change!

This is not a preferred business strategy, it is a reaction to the economic situation most industries are experiencing.  Large companies arguably have more “fat” to trim when necessary but small companies like “mom and pops” or even Non profits run lean as possible anyways.

To compete with this environment companies are continually searching for ways to maintain quality, customer counts and funding.

Here are 5 Key Differentiators in a business handling this well.
  1. Proactive Strategic Planning.  Too often smaller companies view this as “Crisis” management that happens after the fact rather than as a precautionary planning tool.
  2. Getting a fresh eyes” mindset to business operations, utilizing efficiency experts, workforce development, and sometimes even a “blow it up” mentality.  If you can’t afford outside help, then utilize analysis tools like a SWOT or PEST to help with direction.
  3. Courageous Leadership.  Do the decision makers have the courage to take calculated risks with business operations or market shifts.  This is scary stuff, but once there is enough data, you need to make a decision.  Make sure you have the right data or input from a reputable source.
  4. Understanding CHANGE Management.  Once you have started something, a change will come, but is it the one you want?  Knowing how to control Change and calculate outcomes takes a proven formula and a savvy leader.  Contact me for segments of my white paper entitled “5 Pillars of Change Management” it will define the key components needed to control Change in your organization.  LearnMore-Light-Primary-16
  5. Having Business Intelligence about your customers/doners/followers.   Savvy companies know who is buying their products and what it takes to get them to buy. Knowing the Attitudes & Motivators is key business intelligence that makes for a much more targeted decision about your audience.  Too often a business focuses on who they want to buy rather than who IS buying their product(s).

Avoid being in a position to make decisions that will hurt your business, its customers and your employees because of lower earnings.  If you feel you need help, call an expert.  You have worked too hard to have to cut what is important.

Stop – Breathe – Plan – Call

Carpe diem!

 

How to make Excellence achievable

I have been a student of Management for 30 years. Management is as much of an art as it is a science and understanding that you practice management rather than it being a degree on the wall shows that you continually evolve in this position. To be a successful Manager you must have an understanding of how to achieve Excellence. Excellence is a combination of several factors depending on what industry you manage in.  Today I am going to discuss the number one thing to do to achieve Excellence in what YOU do.

Excellence is an Attitude

You do not achieve Excellence by completing a checklist, you do not achieve Excellence by doing what the boss said, and lastly, you do not achieve Excellence through watching an inspiration video (although there are some very good ones).

Excellence is a lifestyle

Excellence needs to be how you address everything in your life.  Excellence means never saying “whatever”.  It is setting the highest standards to hold yourself to and having the discipline to hold yourself accountable.  I don’t care what you are doing, you can be excellent at it.  Washing the dishes, cleaning the bathroom at home, creating reports, or providing customer service, all can have levels of Excellence attached to them.

You will not achieve Excellence if you think it only applies to a “work” atmosphere.  Excellence can’t be turned on and off.  It’s just in you.

Lets define a few terms;

Excellence – The quality of being outstanding or extremely good (Webster).   Achieving or distinguishing a superior quality in an action or outcome (Simons)

Attitude – A settled way of thinking typically reflected in a persons behavior (Webster).  An approach or outlook demonstrated through actions, communications, or outcomes (Simons)

Pride – A feeling or deep pleasure derived from ones own achievements (Webster).  Personally Responsible In Delivering Excellence (taken from my Corporate Training days)

I am certain I have been “picked on” by those around me for having an Excellence mindset.  I have extremely high standards for myself.  I hold myself to higher standards than I have ever held an employee too.  Why, because it is important to me to do things right (whatever right is).  I look at whatever I do as a product I am producing, and I don’t take it lightly.  Some think I am too hard on myself.  No, I am not.  I just don’t say “whatever”.

Excellence is also about precision.  You need to know exactly what needs to happen in order for it to happen.  Once again, this will carry over to other aspects of your life.  In addition to Management, I am also a classically trained Chef and a life long Drummer.  Precision follows me in both of those.  Playing drums is as much about where you hit the drum or cymbal, and at what angle and with how much force as it is about the rhythms or change ups.  If you match the rhythm but you aren’t precise with your stick, you are a hacker.  If you do it right, you are a drummer.  Doing it exactly the same way every time is Excellence, and much harder than you might think.  The same goes for cooking.  Many people can flip an egg but having the timing to have an entire meal or banquet “go out” together, where no food has had to sit (which degrades quality) and everything is cooked or prepared perfectly can be like conducting a symphony.  Variations will always be noticed by someone in your audience so it is important to be consistent EVERY time.  You need to be very precise with your planning and execution.  You need to know ahead of time how it needs to happen.   Both are great examples because when you haven’t achieved Excellence, you know right away!

Does Excellence allow for mistakes?

Absolutely!  I am far from the best there is at so many things.  Some people confuse my quest for Excellence as thinking that I think I don’t make mistakes.  I certainly do make mistakes, but because of my attitude, I likely work harder to not repeat mistakes than others that don’t have this mindset.  Mistakes are a very important part of learning and you can’t learn from them if you don’t recognize them.  I must confess I get mad if I repeat my own mistakes though.

If you haven’t read the short but EXCELLENT book about the FISH Philosophy, I highly recommend it.  It applies to everyone and will help you realize what attitudes you are choosing.

This is why Excellence is achievable, because it is an attitude, and as you may read in FISH or my other blogs about FISH.

“Choose your Attitude”

Carpe diem!

 

Non Profits & Small Business – How to plan a Communications Strategy

Content Management, Frequency, and Target Audience are but a few of the components in a Communications Plan.  Non Profit(s) and Small Businesses need to be very strategic on what messaging they need and which tactics to use when creating a Marketing Campaign due to the amount of time needed and financial investment it takes for these to work.

Knowing the attitudes and motivators of your buyers/supporters/followers has a direct impact on measuring  a plans effectiveness.   The following are excerpts from a white paper published by C.S.Simons Consulting  in 2012 designed as a FREE resource for those businesses who recognize the need for better effectiveness in their communications but have limited funds to hire a professional Marketing firm.  There is also 2 worksheets available to expedite your Communication Planning, feel free to contact me if you would like a copies.

Why develop a strategy around a Communications Plan?
  • Planning contributes greatly to success.
  • Increases effectiveness of messaging
  • Identifies key users and followers
  • Engagement, engagement, engagement
  • Keeps entire organization focused on Strategic initiatives

What is Strategic Communication?

 Strategic communication is planned and accomplishes a specific outcome.  It is essentially a project plan for everything you may need to “Market” a product, service or business effort. Designing one will ask the right questions of you as to how you want it presented(see below).  It is designed ahead of time so your company controls the exposure and narrative that puts your product/service/effort in the best light to the people or businesses you want to see it.  Otherwise you risk the reputation and message being delivered.  Below is a checklist to help you organize a Communication Plan of your own.

  • Strategic communication is targeted to a particular audience or audiences utilizing known demographics about your customer.
  • Strategic communication is designed and delivered to produce a desired result
  • Strategic communication aims for results with the best possible use of time and resources.

Strategic communications should be tracked, with measurable performance.

Some key questions to consider at the start of the process are:
  • Where are you now and where do you want to be?
  • What will you need to do to get there?
  • What role can communication, education and training play to achieve your goals?
  • How will you learn from your experiences?

 

 Be careful! – what to avoid
  1. Communication is part of the entire Policy and Strategy implementation process.   To implement a Communication Strategy there are many projects to be prepared and undertaken. There must be an understanding of what your customer wants from you, who your customer is and where to find them.  Demographics, Attitudes and Motivators is how it is referred to with in the Marketing world.  These are addressed first prior to forming a Communications Strategy around how to effectively have that group pay attention to you.  Most business people or Executive Directors would agree with this yet this stage often receives little attention until much later on.  Often communication is considered only after plans, polices or projects are prepared which strongly reduces the potential for successful project implementation.
  2. Ad hoc communication is not effective.   There is an enormous difference between communication strategically planned and that without strategic planning.  It will miss the target audience or deliver the wrong message.  You may have very little time to get the attention of your audience, so every little effort needs to be effective.

 

FREE Checklist for planning a Communication Strategy

 Message: This will comprise a combination, of WHO you are trying to speak to, and WHAT you want them to remember or HOW you want them to act.

Timeframes & Frequency: You have to clarify if you are designing a communication strategy with long term goals, a communication plan with short term goals or a communication plan for a specific project. A Strategic Communication Plan will likely utilize all three types of communication plans and is a comprehensive approach for long term messaging.

Target Audience:  To create a master strategy, match the goals of your strategic plan to groups identified in the recent membership survey.  The membership survey results provide detailed information on demographics such as age, proximity to lake, length of membership, and communication preferences.  Use this information to choose which medium to communicate to each demographic.  To broadcast a particular message, many organizations choose multiple mediums and alter their message slightly to improve connection with a particular demographic. Much of a communication program success relies upon the content connecting with its target audience.

Budgeting:  You must consider costs when planning a single event or campaign style communication.  This needs to be in the planning phase to insure its completion.  Too often plans don’t become reality because the finances weren’t thought of ahead of time.  Include time of any staff in your estimation even though it is part of a different line item.  When you want to determine the success of a tactic, all costs must be considered.  Include any print materials, ad space, postage, graphic design, sponsorships, office supply and smallwares (table, chairs, poster board, raffle prizes, etc)

Content:  The body of the communication and the vehicle for reaction.  Utilize demographic information to “speak in a language” that the reader will understand.  Incorporate grabbing headlines, pictures or graphs whenever possible as this is a proven to increase attention and action.

Tools & Format;  what method or medium would be best suited to deliver message and achieve results.  Consider the target audience, and how to best reach them based on prior success.  If trying to reach a new target audience, which design works best for the market? Is capital expense needed for a first impression?   Is graphic designing needed for a mailing or email blast?  Print ready advertisement design?  Pictures needed for social media or press release?

Instrumental style communication – You need to be conscious of whether you are dealing with a communication campaign that is organized to raise the interest of the public, politicians and other special groups for a particular issue, or to generate support for policies or plans.

 Interactive style communication – A plan is for establishing active dialogue with certain groups and fully involving them in planning, implementing or evaluating (Feasibility study)

 Maintenance and Accountability;  to assist with daily management of any communication campaign, the creation of tools to help monitor message, frequency, placements and responsibility should be utilized.  Examples of such tools are provided in the tools section of this report.

 5 considerations for Successful communications
  1. When implementing, regularly check how feasible the plan is, and what disasters may occur.
  2. What will affect the success of the message? Which stakeholder is it designed for?
  3.  Be flexible in adapting the plan in case of shortages in money or time.
  4. What will people’s reaction be – What do they want in the communication?
  5. If the communication is announcing an event or action item, how much time is given for members to react?

 

When to use a campaign and when to use single source messaging

A campaign can be designed for virtually any application, after all, more is often better when done right.  The primary goal behind a multi-tactic campaign is to leverage each individual tactic/method to achieve greater impact with the desired message.

Some occasions for use of a campaign

  • To educate a population on a particular subject
  • To tell a story of your brand
  • Establish a dialogue
  • To create recognition of a subject
  • Public Relations
  • To display a style or belief system

Single source messaging which is a one time event through standard media such as direct mail, email, website or online posting and is designed as a “one and done”.  It doesn’t have a direct connection to either the message that LSPA has agreed to or a direct connection to the mission of the organization.  While it is important and informational, it may not lead to a call for action like those in a campaign will from its recipients.

Some occasions for use of single source messaging

  • Scheduled events
  • Confirmation of expected information
  • Thank You’s
  • Annual Reports
How Non Profits can identify the role for a Communication Plan

 To identify the role of communication it is necessary to ask:

  • What is the current Knowledge, Attitude and Practices (behaviors) of the target groups and stakeholders involved?
  • What reactions do you want the target groups and stakeholders have?

It is also important to clarify what are the desired changes in the people involved in this issue:

  • Is it to change the attitudes of people and/or organizations
  • change the mind sets – the way people look at a certain issue
  • change the way people feel about an issuer
  • change behavior? (more difficult)

To assess the role of communication in this change process it is necessary to understand if the problem is due to:

  • A lack of awareness that the issue is important
  • Negative attitudes towards the issue or the solutions
  • Lack of skills or “know how” to make a change

In these cases the different states of knowledge, attitudes and practices need different communication solutions, and communication may be used as a sole instrument.

 Frequently made mistakes in communication planning

 The objective of the communication activity is not properly defined or is too vague

  • The objectives are too ambitious to achieve
  • There is lack of knowledge of what is precisely wanted from the target groups and what is required to achieve the result:
    • e.g. is knowledge needed? new skills and practices?  
    •   e.g. do we need an attitude change from them?
  • Communication goals are set to change other people’s behavior and values without understanding how the behavior change can take place
  • The fact that people need social, economic or other benefits for any kind of behavior change is not considered when objectives are defined
  • Indicators are not defined for the communication targets/objectives, making evaluation of the outcome difficult.

 

For more on this subject or to discuss additional ways to help your organizations Ability to Generate Revenue, contact C.S.Simons Consulting.

 

Carpe diem!

 

 

Great Quote on Continuity and Change

“Precisely because change is a constant, the foundation has to be extra strong”

– Peter Drucker – Management Challenges from the 21 Century.

 

Both Continuity and Change happen on purpose and by accident and most of us put a lot of effort into managing or reacting to them.  The key is to balance these two.  How do you know your organization can balance any change needed while maintaining business continuity?  There is a common denominator for both and developing this with in your organization is the “foundation” that Peter Drucker is referring to in this quote.

Lets first define each

Continuity (business) -process to insure that critical business functions will continue in standardized fashion.  Policies, Procedures and Risk Management efforts build around protecting the organizations core mission or that products will continue to operate despite interruptions, incidents or disasters.  This falls under a category of Risk Management because it protects your organizations interests and the 3 primary focuses are Resilience, Recovery, and Contingency.  This also effectively protects a company through Change.

Change– essentially focuses on transition of any size or scale.  Change Management focuses on how people and teams are affected by an organizational transition. It deals with many different disciplines, from behavioral and social sciences to data and technology, and business solutions.

The common denominator is information.  How an organization chooses to share information is pivotal to the success or failure of Change and Business Continuity.  Peter Drucker is simply saying that in order for things to stay the same (Continuity) or for a transition (Change) to work as expected there needs to be adequate shared information as to why it is happening and what needs to be done differently to make this happen.

Now a days this is management 101, sharing the right information with people (both associate to supervisor AND Supervisor to associate) the Why, the What or the How is the foundation needed in a sustainable organization.  I doubt this is a revelation to anyone reading this, yet a vast majority of the time that a problem occurs it can be traced back to incomplete information sharing.  Which is why it is considered a foundation.

Challenge – When you make a decision or a Change, ask yourself “Who needs this information to make this work?”

Carpe diem!

 

P&L’s – The most important number?

I received a question about  our recent post regarding Financial tools every business needs regarding the Profit and Loss Statement.

The question is…

” Which is the single most important number to help manage your business on the P&L?”

The answer quite simply is the “% Variances” column.   Not all P&L reports even have that so what is it?  To truly have an idea where your business needs to be, you need to start with creating a budget.  Every line on a P&L should have a “budgeted amount”  number in it.  This is the amount you expected to spend to yield the profit you planned.  If you don’t do the work to create a budget, then the P&L looses half of its value as a tool to help your businesses ability to generate revenue.

Many know that to help manage your business you compare the “Actuals” to the “Budgeted” columns for each line.  But there should also be a percentage column next to each of these showing the percent of total revenue that each is, which isn’t as common to find in smaller businesses P&L.  It is important to do this because Percentages reflect day to day execution of the operations in your business.

The VARIANCE column shows the difference between the budgeted and actual dollars spent, which should also have a % Variance column next to it.  This is an excellent “At a Glance” illustration of how you did in that area for the given period (+/-).

The variance dollar columns are great information for when you need to “dig in” and find why an area was high or low, but comparing that areas “actual” percent to the percent of “budgeted” revenue….

is the single most telling number for performance.

Example:

Sales are up, which would likely mean some controllable expenses are up, right? But how much more should you spend to maintain your margins?  Management needs to make sure expenses are still with in the Budgeted percentage of sales to maintain profit levels as expected.  Simply put if you expected to spend 20% of your expenses on materials, you should still spend 20% on materials whether sales go up or down.  This column helps you keep an eye on that and make adjustments if necessary.   Businesses that have a lot of fluctuation tend to run these reports more often (Food, Retail, etc).  This helps you control your product costs.  Granted, this may also mean that profit dollars are down (assuming revenue is down), but at least you maintain product and fiscal integrity.  That is very important which I have a lot to say about as well as how to impact these numbers, but I will save that for another time.

But the SINGLE most important number, one that a Business Analyst or Owner should focus on first is the % Variance to budgeted because it shows so much information.

Call me if you need help with this, my number is at the bottom of our Contact page.

Carpe diem!

Non Profits & Small Business – 3 Keys to Finance Basics

Businesses of all sizes will eventually need to prepare and manage three basic financial statements.  They are included in any comprehensive Business Plan and I will show you how they are commonly used for business strategy and routine Operations Management decisions.  These are the Profit & Loss Statement (P&L), the Balance Sheet, and the Cash Flow Statement.  I admit these can be both intimidating and confusing yet the sooner a business can use these as a compass the sooner they can be financially independent.

They will be asked for by any Business Analyst, Loan Officer, or Financial Advisor of your business so what are they?

Defined

Profit & Loss Statement (P&L) –  Also called an income statement.  This is a consolidated record showing how much you have spent (expenses) and how much you have made in revenue.  The two are calculated showing what your net income is over a specific period of time.  The period of time these show may depend on the industry you are in and typically are either by calander months, fiscal period(typically 28 days), or weekly.  It is also very common to have quarterly P&L showing a consolidated series of numbers that help you determine if it is time to sound the alarm or not.

Balance Sheet – This is a dashboard of your companies overall health.  It provides a summary of the businesses assets, liabilities and net worth.  Essentially the balance sheet tells you what you own and what you owe.  Assets are resources your business controls such as cash, equipment, buildings, furniture, inventory and money owed to you.  Your Liabilities will be the obligations you owe to others such as payroll, taxes,  Accounts payables or loans.  Your net worth is what is left over.

Cash Flow Statement –  This report demonstrates how cash has flowed in and out of your business over that time period.  Typical software programs to produce all of these would be Quicken or  Peachtree if you do your numbers your self (opposed to an Accounting Firm) or for smaller or really savvy businesses Excel works just fine.

How you use themthe 101

P&L – Depending on the scope of your business the P&L Statement can be very complicated or extremely simple.  The key is to have it inclusive of money going in and out of the business over a set period of time.  All expenses should be categorized so that at a glance you can tell why and where they are up or down from a previous period or the “forecast” budgeted amount .  Similar with revenue.  The more information the better because this tool will not only help track history, but it will help you predict future spending in most areas.  The expenses are commonly broken down into two categories; “Controllable and Non Controllable”.  Examples of non controllable expenses would be rent, loans & taxes.  Controllables are pretty much anything you can say “NO” to (much more on that another time).  This report will subtract the expenses from the revenues and show your “net profit” at the bottom.  This is a very important report for the Operations Management team to utilize and if used properly it can be very effective in containing costs and contribute to a positive cash flow for the company.   But it is not all inclusive and needs to be used in conjunction with the other two forms.

Tip – A “best practice” I have all my clients do is when using a P&L is to have all expenses broken down as a percentage of total revenue that is expected.  Manage by using the percentages and not necessarily the dollars on the form.  Ex:  (Forecasted Revenue is always 100%).  Say labor is expected to be 15% of your revenue $.  Then lets say Revenue is down a little.  The manager can either adjust labor or not during that month.  Well if labor comes in at 14% of  projected revenue, you may still be ok in that category.  If labor comes in at 20% because the manager did not use the P&L to make adjustments, then you have lost money.  Same goes for every line on the P&L.  The more information you have, the better your daily decsions could be!

Balance Sheet –  This report is generally broken into a few areas.  Assests will be broken into categories depending on how accessible they are or how quickly you may expect to use them.  “Current or Fixed”  is common terminology.  Current assets, often referred to as “Liquid” means you could use it today if needed (cash, accounts receivables, or short term investments) and are usually listed first.  Followed by Fixed assets which may be a building or equipment you own.  While you could free up money invested in these it may take some time to access it.  Under Fixed assets you are likely to find “Depreciation” which is the amount of money estimated to be used up from the fixed assets. Meaning,  if you had to sell them today, what would they actually be worth?  If you subtract the depreciation from the Fixed assets you will determine how much is available or “net Assets”

Liabilities are listed next and they are everything that the business owes to someone else.  Accounts payable, taxes, loans, wages, etc.  Similar to assets these are also categorized by time frames, although Liabilities are listed by due dates.  If your business has a invoice that has 90 days on it, it won’t be listed on your P&L, but will be listed on your balance sheet.

Both the assets and the liabilities are then subtracted from the assets to determine a businesses “Net worth” or “Owner Equity”.  In short it is a snapshot of what you would have left if you had to sell the business today after you paid everything off that you owed.  Most would agree, it is a good idea to keep an eye on this figure!

Cash Flow Sheet –  depending what type of business you are will determine the frequency in which you use this report.  Any organization that may have an unpredictable revenue stream will rely on it more frequently.  As one Non Profit client put it, “this report essentially shows you how much air you have left”.  This report will not only list what cash is expect to come in and go out of the business, but it calculates a time frame of how long the business could continue should things change drastically.  Generally measured in days weeks or months depending on the size of the Balance Sheet numbers.  In a larger corporate environment this is only reviewed by the most senior level Executives but for Small Businesses and Non Profits, who tend to live “day to day” this can be a helpful report to review quarterly.  Because using just a P&L, like so many companies do, can be deceiving.  It may look like you made money during a specific period but other expenses not appearing on a monthly P&L may come to terms.  Remember the 90 day invoice I mentioned earlier?  Well that may also need to be paid which can throw off your cash accounts.  A Cash Flow sheet would show what will be due and help you plan for it so you don’t become over extended.  As mentioned this is particularly important for many small or seasonal based businesses and pretty much all Non Profits.

As mentioned most software packages on the market will take a lot of the work out of creating these important reports for you.  All it takes is a small time investment to load all the information on a daily basis.  If you prefer to hire an Accounting Firm to get you started, I work with several I would be happy to recommend.  I guarantee that using these standard Financial tools will improve your businesses ability to generate revenue.

For more business basics click here for information on our Business Boot Camp Workshop

Carpe diem!

Ask an Expert – Creating a “Hiring model”

Stephanie asked-

“I need to hire for a new retail venture in 2016.  When I heard you speak, you referred to a “Model” to use when recruiting.  Where can I find those?”

The “model” needs to be created by you specifically for a position or department.  It is a fairly easy process to develop and one that will pay off in the long run.  It helps build a sustainable workforce well suited to help generate revenue.    A hiring model captures the key strengths and attitudes (skills, personality, work experience and even core values) of an ideal candidate for a particular position.  Stephanie you need to literally make a list ahead of time of what will be needed by a candidate to succeed at this job in your environment.  You can then formulate questions for you or your team (open ended ofcourse) to ask during the interview or simply use the “model” as a litmus test when reviewing a candidate.

Let me break these areas down further and show you how I have used them on Hiring Models and or looked for them during Interviews.  Be sure to read my 3 tips at the end!

Skills

Hiring Model -really look at what is needed to get the job done proficiently.  Skills simply illustrate someones capabilities and knowledge base.  If you need a person to be extremely detailed, don’t just look for that skill listed in their work experiences, look for it IN the person.

Examples (customer service, computers, time management, organizational, communication, detailed, analytical, etc)

Interview – perhaps their work isn’t a great example of what they can provide. Lets say they also volunteer and run large events for a charity or church, that takes a lot of organization, attention to detail and coordinating,  so they may very well be capable of performing what you need.  That person may have not brought this experience up because it didn’t seem relevant to the job to them or they thought bringing up religion opened the wrong door.    So listen to what they offer in “icebreaker” questions, because you often get great information you can follow up on.  Asking someone to “tell me about yourself” can provide you very useful information that is technically unsolicited (which protects the interviewer).  People often have many skills that may not be used in past work experiences but may help your business.  You challenge in the interview is to find them!

-The better you know what it takes to complete a given job, and the better you can break it down to a set of skills, the higher the chances of finding someone who can excel at their job.

Personality & Attitude-

Hiring Model  – culture is important and culture isn’t found in your book of Policies and Procedures, it is found in the heart of the business on a daily basis.  Personalities help drive your culture and diverse personalities can either strengthen or break down the teams dynamic.  Personalities and attitudes are an important part of your businesses ability to generate revenue.   We have all been on those teams where either someone else on it became our best friend or we found a person that we couldn’t stand and made us want to leave the job .  So how does it fit in the Hiring Model?  Well if you are adding to an existing team,  you need to have an understanding of the interpersonal dynamics on your team.  What type of person do they want to work with?  While it has nothing to do with completing the job, it has a lot to do with how comfortable that person will be with the existing group of workers.  If the person is uncomfortable or makes others uncomfortable, quality and productivity may go down and turnover may go up.  I am not suggesting clones, but similar or complementing styles.  Building a new team for a new venture like Stephanie mentioned is a great time to build a synergistic team because you are hiring everyone at the same time.   Read a case study where this had a huge impact.

Interview – One great way to assess this is to have a “key” employee(s) interview the candidate also.  If all parties think they can work with this person,  you can feel much more comfortable with the “fit”.  Lastly, as a manager you do not manage peoples personalities you manage or correct their behaviors.   You only get one chance to make a decision based on someones personality and that is in the Hiring process.  Terminating based on personality can get a business owner into legal hot water.

Work Experience

Hiring Model  this one really depends on what job you need filled.  Regulatory or certified level employee’s need a certain level of experience to show they can perform and are competent.   But for most positions, if you focus on a candidates experience you are really focusing on the level of training the past job(s) provided this person and the management staff of each location.  I have seen people work their way through levels of management that weren’t really qualified to even be a supervisor on my team.  Titles are nice but don’t hire primarily on the titles someone has attained.  Many hiring managers falsely assume that experience implies competence.  Competency is what you really need to look for in this category.  In forming your Hiring Mode think about two things;

  1. What do you need this person to be competent at?  Which of the skills you listed will this person need to use most frequently?  Pick the top 2 or 3 and focus on those.
  2. think of the Top companies you may want to see candidates from, or key positions that are similar to what you have available.  You will find particular companies that share Hiring, Training & Development styles with your company, and those typically provide good candidates.

 

Interview – Form questions around how they got those jobs, what they felt they learned while doing them, and how those experiences help them be a better employee today.  Quiz them a little in areas they need to know to do this job to help gauge competency.  Usually in this area you can also get a good sense of what they are like to work with by asking questions around co workers or how they responded to a supervisors feedback.

When assessing professional experiences I always look for progression.  Do they aspire to move up the ladder?  or are they comfortable doing the same thing day in and day out?It is important to match this to your position yet ambition is important to a degree in all candidates because you need your new hire to have ambition in there new position.  Do they seek resources when faced with a challenge or take an easy way out like “just do as I am told” or my favorite “not my job”.  Clearly you need to insure their level of ambition is realistic also, someone who thinks they will be promoted next month may not be what you need!  History WILL repeat itself here I promise.

I strongly recommend questioning about jobs they have had that may not even be pertinent to what you want this person to do.  Ask “how they achieved, why they wanted that, what did they take away from it” and you may be very surprised in what you find.  But do not disqualify someone just because of certian job experiences, this can be a huge mistake for an interviewer.  Sometimes great people have to accept jobs at mediocre companies and often large companies hire and promote people for the wrong reasons, it is just to hard to tell which it is on an application you are looking at.

Lastly, consider how long it may take in the positions listed from a candidate to be competent and what the persons next roll was.  Ultimately think of what accomplishments you would like your candidate to have as it relates to there Work Experiences as a gauge.

Values 

Hiring Model probably the single most important part of a Hiring model in my opinion.  What are the core values of your company ?  Core values should be a guiding force behind all hiring and firing in your company.  You may have 3 or 15 of these, figuring our which ones may be most beneficial to the position you are hiring for can help build a great  Hiring model.

Some examples of commonly found “Core Values”.

  •  If hiring for a service based position, you may want a person to exhibit “Loyalty” or “Passion to serve others”.
  • Someone who will be working with the public and excepting cash needs to be “Customer Focused” yet firm enough  to “Protect company interests” in the event of a small confrontation.
  • Someone in sales needs to demonstrate “Patience” yet assertive and “Willingness to listen” is critical to close a sale.

If you don’t have these printed on your wall somewhere, jot down single words or small phrases ahead of time to help you keep focused during an interview and give others a better idea of what type of person you are looking for.  Another method that works is to have a tick sheet with you when you interview.  Have all the Core Values as column headers.  Every time you feel someone exhibited that value in your interview(s), mark it down to review later.   Get people talking and telling stories about work, school, or even volunteer work  and you will probably find common links.  The more you hear a particular value the more genuine it usually is.

3 tips on matching your model employee to candidates

  1. Sometimes the best employees are the ones with little “work experience” and huge similarities with the values, personality, and attitude you need in this position.  
  2. Skills can be taught, and I would rather teach someone how to do it then someone else doing it.
  3. Training on Values, Attitude, and Personality won’t happen.  People generally don’t learn these, they only conform to company policy.  Having a natural fit will benefit the workplace greatly.  Assuming you have the means (time, resources, systems, etc) to provide skills train, this can help you build a sustainable workforce the helps generate revenue for your business.

Questions?

 

 

Maximizing Millennial engagement

Statistically the Millennial/Gen Y’s are the most diverse and the most socially aware generation yet.  If you sell a product or employee more than a few people, you need to have a strategy on how to communicate and engage this growing population.  Doing this correctly will amplify your message, value and ability to generate revenue significantly.

In 2014, 36% of the workforce was comprised of Millennial’s (born 1976-2001) and by 2020 46% of the workforce will be.  A majority of these 80 million adults are in the workforce today.  Of them 64% are reported to ask about social policies of a company during interviews and 24% indicate it as a key factor when accepting a job.

Businesses who adapt messaging, management practices and policy the earliest may win the loyalty of this critical group.  Loyalty translates into engagement and retention, and is a great motivator.  In my personal experience, this is the most savvy and hardest working generation that I have managed.  In my 25 years of management I have managed boomers, Gen X, Y /Millenials and each clearly have different values and goals.  Building a program around a workforce’s values and goals so they feel as though they are contributing may be the best motivator.  Read a case study

Synergy seldom happens through “old school” management. 

The common denominator for attracting this group as followers is through the corporate leadership strategy.  One thing needed is that a Millenial generally needs to feel comfortable that a company is adding to society in some way.  This is vital for recruiting and this workforce may be the most productive group to date, so some companies need to rethink the benefits they offer.  The Benefits program is where the money comes from for many companies that offer the types of programs that attract this workforce.  The trend to decrease company match in 401K’s by a point or two, decreasing vacation or sick days, even eliminating cafeterias in the building frees up finances to point towards newer benefits that are more valuable to this generations.  Benefits exist to attract workforce, they(benefits)are an added value to working for a particular company.

How to attract or engage this group? – Learn from Disney

Walt Disney was not exactly known for taking care of his employee’s.  Early strikes from artists nearly shut down his studio.  Yet, he taught us the key to managing the millennial population…….

In the mid to late 1980’s the restaurant industry saw how important it was to not only serve food quickly to their guests but they realized the value of creating an “experience” for there patrons.  Theme restaurants boomed and dominated the industry.  This started with Ground Round and TGI Frdays but was perfected by Applebee’s.  Applebee’s International grew to over 1400 restaurants worldwide in record time and they did it by creating an “experience” the diner was comfortable with.  When the kids say “lets go to Applebee’s”, parents generally didn’t argue.  This was all inspired by the “experience” the guest received when going to a Disney theme park.  Roy Disney understood the importance of creating an escape and what a lasting impression it made.  If you focus efforts on executing the “experience”, loyalty will follow.

After Lloyd Hill popularized the “customer experience” motif with Applebee’s, the Healthcare industry was next.  To this day most hospitals place a great emphasis on the “Patient Experience”.  There have been departments created around tracking it with surveys, hour upon hour of staff training, and the bed side visit has been completely re-scripted, and it has all worked!  Studies show that hospitals that create the best overall “experience” for the patient have less open beds than those that don’t and they have a greater number of Outpatient procedures booked while also enjoying a much lower cancellation rate.  When the healthcare industry shifted it focus to the “experience” of their guests, it increased loyalty.

Many businesses need to start focusing on what I call the “Employee experience”  and go to lengths to include it as part of the culture.  Millenials grew up knowing this environment as the norm.  Everywhere they went someone was competing for them to have the best experience, so why should work be any different?  Focusing your company on the “employee experience” will increase engagement, productivity and satisfaction and isn’t that what you want?  One of the Core Values of Applebee’s was “Fun”.  That’s not only cool, I guarantee it works by building employee loyalty.

Whether you are looking to recruit or promote sales; here are                          5 tips to engage this group and start creating a successful         “Experience”
  1. Speak to a flexible workplace, environment and culture
  2. Demonstrate dedication to career growth through support, feedback and goal setting
  3. Boast a culture of collaboration
  4. Design opportunities to contribute to society both as individuals and as a corporate structure
  5. Competitive Compensation structure

 

Bonus – #3 is worth repeating, it is that important – Promote a climate of leadership and development, this group doesn’t respond well to being managed and micromanaged.

In my experience Millenial/Gen Y’s are attracted to a company for what I mentioned in the first part of this blog, and choose to leave because of one or more of the bottom 5 points.  Incorporate those points into your culture, manage this group by results and mentor them so they succeed and you will be as amazed as I at how this will help your company build loyalty and generate the revenue you were hoping for.

 

Carpe diem!

Progressive Discipline – A great coaching tool

The first role of a Leader is to effectively communicate.  A great leader will recognize the variety of ways they have to communicate.  Conversely, an employee wants to follow someone that knows where they are going.  Employees only want a few things out of a job, certainly pay and stability, but employees also want to contribute, they want to make sure they are doing a good job.  Training, Coaching and development tools are often used while Onboarding a new employee, but once that 90 day grace period is up how corrections are communicated are critical to developing each employee.

Many I have spoken with view the Progressive Discipline process as a means to an end.  “It’s how you fire someone, right?”  It is looked at a tool to document when employees have not performed, broken policy or exhibit unacceptable behavior.  While this is true, it does all that, the Progressive Discipline process is a much greater tool to both employees and management.

Progressive Discipline is a great coaching tool

The Progressive Discipline process dates back to the 1930’s and was instituted as a way for EMPLOYEES to know that a business would treat them fairly.  This is a policy that is designed to protect individuals from being treated differently than others with in that company and it holds all parties (both management & employees) accountable.  It is a process that forces a supervisor to be progressive with both coaching and accountability, thus improving leadership with in an organization.  A process that levels the playing field for employees because it assures them they are not being singled out and that everyone would be treated consistently.  Lastly, it is a process that should teach and hold all employees accountable for job performance, following company policy, and matters relating to company culture or work environment.

One problem is that employees generally first hear of this policy when they are in trouble.  It is referred to by the “boss” who says that “HR is making me do this, sign here”.  This is lazy management in my opinion.  I became notorious for conducting a very long employee orientation class wherever I have worked.  It is the best way to set expectations(but more on that another time).  I ALWAYS go into detail about the Progressive Discipline policy and that it is there for their protection, and I can tell you that people like hearing that.

What is Progressive Discipline?  – a quick overview

A Progressive Discipline policy exists in most companies and is usually found in the Human Resource Policy and Procedures.  It states that when employees exhibit certain actions or behaviors contrary to policy, regulations or municipal laws that the company will respond in a specific way.  Most occurrences fall under a “Progressive” category and most policy’s also list certain actions that could mean immediate discharge.  I like to refer to that section “the deadly sins” because most people understand that severe consequence are associated with it.

For the instances that fall under a progressive category, the policy outlines a course of action to take each one being more severe than the last, hence “progressive”.  This is for 2 reasons.  To guide the managers and to inform the employee of potential consequence.  The law is clear to state that the business needs to inform an employee of the consequence should they repeat that action.  Failing to do so will likely mean that you could lose in court if sued by the employee.  Losing in court can cost you a lot of money (and pride) and the court is generally on the side of the employee, so you better be prepared.  Here is a generally accepted hierarchy of the progressive steps taken.

First offense – Simple conversation, nothing for the employee to sign.  But a pointed conversation stating what was wrong and what will happen if it happens again.  Once you have done this, it is up to the employee to manage their own actions.

TIP – The manager should make notes to “record” this conversation.  You may have to prove down the road that you had this conversation and accurate notes are the accepted medium of proof.  Date and time should be included.

Second offense – Generally called a “Verbal Warning”.  This is the first official session.  You sit with the employee in a private location.  Make sure their privacy is secure and respected.  You reiterate that you spoke about this before (time & date), and that it happened again which is why you are speaking.  This time you will have something in writing speaking to the policy they broke if possible.  Again, you state what happened and what the next step will be if they repeat the action.

Third offense – Escalates to a “Written Warning”.  Same process, tell them what other times they were spoken to about this, that they did it again, and what will happen should it occur again.

In each of these instances do not scold the employee.  This is not emotional, it should be very matter of fact.  You did this, your not supposed to do that, if you do it again then this will happen.  Do you understand, thank you bye bye.  Raising your voice, using gestures or even looking angry can look bad in a court of law.  Be smart.

Each company’s policy may be different as to how many chances an employee will get prior to the last warning.  Smaller companies may terminate on second written warning, larger companies may wait until 3rd written warning and it may require a managers superior being involved.  This is for the employees protection.  It ensures that multiple people in the company are in agreement that it is a justified action.  It makes it more difficult for a manager to terminate an employee, thus creating more protection.

So why is this a good Coaching tool?
  1. This is designed to insure that an employee knows what is expected and gives ample time to correct the behavior in question.  During this time the supervisor should not be looking at this as discipline but as a corrective tool.  Perhaps it identifies where additional training is needed or makes them reassess job responsibilities and workloads.  The supervisor wants the employees to succeed in completing their tasks on time and is held accountable by their supervisor for doing so.  Clearly the supervisor should have a vested interest in making whatever happened not repeat.  This process helps clarify expectations to the employee and is a Leadership “best practice  “ It is really just an opportunity for training.
  2. Other employees are aware long before management that someone is not doing there job correctly.  They are upset by this because they work hard to meet the standards but this other person “gets away” with not doing the same.  Correcting that problem WILL be noticed by other employee’s, guaranteed.  Of course, you never tell the other employees that you wrote someone up, they notice because the problem went away.  This sends a message that all the rules/policies apply to all of the employees.
  3. Discussion of a particular policy (what ever you had to address) often leads to discussion of other policies.  The employee may come to you with questions on another policy or standard.  Welcome this, it is good discussion and will increase everyones awareness of policies.  Policies are the expectations of the company and discussing expectations is clear leadership.  Discussion leads to conformity, and conformity generally means employees are more productive.
  4. This process will create open communication in the workplace
  5. Open communication tends to decrease turnover
  6. If a team is properly Coached it tends to be more effiecient, which saves money
The Downside of the Progressive Discipline process
  1. Time demanding
  2. Must be consistently utilized throughout organization
  3. Easy for Managers to misuse
  4. Employees can “play” the system
  5. Needs an in-house examiner for escalations and approvals
  6. Can negatively affect Unemployment Insurance when not consistent
Advantages of the Progressive Discipline process
  1. Increases productivity
  2. Decreases turnover and avoids expensive replacement costs
  3. Lays the groundwork for defensible employee terminations by recording history
  4. Allows an accepted way for earlier intervention at first sign a problem is developing

Progressive Discipline is more of a mindset than a policy and it should be part of the culture in an organization.

CEO’s I work with are amazed at how many of their managers don’t know how to use this. It’s in the policy book and assumed to be used.  This is seldom even thought of until a problem erupts and then the policy is referred to like everyone uses it.  It needs to be developed into daily interactions rather than a way to rectify a problem employee in order to be effective.  Lastly, as with most of what I post, utilizing this tool effectively is directly related to your businesses ability to generate revenue.  It helps you get the most from your staff and is well worth the time investment needed.

Few other tools help you manage THE most important aspect of your business effectively as the Progressive Discipline policy.

 

When incorporated into a culture, it vastly improves accountability and believe me, everyone is watching.  Correction is part of training and development and is often a process.  If your organization can approach this as a tool that you can use to Coach your team better rather than a series of signatures needed prior to a termination you, your employees and the organization will be much better off.

 

This is a large topic yet I only touched on it here, you are welcome to contact me with any questions.

Carpe diem!