Category Archives: Team

Must a Family Business Always be “Family”? Five Suggestions

Situation: The CEO of a business that has been in place for several generations is frustrated by the challenges of working with family members. Relatives are involved in top positions, but frequently place personal concerns above the priorities of the business. This leads to tense situations where other family members, not in the business, will intervene to support their close relatives without appreciating the conditions facing the business. Must a family business always be “family”?

Advice from the CEOs:

  • For the business to thrive, you must match skills and talent to available positions – not just the “best” family member fit for the position.
  • Understanding that it is difficult for one family member to communicate negative news to another family member, consider hiring a consultant or HR company to evaluate and be the go-between in determining best family fit, or family/non-family choices for open positions.
  • If the company involved unionized employees, and some family member employees are union members, this may complicate your choices. Seek outside non-union counsel to help you evaluate situations and navigate solutions.
  • Hire a professional facilitator to assist in running company planning meetings which involve family members. A facilitator can approach the situation from a neutral standpoint, and does not carry the personal history of brother-sister or close relationships within the company. Choose an individual with experience with family-owned companies who can build a company vision that goes beyond personal relationships and concerns. This individual can also help navigate the operational situations facing the company.
  • Look at both your organization and ownership structure versus applicable regulations and licensing requirements. This may present new alternatives for you to consider.

How Do You Scale with Scarce Talent? Four Factors

Situation: A software company relies on in-house expertise to both position itself and come up with unique solutions to clients’ problems. The CEO wants to significantly scale up the number of clients served per year. The challenge is that it is difficult to find software engineers who are experienced in a wide range of code languages. How do you scale with scarce talent?

Advice from the CEOs:

  • Start by looking at the load carried by your current employees. Do they have the capacity to significantly increase the number of clients that they serve? Do you have sufficient back-up to serve existing and new clients should something happen to a key employee? It’s one thing to have ambition to expand, but another to assure that you have the capacity to serve both existing and new clients.
  • Take a close look at your org chart.
    • What happens and where are the exposures when you double the current service volume? Where will the greatest stresses occur? These are the first areas in which you should start to build redundancy.
    • From an HR standpoint, you need a leadership development plan that extends down your organization chart. Use the stress analysis just mentioned to identify the areas in greatest need of additional resources and leadership development.
  • Look for areas where you can off-load current responsibilities to support staff to increase the capacity of your current talent. This increases potential capacity as well as the overall value of the company.
    • The lack of redundancy may prove to be detrimental to your ability to attract new large clients. Large potential clients and partners will use whatever means they have at their disposal (including stealth visits to your offices by local reps) to vet your organization before they make a commitment to you.
  • New client and partner relationships are like new product introductions.
    • A few early adopters will jump on your opportunity.
    • Many of the most established clients or partners will sit on the sideline to monitor the experience of early adopters.
    • If you trip in your service delivery early in your scale-up, most of the remaining targets will be slow to support your offering.
    • Count on the first two years of building additional clientele to be very intensive. It will distract you from many of the functions you perform today, unless you have additional personnel to support this.

How Do You Create Accountability? Four Suggestions

Situation: A CEO is concerned that there is insufficient fairness and accountability within her company. One manager is paid hourly and the CEO is thinking about shifting this person to salary plus bonus both to put them on par with other mangers and to create more accountability. How do you create accountability?

Advice from the CEOs:

  • What exactly are you trying to achieve? An operations manager is paid competitively at hourly rates, even compared to salaried employees. The issue is that this person has no responsibility for results as they relate to the P&L. Given this, the group consensus is that it is better to have this person on an incentive program that ties compensation to the performance results that you want.
  • One objective is that you want this employee to contribute more to planning, strategy or the company’s attempts to develop solutions to the challenges that they face. Have you spoken to the employee about your expectations? Does the employee realize that you want or value their input? Direct communication with the employee is important.
  • While the employee understands his responsibilities in the operations area, be sure that he is aware that he is also important to the profitability of the company, and managing operational expenses which are contributors to that profitability. Depending upon the individual’s background, he may need training about the links between expenses and the P&L.
  • Given these factors consider the following options:
    • Adjust the employee’s compensation by switching from hourly to salary. Make the base livable, but not comfortable, and tie the bonus (which will make the total compensation package comfortable) to the profitability of the business. This will have an immediate effect.
    • Clearly explain to the employee that you value his creativity and input. Give this person the freedom to contribute and make it clear that his contribution is expected. Early on encourage this and acknowledge contributions in meetings.
    • You may want to make this person a part owner of the business. This will have a long-term effect.

What is a Fair Revenue Split? Five Pieces of Advice

Situation: A professional services company is constructed as a network of members. The company’s contract specifies that if a member of their network goes to work for a client – even a client that the member brought to them – the client owes the company a fee of 50% of either the member’s salary or the annual consulting revenue paid to the member. This is onerous. What is the best way to respond? What is a fair revenue split?

Advice from the CEOs:

  • This does seem like an onerous provision. It is unclear whether the bite is as fierce as the growl.
  • Consult a lawyer. If you quit the network and go to work for the client, what is the level of risk that the company will successfully sue, and what you can do to mitigate this risk?
  • If the offer from the client is appealing, quit or avoid using this company’s services. Given their cut to your revenue you will see a net gain in your own pay for services rendered.
  • If several members agree that this stipulation is onerous, team up and start your own network with better terms. This can provide you and the others with an annuity revenue stream.
  • Integrity in professional circles is everything. Whatever course you decide on, be up front.

How Do You Create HR Using Outside Resources? Four Thoughts

Situation: A company started small with everyone wearing many hats including the person in charge of HR. They wish to create a more formal HR structure with professional advice, but don’t yet want to hire a full-time HR professional. How do you create HR using outside resources?

Advice from the CEOs:

  • One company outsources their full HR function. Services include:
    • Putting records in order and maintaining them.
    • Developing different hiring packages for different levels of employees.
    • Recruiting.
    • Keeping the company and employees updated on compliance regulations.
    • Coordinating on-boarding and training.
  • There are several national HR and personnel outsourcing companies that can help. Examples include Paychex and ADT. There are also a large number of local providers. Network with your business peers or check out your local Chamber of Commerce to learn who these providers are.
  • What about training?
    • Outsourced HR professionals can organize training for formal certifications and some aspects of job skills training.
    • Training in company culture should be done by company leadership. Outsourced HR can organize schedules for this. The key point is that company leadership is the face of the company and the foundation of company culture. This can’t be effectively outsourced.
    • In some cases, training can be done via video. Outsourced HR can help to plan and coordinate creation of the videos, and can then schedule video training for new employees.
  • Have your in-house person join an HR roundtable to embellish their own training.

How Do You Create Consistency in a Business? Six Suggestions

Situation: A CEO feels like he is on a roller coaster ride with unpredictable revenue and processes month to month. His ideal outcome will be to be able to go on vacation for 4-6 weeks, and have the business running better when he returns than when he left. Have you managed to achieve this? How do you create consistency in a business?

Advice from the CEOs:

  • Make your managers live up to their titles.
    • Insist that they go to each other to solve problems first, instead of always asking you.
    • When they ask a question, answer how to solve it – but don’t give them the solution.
    • Require them to present solutions rather than problems.
    • Be willing to spend money on their solutions.
  • Answer all questions with questions.
    • Ask them for their recommendation.
    • Keep asking until they come up with the answer.
  • You should not be doing jobs or tasks that are really your employees’ responsibilities.
  • When you start to delegate, it hurts for a while but it will work itself out.
  • What has been the impact on other companies when they’ve made these changes?
    • Businesses have become more diversified.
    • CEOs are focused strategically vs. tactically.
    • Businesses are more successful and profitable.
    • CEOs enjoy coming to work again.
  • How do you work with younger workers, millennials?
    • Allow flexibility – where appropriate – on hours and how they do their jobs.
    • Responsibility will vary by pay level – with the understanding that higher pay equals more responsibility and most likely longer hours.

Should a Start-up Focus on Team Dynamics? Four Thoughts

Situation: An early stage company is wrestling with team dynamics and coordinating the achievement of critical milestones. The strategic picture seems to change on almost a daily basis. New employees who have big company experience want to see formal job descriptions and role definition. Older employees are jealous of the attention that newer, more highly qualified employees are receiving. Where should the CEO be focusing. How should she be handling these challenges? Should a start-up focus on team dynamics?

Advice from the CEOs:

  • At this point, the company is in start-up stage. The most critical issue isn’t team dynamics, it’s getting a product to market and demonstrating that you can sell it. If you don’t have a product, you don’t have a company.
  • Your top 4 areas of focus for the next 3-6 months should be:
    • Get the product out.
    • Close 3-4 good customers – preferably customers that you can reference.
    • Securing the funding – partnership or investor – that will get you to your next key milestones or to positive cash flow.
    • Build your organization and keep planning.
  • As an early stage company, distinct roles and job definitions make no sense. Your strategic picture is currently very dynamic. You need good people who can flexibly wear several hats and fill diverse roles.
    • If employees with big company backgrounds press you on job descriptions and role definitions, tell them that as a small company you must be quick on your feet, and that you need them to fill flexible roles. As you grow beyond 35 employees then roles will start to become more clarified. Ask for their patience.
    • If they continue to struggle with loose role definitions, then they aren’t the right people for an early stage company.
  • Employees who started with you early were great for the beginning. However, they may not be the best for you long-term. They may feel hurt as newer employees with deeper expertise and resumes start to replace them. In the interests of the company, the game is not longevity with the company; it’s about quality and putting the most competent people in the most critical roles.
    • If you are playing pick-up basketball, you play with whoever comes along.
    • If you decide to form a team and to compete, you need quality players. Some of your pick-up players won’t make the cut and need to go find another pick-up game.

How Do You Facilitate Management Change? Four Suggestions

Situation: Historically the management of a company has been family and a few long-term managers who’ve grown with the company. Some of these managers have reached their limit. Over the last couple of years, the company has added new, high capacity management. Who do they do with existing managers who can’t keep up? How do you facilitate management change?

Advice from the CEOs:

  • This is why packages exist. Employees, even key managers are not forever. As a company grows both its needs and culture must grow. There comes the time in the life and growth of most every company when certain managers are unable to accommodate this growth or adapt to the changing culture. You may well find that these managers are not very happy and no longer feel at home. Whatever the case, it is better that they move on.
  • Who creates the package?
    • You or your HR manager come up with the outline.
    • Get professional advice if you have none in-house.
  • Is there a moral issue – our commitment to our employees?
    • If an individual is demotivated, they are not contributing – this solves the moral issue.
    • If the individual is terminated amicably this can be for the best – for both parties.
  • How do you ease the pain of separation, both for the individual and the company?
    • Packages can be adapted to the situation.
    • Take the example of a manager who has made important contributions in the past, and who has good relations with others in the company, but doesn’t have the skills to adapt to the next level. Include a generous term of job search assistance. If the separation is amicable, offer them space, computer and a telephone to facilitate their job search. This can ease the separation.

How Do You Enforce Meeting Attendance? Six Suggestions

Situation: A company has many meetings. Organizers calendar meetings on Salesforce.com. Despite this, participants show up late, and sometimes not at all. When the right people aren’t present they must re-schedule the meetings. This ends up wasting valuable time for managers. How do you enforce meeting attendance?

Advice from the CEOs:

  • The answer depends upon your company culture and priorities.
  • If you have a production-focused culture, absence and tardiness may not be tolerable. Companies with this type of culture can take the following steps:
    • Call out late arrivals and absences immediately – the first time take them aside and explain that tardiness or absence is not excusable.
    • Called out repeat offenders on the spot!
    • One company has a policy that if you arrive late you stand for the period that you’re late. This has been very effective.
    • The example that you set reinforces desired behavior for the others.
  • In client-centered service organizations the rules may be different. Some companies feel that customer calls and meeting customers’ needs comes first, even if it means that the meeting starts without a key participant.
  • Match your meeting discipline to your culture.
  • The quality of meeting is dependent on quality of the meeting facilitator. Make sure that you have the right people leading the meetings to keep them on time and on topic. This may improve meeting timeliness.
  • If this is a challenge for your company, meet with those involved. Clarify the problem and confirm the reality of problem; then agree on the solution and gain their commitment to comply.

Does It Make Sense to Promote a Relative? Four Perspectives

Situation: The CEO of a company has a niece working in the company on a project basis. The niece is has helped to develop a strategic plan and has performed well. She now wants to move from part-time to full-time and to receive a raise. Does it make sense to promote a relative?

Advice from the CEOs:

  • If you are pleased with the individual’s work, don’t worry about the family relationship – go ahead and hire her. This is especially true if she can play a significant role developing the strategic plan and help you to improve your sales organization.
  • Give this individual a set of responsibilities, a budget, and a time line to do the jobs you want done.
    Evaluate her performance just as you would any other employee. Don’t compromise your standards for a relative.
  • This may offer the opportunity to improve your sales. Have your niece work and travel with your sales people as a systems engineer. This will allow her the opportunity to learn your products, customers, and process – and will provide you with valuable input on how your sales team is performing.
  • You are really addressing two problems:
    • What is your niece’s passion? Don’t make work for her simply because she’s related and available. The work must serve your and the company’s needs.
    • Do you have holes in your business? Put your best people on these If your niece is one of these people, then give her a chance but don’t play favorites.