Situation: The CEO of a service company is concerned about lost income from uncaptured billing. He has identified the cause – failure to capture extra hours that haven’t been billed – but is struggling to get employees to monitor this more effectively. How do you implement a process change?
Advice from the CEOs:
The group presented two options for growth: bring in experienced outside people to develop additional systems to run the company, or a hybrid model using internal resources, augmented with outside expertise.
Bring in Experienced Outside Resources: Hire an experienced outsider with a track record in your industry to design and implement the needed systems.
Pros for this solution: the outsider will bring a fresh vision and new energy, plus the experience and know-how to make the desired changes.
Cons: impact on current business culture. This may generate resentment among employees who can no longer make decisions on the spot and may remove a path to management for existing staff. Possible negative impact on customers who receive larger bills due to change orders.
Hybrid Model: Outside person creates model and trains employees to implement it, then monitors the system and progress long-term. The key is to change expectations and behavior within the team.
Pros for this solution: more opportunity for current employee participation; involves employees in the design of the system, providing better buy-in to the solution.
Cons: as with any change, this won’t provide the full expected return. Just the fact that things are being changed impacts the efficiency of implementation. Unanticipated blocks and resistance may hinder progress – don’t be surprised by this, it is predictable.
Implement SOPs that facilitate rapid response to change orders – starting now and with whichever option is chosen.
Generate a pick list of all possible change orders with pre-calculated costs to guide employee choices and keep customers informed.
Whatever solution is chosen, be sure to communicate frequently and consistently with employees to facilitate the change.
Situation: A CEO wants to establish baseline metrics to evaluate company performance, and guide both planning and operations. Without baseline metrics it is difficult to compare the impact of options that the company faces. What are the most important areas to analyze, and what do other companies measure? How do you establish performance metrics?
Advice from the CEOs:
Start with the basic divisions of the business. As an example, take a company which has three arms to its business – products that it represents for other companies, products that it distributes, and custom products that it manufactures to customer specifications.
For each of these lines track gross revenue, profit net of direct costs, FTEs necessary to support the business, number of customers, net profit percent, net profit per employee and net profit per customer.
Calculate these metrics on at least a quarterly basis for the past 2-3 years to set a baseline and a chart of historic trends.
Once you establish a baseline, chart current performance on at least a quarterly basis and look for trends and patterns.
Where is your greatest growth and greatest profitability – not just on a global basis but in terms of profit per customer and profit per employee?
If you’ve included your full costs including the costs of the FTEs to support each business, then the analysis should show you where you want to invest and what it will cost you to support additional investment.
Do a similar analysis of costs per line to further support investment analysis.
This analysis will help to evaluate whether it is better to purchase another rep line, or whether you would be better off investing the same funds to grow custom business.
Similarly, it will demonstrate on what kinds of customers and products you want your sales force to focus to grow profitable business and will help you to establish objectives based on anticipated revenue or profit per new customer that sales closes.
Finally, it will highlight potential vulnerabilities such as the impact of the loss of a key customer in one portion of the business.
Situation: A private company has a Board of Directors that functions more as an Advisory Board than a traditional Board. For example, they do not have the power to fire or replace the CEO. The CEO wants feedback on how to interact with the Board, and how to work with them between meetings. How do you make the best use of your Board?
Advice from the CEOs:
Decide what you want from the Board, and clearly communicate this to the Members.
Treat the Board as a single entity – not as individuals. Avoid politicking individual members between meetings. Use the Board to drive decisions.
At your next Board meeting have a discussion with the Board:
Let the members know that you are concerned about whether you are using them effectively as a resource.
Lay out strategic elements to be dealt with over next period, and ask for their advice.
For example, if you are moving into a new market you need advice on how to succeed. Are they the right group to provide this advice? If not, what other expertise should be added to the Board?
Consider having this conversation in a special session of the Board.
Bring in expertise – if your industry has shifted, adjust the make-up of the Board to reflect the new realities. If you need to raise capital, look for expertise in this area.
Eliminate less productive members from the Board.
If you are looking at a new market, build an Advisory Board that is knowledgeable about this space, but who are not necessarily customers. Consider retired executives from companies in this market.
Additional needs that you might want to address either through your Board or an Advisory Board:
Financial expertise in new markets.
Where should you partner to make a complete offering or to supplement your offering?
Another CEO has a similar Board situation. In this case, the CEO makes it clear that Board members are expected to:
Assist in bringing in business.
Members are expected either to produce or they are off the Board.
Meetings are driven to a specific agenda with expectations of deliverables.
Situation: The recovery continues to be uneven and uncertain. One company finds that both staff and their families are nervous about how the company will fare and the future of their jobs, and this has created strain. What are you doing to stay balanced and positive – both within your company and also in your personal relationships?
Advice from the CEOs:
Transparency and communication. These are critical in both business and personal affairs. You have to be honest, avoiding either pessimism or unwarranted optimism.
Share the metrics of where you are – the reality – and projections on your expectations of how things will go. This has been a long bump in the road, but eventually things will get smoother.
Involve your staff in difficult decisions. Do the same with family on difficult personal or family decisions.
Be frank with family, but keep communicating. Time is more important to family than money – they want you to be there with them. If you’re working long hours in the evening, at least go home and have dinner with your family.
Staff adjustments, where necessary, have been done as single events and weren’t drawn out. CEOs have communicated more frequently about the state of business and pipeline. Assure staff that the company is solid. Show them the runway.
Those most worried are employees without project work. Some companies focused them on infrastructure projects to keep them engaged.
Cross-fertilize your teams. One company brought professional service employees into product engineering. Both groups learned and benefitted from understanding each other’s perspective.
Situation: A tenet of the Company is that all decisions are made consistent with Company Values. However, some of my managers are asking for guidance on how to do this. How have other CEOs encouraged managers to make decisions consistent with company values?
Advice from the CEOs:
Create cross-functional teams to address initiatives, solve problems and develop new processes consistent with company values.
This builds understanding other departments’ perspectives, and awareness of the impact of decisions on the company as a whole.
It builds awareness of company values and fights unhealthy competition between functions.
One company created an employee task force to encourage living company values. Their solution includes:
Review the company’s values and consider revising how they are stated for easy learning.
Involve employees in discussions of company values and how they are applied in their departments.
Create a cross-functional employee task force to address inter-departmental conflicts and to suggest solutions in line with company values.
Expect everyone to know the company’s values, and occasionally test them.
Build a vision of what the company looks like as an expression of its values.
Make living this vision part of your role.
Include living company values as a formal responsibility of managers.
Reward initiatives that build company values into company efforts.
Regularly review with your mangers their execution of company values.
Create “SMART” objectives around implementation of company values, and hold individuals accountable for achieving their objectives.