Situation: A tech company is having difficulty with a customer. Given three options – high quality, low cost and rapid delivery – the company can deliver any combination of two, but the customer wants all three. When the company asks which two are most important, the customer responds that they want all three. How do you respond to unrealistic demands?
Advice from the CEOs:
The Devil’s Advocate response to this question is to look at your processes. Is it possible to do all three, and if so under what circumstances?
Think from the perspective of the customer:
What will you need and when?
Integrate the customer into the decision process as much as possible.
Demonstrate where trade-offs exist, and work through these in binary fashion until you reach agreement on the scope of work, delivery timeline and price.
The challenges change depending upon who within the customer company you are working. For example, the engineers understand the challenges and complexity of the product in question. However, the purchasing agents do not necessarily understand the product, its complexity, or how critical it is to their final product.
In this case try bargaining with the purchasing agent – if the purchasing agent goes back to the engineers and gets their agreement that your company can change the quality or delivery spec, perhaps you can be flexible in your pricing. Put the ball in the PA’s court – but make sure that the PA knows that he/she will be responsible for any project delays for not giving you the order today
Use stories to set expectations – better yet, use stories, combined with metrics about the costs associated with attempting short-cuts to develop authoritative arguments in support of your position.
Create a User Guide for your customers – paper and web formats – to sell your story. Sell fear, uncertainty and doubt; for example, if the PA wants to go another route here are the potential costs in terms of time, market share and profits lost.
In particularly difficult negotiations, use the real estate mantra: Some Will, Some Won’t, So What, Who’s Next?
Situation: A company has an offshore operation with 10 engineers and a good General Manager. They will hire five more engineers in the next month. Their target billing rate is projected to be profitable when they reach 15 engineers. Their challenge is that they need to bear the investment loss to have an offshore capability, but are not sure that they’ll see a pay-off. How can you accelerate the offshore learning curve?
Advice from the CEOs:
Given the current situation, give yourself a window of 60 to 90 days. Create a go/no go decision point and let the General Manager know this. It will provide motivation for the off-shore operation to come up to speed faster.
Another company projected a 2 year break-even based on others’ experience in the geographic location.
They are nearing the 2-year point with the office up and running, on target with schedule, under a General Manager with proven experience.
They see payback on their initial investment at the 2.5 to 3 year point, and thereafter duplicating their payback every 6-12 months or better.
It is important not to undercharge for off-shore work.
One company charges $125 for work done in India that they would have charged at $180 if done in the US – a 29% discount. This is for high billing rates, with spreads even better for lower billing rate work.
If a client pushes for offshore rates, bargain for a lower initial discount for off-shore work compared with US-based work, but combine this with an offer to generously share additional discounts as the offshore location improves productivity.
Bottom Line: Stay the course. Long-term this investment will pay off.
Situation: A company needs a strong pool of engineers in their market niche to stay ahead of the competition. Their niche is specialized with little transferability from other engineering specialties. They struggle to find local talent and relocation expenses are high. How have you recruited hard-to-find talent?
Advice from the CEOs:
If you want a mix of fresh and experienced talent and need to add 3 to 5 new engineers per year to keep up with growth and turnover, you will be hiring a new engineer every 2-3 months so you need a standardized, repeatable process that is ongoing. If you don’t have either in-house or reliable outsourced HR capabilities, you need to secure this as soon as possible.
Consider establishing a satellite office in a geographic area which has an available talent pool.
Look for areas with a top university engineering program in your field.
Look at your key competitors’ locations and see whether they are in areas with both the educational and industrial-technology base to be a candidate location.
As you develop a new geography, forge strong relationships with the university programs that can feed you the younger talent that you need. This is a win-win relationship, because universities are focused on their placement statistics and corporate support.
Get to know the professors in your specialty and explore establishing a center of study or excellence within the engineering programs.
One company works closely with Santa Clara University and developed a program that offers financial rewards for the best technical papers produced by students in their specialty. This has created a buzz around the company, helped to establish a study program in their specialty, and enables them to attract the best and brightest graduates.
As you establish a reputation for attracting the best younger talent, this can help you to attract seasoned talent that wants to work with the brightest young talent in the field.
Another option is to find 2-3 key experienced engineers who are willing to relocate for the opportunity to build a new team.
Situation: Two employees within a small company are shifting roles. One is shifting from Operations Manager, a higher level position, to an engineering role in charge of production, with no reports. The second has been promoted from Customer Service Supervisor to greater responsibilities for purchasing and production scheduling. How should the CEO adjust the titles and compensation of these individuals?
Advice from the CEOs:
The Operations Manger is really shifting to a staff engineer position. Consider the title Senior Engineer or Senior Staff Engineer if the individual is comfortable with this. It conveys respect for prior experience while delineating this individual’s preferred responsibility. You may want to make adjustments to compensation over time by holding back on salary raises rather than by cutting salary right now.
The Customer Service Supervisor is moving into new responsibilities, and this may take time. In a sense this is a lateral move with potential for growth. Consider retaining the title of supervisor until this individual has demonstrated ability to perform these new duties. Salary adjustments and raises can be added as the individual grows in responsibility.
There is no problem having multiple titles and business cards. Many small companies do this. You can give the second person two titles: Customer Service Supervisor and Production Supervisor. This enables you to elevate this individual to manager of one or both areas as ability is demonstrated to take on additional responsibility and accountability.
Because both employees will be working in production, albeit in different capacities, monitor the situation closely to assure that conflicts don’t develop.
Situation: A company has been seeking additional engineers. Unexpectedly, three excellent candidates independently approached the company seeking employment. This opens the door to expand the department and also to create an additional layer of management consistent with the company’s growth objectives. Currently, in this small company all engineers report directly to the CEO. What are best practices adding a layer of management to the company?
Advice from the CEOs:
Remember that aspiration does not equal talent. There is a big difference between good individual contributors and good managers. The best predictor of managerial success is past successful experience.
You have a number of senior engineers who have been with you for a long time. Have any expressed an interest in management responsibility? Do any of them have a track record successfully managing teams? Similarly, evaluate your new candidates both in terms of both their ability to contribute as engineers and their prior management experience.
If you hire one or more of the candidates, start them at the senior engineer level. Let the company and the rest of your engineering team get used to them and observe the quality of their contribution.
Once you are ready to create a new level of management, make this an open process. Announce your plans to the engineering team, and ask them to approach you individually if they are interested. See who steps up.
When the time comes to make the promotion, how do you communicate this to the group?
If you’ve used an open process to evaluate one or more candidates for management, the group will already be prepared when you announce the new structure and promotion.
An important part of the message is that the company is growing and that there will be ongoing opportunities for talented engineers to earn promotions to management.
For those interested, start with small steps as leads in team projects. Who if effective at guiding their team? Who is a positive source of energy for the team? Who is helpful and goes above and beyond for other team members and for customers? How do they respond to team obstacles? Observe and coach them along the way.
Interview with Muhammed Chaudhry, CEO, Silicon Valley Education Foundation
Situation: A critical component for the future of technology in the US is a workforce trained in math and the sciences. In Santa Clara County, California – the heart of Silicon Valley – only 49% of high school students complete University of California/CSU qualifying courses, and only 26% of Hispanic students. How can private industry contribute to the improvement of education and the training of future workers?
Advice from Muhammed Chaudhry:
Silicon Valley Education Foundation’s objective is to make Silicon Valley the number one region in California in student readiness for college and careers. It has been shown that the top predictor of college success is the completion of Algebra II in high school. Our primary program – Stepping Up to Algebra – focuses on students and teachers to increase the number of students who are ready for Algebra I in 8th Grade. To date 2,500 kids have gone through our program.
We actively encourage private industry to get involved in our programs and to invest in solutions that work. We call this involvement Work, Wealth and Wisdom.
Let’s talk about Work:
Our aim is for every business person to make it a priority to invest time in public education. This takes an investment – we ask for a consistent investment of 4-5 days a year.
Next is Wealth:
We encourage every business person to sign up to our Sustainer Program. The commitment is modest – only $5 per month to support our activities.
We encourage corporations to Adopt a Classroom for $10,000.
Finally we have Wisdom:
We encourage business people to get involved. We need help designing technology products that enhance learning and in formulating a blended learning approach.
We need to improve the enabling of technology in our schools to improve individualized learning to maximize the potential of each student.
We need support and involvement in policy work by contributing business thinking. Education has lessons to learn from business.
There is room for innovators who are interested in social benefit and long-term investment with profit as a secondary consideration.