Situation: A company has two key managers who battle constantly. Recently these battles have escalated. Both people are valuable, but this has become a significant distraction. What’s the best way to handle this situation? How do you deal with management infighting?
Advice from the CEOs:
Talk to the two people individually. Acknowledge company awareness of the situation and ask what’s going on.
Listen – make sure you understand what’s going on.
After you listen, coach. The message: I need you to step up. The company counts on you.
Both parties must feel empowered by the conversation.
Focus on behavior only, not the person.
Make sure that each feels validated but with clear direction to change behavior.
Acknowledge each individual’s value. Point out the problem, but make it clear that nobody is indispensable.
At the same time, be firm as to what is expected of individual behavior as well as individual performance. Set the expectation: either you act in a way which does not harm the company environment, or I will take your notice in 30 days.
If either individual can’t agree to this, then that individual is the problem.
Revert to guiding principles and values of the company. Raise the conversation to a higher level.
Establish what the individual wants from the company. Are their needs currently being met? What can be changed to better meet their needs?
An important end point of the conversation – because both are key players – is for each of them to value the other.
If, after providing time for the two to resolve their difference, they still can’t make peace with each other, you may have to make a hard decision.
Be careful – it may be necessary to take a different approach with each individual.
It may turn out that one individual is the instigator and the other is simply reacting to the first’s provocation. In this case, get a 3rd party to coach each of them.
Another company recently had this same problem.
The CEO sat each person down – talked about impact, big picture and what this does to their image in company.
Situation: A company’s current directors are all insiders. The CEO wants to bring in an outside director for greater perspective, someone who can help the company grow to the next level. What should they look for? How do you recruit an outside director?
Advice from the CEOs:
Look for an individual at a company in a similar market segment that is the revenue size that you want to be and which is selling to the same customers that you do. You want their sales process to be similar in type and complexity of sale but non-competitive with your company.
This can be an inactive founder or past employee who has been in GM role with P&L responsibility.
Write a list of the needs that you want this person to fulfill. Use this to evaluate prospective candidates.
Is it OK to hire a stranger?
Before you speak with a candidate, research their background and reputation.
You want someone who can provide information and a perspective that you don’t have now. During the selection process you will get to know the person.
Consider a high level individual from a company that has been a top customer. This individual can help you understand how you are viewed in the market, and how you can enhance your positioning and competitiveness.
Have lunch with a local recruiter who regularly recruits directors for companies. Get their perspective on how to select an outside director and what to look for in a candidate.
Situation: A CEO is concerned that his company’s sales and marketing efforts are not effective. Too often the sales team finds a good prospect, but fails to convert them to the company’s offering. How can the company improve its sales conversion rate? How do you optimize your buy/sell funnels?
Advice from the CEOs:
To improve both your marketing and sales functions, it is essential to move the company’s perspective from the Sales side of the Seller’s Funnel to the Marketing side of the Buyer’s Funnel. Only by understanding your customers can you:
Create awareness of their needs,
Acknowledge interest in a solution to their needs,
Consider options and develop preferences among the possible solutions, and
Determine how to effectively communicate with them through your marketing and sales efforts.
In today’s world, a quality web site is essential to your business. The objective of the web site is to convince the customer that they want to talk to or do business with you. Your web site must tell them:
Who you are.
What your values are.
Why you are special.
And it must include a “call to action” – a convincing reason for them to call you.
To better qualify your prospective clients:
Develop a scripted telephone interview that can be conducted by your sales people or less expensive inside sales/marketing people to qualify prospects before you spend the time and effort for an in-person sales call.
Use targeted marketing programs to leverage references to prospective customers.
Have lots of conversations with potential customers to understand their needs. Tailor your value creation process to address these needs.
Special Thanks to Craig Olson of MXL Partners for his contribution to this discussion.
Situation: A company has a long-term employee who has been growing in responsibility as Customer Service Supervisor. The CEO is considering giving this employee the new title of Production Manager at the same time that the employee receives an annual wage increase. How do you optimize a promotion?
Advice from the CEOs:
Any promotion or increase in responsibility must be consistent with the strategic direction of the company. What are the company’s current and future needs and, based on past performance, can this individual satisfy those needs? If so, this may be a good match.
In addition, it is important to consider the needs and career path of the individual. Does the new position involve an increased time commitment, additional skills and training, or other important factors, and is the individual prepared for this increased commitment? Will a higher level of commitment be rewarded financially? The only way to answer these questions is to have a conversation with the individual.
If as the first two questions are considered there is any doubt, a longer-term transition may be appropriate. Meet with the Customer Service Supervisor and set a series of goals and objectives that will demonstrate their ability to assume the new role over a 6 month time frame. The concept here is that you must work at the level of the new job before you get it.
Before embarking on the above recommendations, draft a job description and list of responsibilities for the new Production Manager position, consistent with the company’s needs as it grows. This will involve input from employees who currently handle these responsibilities. Also look at the reporting structure as it currently exists and as it may change.
Situation: A company wants to add off-shore manufactures to its supply chain. This is a new experience and the CEO seeks guidance on how to negotiate supply agreements. They want win-win agreements with their new suppliers. How do you optimize supply agreements?
Advice from the CEOs:
No supplier relationship is risk-free, especially if you are a small company. Be sure to cover ownership of new IP developed during the relationship. For example, assure that the supplier adds no new developments without communicating these to you in writing. You may want to fund new developments selectively to assure protection of your IP. This is essential if you need to switch or add suppliers rapidly to maintain adequate supply.
A service agreement is not always about cost. It’s about deliverables, and quid pro quo is important.
Manage your key supplier relationships as diligently as you manage your key client relationships. They are equally critical.
In a contract negotiation between supplier and OEM or customer, both sides need to clarify customer needs and supplier capabilities. The greater the transparency on expectations, deliverables, and contingencies, the better the agreement and contract.
In negotiating an agreement with a Chinese company, make the enforcement jurisdiction either Hong Kong or Macao. Why? So that courts can enforce terms of the agreement on the Chinese party in the case of a dispute.
Post-termination obligations are a key to any negotiation – you want this clarified in advance.
Contracts serve two purposes: a legal tool, and a way to drive behavior. They provide an opportunity to assure that both parties are on the same page and, under the best circumstances, serve as process documents.
Special thanks to Bijan Dastmalchi of Symphony Consulting for his contribution to this discussion.
A CEO is concerned about a possible downturn in the company’s market. They have survived the Great Recession and want to assure that they continue to survive future downturns. How do you succeed in turbulent markets?
Advice from the CEOs:
In turbulent markets, companies do everything that they can to reduce costs. This includes just-in-time ordering – regardless of lead times which they view as the supplier’s problem, delaying orders until they have confidence that they can sell what they order and produce, being miserly with cash, and demanding lower prices – even if supplier costs are rising. Dealing with each of these requires a steady head and creative solutions.
Spend as much time as possible meeting with important vendors and clients. Maintain the dialogue. They need you as much as you need them – without your products and services, their business is compromised, too. Spend time finding and cultivating the right relationships in client companies. Most of the time, this will NOT be the purchasing departments, but higher ups within the business units who are being pressed by their superiors to generate sales and revenue.
Pushing harder does not work in turbulent markets. Too many others are doing this.
Change your message – what used to work does not work now. Adjust your message to the times and adapt your message to your customer’s needs.
People want choice, and to do business with those whom they can trust to deliver.
Develop good case studies and testimonials – stories that your customer can share with others in their company.
Adjust your sales approach – look at SPIN Selling (Status, Pain, Implication, Needs-Payoff).
Don’t cut sales and marketing – focus it on the sectors that have cash and who are using the current market to grow. These people will continue to buy.
Look at what worked for you in the last five years – this situation is similar.
Look at your communications through the eChannels – if your competition is there, you should be too. For example, explore LinkedIn.
Special thanks to Jennifer Vessels of NextStep for her contribution to this discussion.
Situation: A company performs service that is primarily locally-based. A competitor is establishing a new site less than two miles from the company’s location, offers a broader array of services and is larger than the company. How can the company protect its business by responding to this new competition?
Advice from the CEOs:
Your most important asset is understanding what you are doing right, and what is most important to your customers. Remember that business is more than just a product or service. It’s a relationship. Your customers depend upon your for more than just what you offer for sale. Reach out to your customers for these answers. Make sure that you respond to their needs. As a benefit you may also find new growth opportunities.
Ask current customers whether you need to expand your service offering, or whether your current offering and lead time is acceptable to them. Ask how their needs are changing and how you can better serve them.
Reestablish the connection to your customer and listen. Preempt new competition by contacting your customer base before the competitor gains a stronghold.
Study your options and avoid knee-jerk reactions. You may be in better shape that you think.
Major retailers and service companies have moved into many locations. Local businesses who survive their presence do so because they are focused on their customers’ needs and are better at serving the customers that the big companies are.
Invest in key components of your business relationships: services, payment terms, responsiveness, your facilities, and so forth.
Situation: A company’s employees are increasingly getting offers from other companies. They believe that they have a good team, a good work environment and offer a competitive pay and benefit package. However, they are concerned that the job market in Silicon Valley is heating up. How do you keep your employees on-board when they start receiving offers from others?
Advice from the CEOs:
Make sure that your wage and benefit scale continues to be competitive. The Silicon Valley Index, published by Assets Unlimited in Campbell, is the best local survey covering Silicon Valley and the San Francisco technology market.
Survey after survey finds that compensation is basically a hygiene factor – it has to be good enough so that needs are satisfied, but it isn’t one of the more important factors in retention. The Gallup Organization has determined that respect, challenging responsibilities, and personal recognition are much more important factors in employee retention. Be sure that you are actively involving your key personnel as leaders in formulating and updating your processes, and that there are plenty of opportunities for recognition and celebration for your staff.
If you are generating a profit, share this with the employees as an incentive. This may well be better spent in fun and team-building activities like a weekend in Tahoe for a team, or supporting their creative needs by sponsoring their efforts in engineering design competitions. Whatever is appropriate for your company, involve your employees in setting company performance goals and give them a voice in determining how achievement should be rewarded. Making them part of the process builds better long-term loyalty.
On the sales side, establish a reward incentive structure for bringing in new business for the company to prompt field personnel to develop and exercise their business development skills.
Whatever you and your team decide, be sure that your choices support your overall strategic plan.
Situation: A company has a long-term loyal employee who has served in a number of roles. The company is growing, and no longer has a clear role for this individual. This individual can’t and doesn’t want manage either other employees or projects. The CEO wants to be compassionate with this individual to honor their loyalty, but finds himself in a quandary. How would you handle a loyal employee who no longer fits the company’s needs?
Advice from the CEOs:
Your desire to treat this individual compassionately is commendable. This individual has been loyal and has served you well. There are a couple of questions to ask: is there a valuable function that this individual can serve within the company, and is this individual essential to the company?
What happens when this individual goes on vacation? Are there gaps in service or function?
Who handles this individual’s duties while they are on vacation?
If the answer to these questions is that others fill in easily and not a beat is missed, particularly when this individual is absent for long vacations, then either they have made excellent preparations prior to their vacation absence, or they may not be essential to the team.
As a business grows, it changes. Not everyone who came onboard early will have a place as the company grows. Think of a pick-up basketball team on the local playground. In pick-up basketball, you play with whoever is available. Let’s say that the team starts to improve, and they decide to join a competitive league. Now the game starts to change, and some of the buddies who played pick-up ball won’t be able to make the shift to competitive ball. They aren’t bad people; they just no longer fit the game that the team is playing.
You may need to sit down with this individual and have a heart-to-heart discussion about the needs of the company and their ability to serve these needs. This is difficult, but if there is truly no longer a role for this person, then you need to be honest with them while at the same time honoring their past contribution.
Situation: A company is the leader in an expanding market. To sustain growth, they must transform how their people operate so that they better address and serve the needs of their target customers. How do you transform company culture?
Advice from Joe Payne:
We have a saying at Eloqua: Culture eats strategy for breakfast. More important than this year’s product strategy is the culture you build that let’s employees make decisions on the fly because they know “that’s how we do things at Eloqua.”
Look at how you pay and reward your people. We all receive bonuses on the same team metrics: company sales, profitability, and customer satisfaction. If the team wins, we all win.
We are not a democracy, but everyone has a voice. Although we make decisions as a business, we avoid top-down management. We push as much authority and accountability as far down the organization chart as we can. You can only do this well with a strong culture.
We adopted a mantra to guide our way, “Get it done – Do it right”, and a set of metrics to make it part of our culture.
We created a two-by-two grid, with “Get it Done” on the Y-axis and “Do it Right” on the X-axis on which all employees, including the Executive Team, are plotted. If rated in the top right quadrant, that employee is doing well. If someone finds himself or herself plotted in the Upper Left quadrant (getting it done, but not doing it right), that person has one quarter to improve. Lower Right people get two months. Lower lefters are out that day.
We can measure “getting it done” using standard quantitative metrics, but “doing it right” is more qualitative. We ask questions like, “Is the person a positive source of energy for the team? Does she go above and beyond for other staff and for customers?” We provide examples to help evaluators plot individual performance.
Once we instituted this matrix, one of our top selling sales reps was evaluated as being in the top left quadrant. When he only paid lip-service to changing and didn’t correct this behavior after a quarter, we let him go, numbers and all. This decision was both a major “wow” and a major win for the company.