Situation: A CEO and his COO find it difficult to focus on core tasks when business is booming and everyone is busy. The company is small but has been very successful. However, the pressure of simultaneously attending to key customer relationships, training new people, and formulating plans is overwhelming. How do you stay focused when it’s busy?
from the CEOs:
If the CEO and COO are doing a mix of corporate and project tasks, the first step is to delegate so that top staff focus on strategic areas rather than execution.
Over the next week, keep a record of what the CEO and COO are doing. At the end of the week sit down and determine which activities were corporate activities, and which should have been delegated to staff.
As an example, training of new personnel should be a key role of someone else. The CEO and COO will be involved, but only tangentially. The bulk of onboarding should be handled by staff.
Similarly,restrict sales activity of the CEO and COO to high level discussions and decisions.The rest should be handled by sales staff.
What must the CEO and COO be involved in? Intellectual property development, high level decisions about new service offerings, high level decisions on business expansion opportunities, and occasional oversight of company operations.
It is important to focus. The first priority should be the company’s principle revenue stream.
The second priority should be new service offerings which are central to efficient delivery of the primary revenue stream.
Meet with top staff and develop a five-year vision. The order of priorities that are developed will determine where to focus.
In the process of developing priorities, ask the following questions:
What do you love and what do you need to love?
Analyze the comparative importance and urgency of each activity of the CEO and COO. Which require top level input, and how much? Which are better delegated to staff?
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 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.
Situation: A CEO wants to schedule an off-site planning meeting with her top staff. She has heard about the potential efficacy of off-site meetings and is intrigued by the idea of taking her staff away from the office for a day or two to concentrate on planning. She is curious about typical agendas, time frames, objectives and who should be involved in the meetings. How do you plan an off-site meeting?
Advice from the CEOs:
Set the objective of the meeting in advance. Tell everyone involved the objective so that they are thinking about this prior to the meeting.
The staff involved depends on the objective of the meeting. Select participants to fit the need.
Include a team building event. One purpose of off-sites is to help the team or teams get to know each other better and improve collaboration.
Have an agenda for the meeting and meet without interruptions. Have participants notify key customers or contacts in advance, schedule back-up contacts if necessary, and don’t allow interruptions.
Hold the meeting during work hours. Options: one day, local for easy travel and return home; or two days, nice setting, dinner the first day, and late afternoon return home the second day.
Do you need a facilitator? This depends on the goal and organizer’s comfort with the topic of focus.
A speaker or educational component pertinent to the meeting goal.
Breakout and group discussions to think through important issues.
A team-building event.
Some fun – dinner or an evening activity that allows individuals to talk in a relaxed setting.
Examples of effective events:
Broad agenda – What can we do better?
All-hands meeting – prompts contribution by all.
Opportunity for CEO to communicate the company vision and involve employees in the planning process for the coming year or period.
As we begin 2015 more people are feeling upbeat about the economy than they have through most of the last six years. The dollar is at new highs against global currencies. The US is approaching energy self-sufficiency. However, some still see regulatory headwinds and downsides. What do you see and what will you do differently in 2015?
Advice from the CEOs:
Over the last six years, software companies have seen large increases in outstanding credit to clients, combined with restrictions on clients’ credit lines available and fewer new purchases. We hope for a better year in 2015, and will focus on reducing outstanding credit to improve cash flow.
Cash continues to be king. B2B business sectors with good cash positions are solid.
If your product/service saves clients money and makes financial sense, you’re in good shape.
Raising money will continue to be a challenge. Investors have been focusing on accelerating deliverables, creating a difficult environment for entrepreneurs. The Wall Street Journal says that the share of people under 30 who own businesses has reached a 24-year low, referring to young entrepreneurs as an endangered species,.
What is your current planning horizon?
We continue to plan quarter to quarter. There are too many variables for a longer horizon. We pay up our credit lines, and cover multiple payrolls with safe bank deposits.
We are watching headcount and dollars in the bank.
We are communicating more with our best employees and bringing them into more decisions so that they won’t be looking elsewhere.
Situation: A CEO is doing benefit planning for next year. The company is small, with just under 100 full-time employees. They are growing, and anticipate reaching over 100 FTEs in the next 12 months, unless they consider either contract or less-than-full-time employees. The CEO is curious about what other companies are planning for employee benefits. What changes in benefits do you see for 2015?
Advice from the CEOs:
Including employer-paid social security and Medicare matches, CEOs in the group are seeing a range of from 12.5% to 30% in benefits. This does not include 401K matches or bonuses.
Over the last five years, there has been a big shift in benefits, in particular a move from traditional health coverage to high deductible HSA plans.
ACA requirements for businesses kick in during 2015/2016. In 2015 employers with more than 100 FTEs will need to provide coverage to at least 70% of full-time employees. Starting in 2016 employers with 50 or more FTEs will need to provide coverage to 95% of their full-time workforce.
Much depends upon your annual cost per employee is for health coverage as well as your philosophy on employee benefits.
Starting in 2015, if a business is supposed to insure its full-time workers but does not, they will have to make a $2,000 per uninsured employee payment on their year-end federal income taxes.
The fee is $3,000 if the employee gets health insurance subsidies through the Health Insurance Marketplace.
Some companies who currently pay more than this in annual premiums per-employee are considering boosting employee pay and having their employees self-insure through the Marketplace, or by purchasing the same policies available in the Marketplace directly from health insurers. The policy cost is no different, assuming that the employees will not qualify for subsidies, but policies purchased directly from insurers may provide a better network of physician providers.
Before you make any decisions, it is best to consult an outside HR professional who is knowledgeable in both health care alternatives and the ACA.
Situation: A company wants to develop a better planning and execution process. Historically they have been poor at meeting goals and objectives. What are the most important factors that improve planning and execution in your company?
Advice from the CEOs:
Take the advice of Jack Stack in his book The Great Game of Business. When building a plan, do it as a company-wide exercise.
Make sure that all of your departments are involved, each has direct input into the development of its own goals, and each understands that they are fully accountable for the achievement of their own goals.
Also do this in open session, and assure that each department has the input of other departments whose activities are critical to the completion of each goal.
This assures that different departments are working in alignment and not against each other.
Finally, make the process interactive and add some fun so that everyone is engaged.
Milestones and meetings are critical. Each department develops quarterly goals to support the plan, and department heads meet bi-weekly to monitor progress and prevent conflicts. Revisit the plan on a quarterly or semi-annual basis to adapt as necessary.
Focus the plan on one-year performance – with quarterly objectives – but forecast financials and broad metrics out 3 years to assure that the 1-year plan supports long-term objectives.
Situation: A company had several huge orders last year but ended the year with a low backlog. Sales forecasts are rosy, but acceptance of proposals and initiation of work is hard to predict because the company’s products are just a piece of much larger projects with variable timelines. How do you plan spending in this environment – conservatively to backlog or more aggressively to the sales forecast?
Advice from the CEOs:
It is important to understand the magnitude of difference between spending under the two scenarios. For example, if a conservative spending plan means major cuts to product lines or business compared to the more aggressive plan, then analysis and what if scenarios are more complex,
What are the company’s cash-flow and debt situations. If you are cash-flow positive with little debt, this increases flexibility. Another consideration is the company’s attitude on debt.
Be wary of the healthiness of an unused credit line. Companies have seen unused credit lines cut and accounts cleared when they have started using the lines after a long dormant period.
Exercising the credit line may increase flexibility.
Look at your approach to forecasting and spending. How far out do you forecast? How effective have past outgoing forecasts for several quarters been, and what confidence can do you have for the next quarter, the quarter after, and the quarter after that? If you are reasonably confident one quarter out, you can plan spending on this. If you can adjust spending relatively quickly this gives you more leeway.
Establish leading indicators to improve future forecasts.
What is your win/loss record on proposals, and a conservative estimate of what this ratio means for revenue?
Other examples include sales calls to new customers versus new key customers won, and similar sales metrics. These metrics can help to govern expectations based on sales forecasts.
If your sales team is not performing, look at changes to sales management. This may wake the team up and prompt them to go the extra mile for contacts and contracts.
Situation: Many executives in their 50s and 60s have parents in their 80s and 90s. When parents can no longer take care of themselves, there are important decisions to make regarding long-term care. What considerations are important to these decisions?
The most important challenge is that we often don’t want to think about these decisions.
There are three legs of the stool when it comes to later life planning.
Regular life insurance for family and final arrangements.
Financial planning to assure that you will have the assets to provide for yourself in later life.
Long-term care insurance can expand alternatives and help defer the cost of later life care.
Also, an estate planning attorney can shield assets if Medicaid will cover the expense of later life care.
The aging population is rapidly changing the demographics of later life care provision.
In Santa Clara County, California 16% of the population is currently 60+. This will go up to 25% by 2040.
Baby Boomers who waited longer to have children may have small children and aging parents at the same time. If a family member currently cares for elders, what will happen if they return to the workforce?
Medicare and Medicaid cover hospital and skilled nursing, but not assisted living. Long-term care insurance is important for those in their 50s and 60s and is less expensive if purchased earlier.
Needs and alternatives are changing as the generations change.
In contrast to their parents, Baby Boomers are more open to late stage options. They look for amenities and social environments that will enable them to stay active.
The village concept is gaining momentum – communities of like-minded seniors who will move into a community, often at a younger age than earlier generations.
Current elders are healthier than Boomers, and even more so than younger generations due to better diet and exercise habits. This has implications for both the care needs and options available to the younger generations as they age.
Technology will come into play in new ways. Current products assist in tracking and dispensing medications. There are also fall-alert devices and nanny cams to monitor parents in case of emergencies. Many more will be developed.
Key Words: Long-term care, Generations, Planning, Urgent, Insurance, Financial Planning, Long-term Care Insurance, Estate Planning, Demographics, Baby Boomer, Depression, Family Care, Assisted Living, Village, Health
Situation: A CEO has not taken a vacation for years due to focus on the company. He knows that he needs a vacation and wants to take one. However, he feels guilty taking time off. How do you take a guilt-free vacation?
Advice from the CEOs:
For your general health, you need to take time off to refresh and recharge!
Think of the vacation as your CEO Test – have you created a team that can perform in your absence?
You may be amazed at the initiative that some will take given the freedom to do so. As a corollary, initiative is accompanied by risk and your employees may make some bad choices. Be patient. Congratulate them for taking initiative and coach to improve choices.
Stay out of touch. Don’t call in daily and see what happens. If and when you do call in, don’t solve challenges that come up – let your people solve the challenges. Keep a few notes. On your return see where you need to adjust procedures to allow employees to make independent decisions.
More than one CEO has found that taking 3-4 week vacations each year has had very positive results. The company actually performs more efficiently and with more energy upon their return than it did when they left!
To ensure that you take a vacation, schedule it in advance. Let everyone know that you are going to take it and Just Do It!
If you can’t take the time to plan a vacation, have your spouse or a loved one plan the vacation.
If you need to feel in touch during your vacation, take your laptop. You may never even use it, but it will be there as a security blanket. Once you are on vacation, let family and personal priorities rightly take precedence over your need to stay in touch.