Situation: A company acquired an office in a new geography at no cost – just a commitment to keep the office going. The immediate challenge is transferring the previous owner’s client base to the new owner’s service. The people in the distant location are OK, but it will take coaching for them to deliver the new owner’s level of service. However, these people are proud and resistant to change. How do you eliminate a them-us cultural divide?
Advice from the CEOs:
Involve the person who facilitated the acquisition in the integration process. Get his opinion of what is needed.
Your prime commitment is to the client base and past practices that built the client base. Maintain or surpass this level of service. As long as the team meets this level of performance, they are serving your objectives.
You and the key manager of the newly acquired office should meet with their most important clients. Help the manager convert those clients for you.
Your other implied commitment is to the manager and employees that you inherited through this deal. Educate them on your approach – “we will do all that we can to create success for our clients.” Connect with the manager, understand how this person serves clients, and coach the individual.
Be fair – the fairest method of managing is a meritocracy.
Manage by results, not process – if the core values between the two sites are similar, allow for cultural differences in local practice.
If all this doesn’t work and you want for “them” to become “us” you will have to have someone from the home office move to the distant office and manage it.
Situation: A small company has a long term clerk employee. This individual is responsible for AR/AP, Payroll and also HR manuals and reports to the CEO. This individual has been a good employee, but doesn’t perform well in this role. How would you structure accounting and bookkeeping in a small company?
Advice from the CEOs:
This is a key role, but there are a number of options. One is for the individual to continue reporting to the CEO, but train someone else to back them up. This will enable you to either shift the individual to another, more appropriate role within the company, or to continue with minimal disruption if the individual leaves.
Because of history and loyalty, this is a difficult emotional issue for you as CEO. It is important to consider what you would do if you could remove your emotions from the issue. If the answer is that you would eliminate the clerk position and hire a qualified, experienced bookkeeper at the appropriate salary, then this is your answer.
Packard’s Law – from one of HP’s founders – is that no company can grow beyond the capabilities of their employees. Hire the right person. This individual must be process-oriented – someone who routinely checks their own work to make sure that it is right. There is an adage in accounting that good accounting is 20% knowledge and 80% double checking the work. Hire a person who loves to do this.
Take care of this position in the best interests of the company, and look for another, more appropriate within the company job for the clerk.
Situation: Few economists predict a robust recovery. We know from past recessions that in a slow recovery some companies will fail while others rise to the top. What are the three qualities of the companies that will thrive and become the companies of the future?
Advice from Philippe Courtot:
Companies of the future will have three qualities. The first is a keen sense of who your customers are – what characterizes them and their buying and use decisions. You need to see yourself through their eyes. This will give you the ability to shift more easily as their needs shift. Making this shift is easier for a service company than for a manufacturing company because the infrastructure of a service company is more flexible.
Second is an intense focus on operational excellence. Everything is measured with the objective of obtaining the highest levels of productivity as well as the opportunity for ongoing learning and improvement. The companies of the future will have superior systems for gathering and tracking performance data, as well as cultures which allow them to learn from what they track.
Third is a culture of continuous innovation. The company of the future will be the company disrupting itself. Germany provides a wonderful example because of its culture of excellence in small, family owned companies. You may be surprised to learn that it is these small companies who are the true drivers of German innovation, not the big companies like Daimler or BMW. The small companies follow the three rules outlined here. Their success has been aided by the emphasis in German education on math and engineering which means that there is an ongoing supply of domestic talent to feed these jobs.
Situation: A company is in contact with an Eastern European company that seeks outsourced business from the US. The CEO seeks guidance on challenges managing as well as formalizing this relationship. What is your experience outsourcing to Eastern Europe?
Advice from the CEOs:
Location in Eastern Europe is important. There have been concerns with both corruption and IP protection in Russia. Some other Eastern European are more aligned with US/European values and farther up the ramp as outsource partners.
Experience of other US companies suggests that your spec must be written much more tightly than if you were doing the work here. If you can’t write a tight spec on the work, don’t outsource it!
Contract outsourced work on a fixed fee basis with the bulk of payment due on completion. This helps to assure that you receive timely delivery and the quality of work required.
Set up thresholds for the circumstances to engage an outsource partner.
Say one US worker is economically worth 5 foreign workers in your domain. Do you have enough work to support this?
Determine who will manage the outsourced work. A European is fine, as long as they have experience managing outsourced work.
Someone on your team will become their Project Manager. This can be VERY time consuming.
Consider setting up an offshore company to shelter some of the revenue from the outsourced work.
You want to locate the offshore company in a tax-free country, and to have them handle the funds connected with the outsourced work.
The contact in the tax-free country will likely be an accountant, lawyer or both. There are many reputable individuals who do this in tax-free countries, but be sure to check references and background carefully.
Situation: A company has an opportunity to form a marketing partnership with another firm. The primary potential benefit to the company from this partnership is gaining access to new customers. On the other hand, partnerships may bring complications. What is your experience with marketing partnerships, both positive and negative?
Advice from the CEOs:
Marketing partnerships can certainly work, provided that both parties see benefit to the relationship, and both are committed to make it work.
Be sure to clearly define boundaries with the partner.
If either company can perform a particular service, whose customers are who’s?
Is there alignment throughout the partner’s organization regarding the partnership? Or are their conflicting priorities within different branches of that organization? Test the waters ahead of time and assess how these will potentially impact the partnership.
There are potential pitfalls:
What is the in-house/outsource attitude of the partner? If there are strong voices for in-house production or service provision, these will not be supportive of the partnership.
Watch the quality of the partnership over time.
Successful partnerships are based as much on friendly cordial relations as on business priorities. Are your business cultures and ethics compatible?
Who is the champion for the partnership on the other side? What will happen if the champion leaves? Is there a back up champion?
Build an exit strategy into the partnership that will allow you to leave gracefully and mitigate financial or good will consequences if the partnership sours.
Situation: A rapidly growing company is expanding both in its primary market and into new verticals. A number of companies are interested in strategic partnerships. How do you select the right partner in the right space?
At the end of the day it’s about a connection with the partner which extends across both organizations.
Look for cultural synergy with the other company. Do your and their managers and employees “click” or are they oil and water? This is a gut assessment.
Is the quality of people in both companies complimentary? Is there similar drive for quality and attention to detail?
Will technical integration be smooth? Are systems complimentary? At a minimum are there the right skills on both sides so that this won’t hinder the project.
Are sales and marketing approaches compatible? Will teams be able to work together? What about other departments?
You need to have strategic commitment across both organizations.
Partnerships don’t work if there is only alignment at the top. Executives can’t shove a new opportunity down the throats of those who report to them. There must be excitement about the opportunity across both sides of the partnership.
There must be complimentary competencies, capabilities and commitment.
Is there a clear understanding of the goals and objectives succeed?
Reward structures and incentives must be aligned down through the two parties. Conflicts will lead to struggles.
There must be a strategic alignment between the two organizations so that both see the partnership as complementing their broader strategic plans.
There must be a fundamental strategic win-win. The venture must be seen by each party as core to their business, plans and results. If this isn’t present, the collaboration can be drowned when a better opportunity that comes along.
Look for some gauge that the partnership is as important to the other party as it is to you. What other partners do they have? Is the size of the opportunity enough so that you are assured of their ongoing attention?