Category Archives: Team

How Do You Respond to a Breach in Policy? Five Suggestions

Situation: A company recently terminated their lowest performing sales representative. Prior to surrendering the company computer, the employee sent a goodbye email blast to the company and customer email lists. This action was a breach of company confidentiality policy. How do you respond to a breach in company policy?

Advice from the CEOs:

  • Have the human resources manager send out a company-wide message specifying how this misconduct violated company policy and the potential impact on the company. In the same message, re-emphasize company confidentiality policy and the importance of complying with policy. Follow-up with conversations between managers and employees about the importance of company confidentiality.
  • Consider having all employees sign a new company confidentiality agreement every 6 months. This should be accompanied by explanations of company policy and conversations to reinforce the importance of complying with policy.
  • As a follow-up to this situation, be proactive by informing affected clients that this individual has left the company and let clients know who their new sales representative is.
  • Be aware in your internal communications that this action may have been an honest mistake, not intended to harm the company. If this is the case and your internal response is too strong, this may have a negative impact on other employees.
  • If the individual goes to work for a competitor, send the new employer a copy of the termination agreement signed by the employee and put them on notice that you will prosecute any violations of prior confidentiality agreements.

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How Are You Staying Positive in This Economy? Seven Thoughts

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.

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How Do You Overcome Resistance to Change? Five Suggestions

Situation: A CEO manages more than one company and is overcome by the complexity of the task. The biggest challenge is the oldest of the companies which is increasingly resistant to change. How do you overcome resistance to change?

Advice from the CEOs:

  • Regardless of the age or experience of any company, meeting on-going performance objectives is critical. The fact that strategic imperatives have led to the formation of spin-off entities does not change this. Managers and key personnel are expected to perform to reasonable expectations, whether in a family or non-family business.
  • Resistance to change may be a symptom of more fundamental issues. Is the older business receiving adequate attention from upper management? Are they receiving sufficient funding and resources to complete their objectives? Do they have the latitude to make decisions necessary to achieve their objectives? If the answer to any of these questions is no, then address this first.
  • Presuming that the answers to the questions mentioned above are positive let the key personnel in this company know that they remain a critical business entity. Telling them this 1-on-1 is not enough. They need to hear this in public forums within the company. They need to be clear on the opportunity that the company enjoys, and what this means both for the company and for them as employees.
  • You cannot over-communicate the vision, mission and opportunity. They already know that you are juggling multiple balls and need ongoing assurance that they remain important.
  • Make sure that you have a right person handling day to day matters in the core company and in each of the other entities so that as they grow that they can support themselves.

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Where Do You Currently Stand on Benefits? Three Comments

Situation: A small company (fewer than 50 employees) is reviewing their employee benefit package and wants to get a sense of what others are currently covering in their benefit packages. Where does your company currently stand on employee benefits, and what does your company cover in its benefit package?

Advice from the CEOs:

  • A recent small (unscientific) poll of entrepreneurial Silicon Valley SMB Companies on benefits offered found:
    • Health: 100%, Dental: 83%, Vision: 67%, Disability: 17%
    • 401K: 100%, 401K Match: 33% (most companies eliminated the match to reduce costs)
    • Reduced benefits in the last 6 months: 67%
    • Employee complaints or recruiting challenges following cuts: 0%
  • One company commented that when a key customer cut their payments they had to cut benefits. They reduced the company payment from 100% to 50% of benefit cost. Their employees make choices among options available, with a company dollar payment cap. Management explained the situation when they made the cuts, and there were no objections.
  • Several companies have shifted to consumer directed health care options.
  • A comment of caution was offered by one CEO – employees are unlikely to object to their company needing to reduce benefits to get through a difficult market. However, as conditions improve, employees are likely to expect some level of return to prior benefit levels. If not, the company at risk of increased turnover. It is best to stay ahead of the curve to assure that your benefits packages are competitive.

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Can Bonus Plans Differ Between Departments? Four Thoughts

Situation: A CEO wants to build a new bonus program for the company’s professional services team. He wants to include a customer satisfaction component, because the group is historically weak in this area. Does it make sense to have a different bonus plan for professional services personnel and managers than for product development personnel and managers? Can bonus plans differ between departments?

Advice from the CEOs:

  • Many companies have different bonus structures for different departments. This is natural because different departments have different functions. For example, Sales may evaluated for bonuses based on a combination of revenue and gross margin achievement, while Finance is evaluated on profitability and Product Development is evaluated on hitting product launch schedules and new product sales.
  • Changing bonus structures can be a sensitive matter. If the team impacted is not included in the process of drafting the new plan, changes may be perceived as negative. If this is the case, it’s better to frame the new program so that you limit your commitment to it to just one year, and let the team know that this may change this next year.
  • How do you go about including customer satisfaction surveys as a component of bonus calculation?
    • If you want to use customer satisfaction as part of the plan, benchmark customer service satisfaction before you launch the plan. If you don’t benchmark, how do you know whether performance improves?
    • Survey response rates will be an issue – you won’t get 100% and may get a survey response rate of 10% or worse. Be prepared for this and make sure that data with a low response rate will support your objectives.
    • A survey is a lagging metric. If you can find a measurable leading metric to use as well this is better.
    • Be careful of how the survey is drafted and who conducts it. Both can bias results.
  • As an alternative to making customer satisfaction part of a bonus plan, consider starting a customer satisfaction or loyalty program. The most important question to ask will be: would you recommend us to your peers?  Any low response guarantees a follow-up call from the company.

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How Do You Move from Manager to Strategist? Four Suggestions

Situation: The CEO of a small-to-medium business wants to reduce day-to-day management activities and spend more time focusing on new opportunities. How do you shift focus from management to strategy and how do you identify the right person to take on the management role?

Advice from the CEOs:

  • As CEO your primary focus needs to be on the future more than the day-to-day. As a smaller company, the management role needs to be filled by an individual with broad multidisciplinary experience. To replace yourself, you need a Renaissance person – someone with industry knowledge and experience who buys into your business model.
  • As you evaluate candidates, look for attitude, not resume.
    • Analytical skills are critical – mental capacity.
    • These need to be complimented by guts – emotional intelligence.
  • Your current business is not the business that you and your co-founders started. It is a larger entity, more solid, and you need to bring in people who can take it to higher stages of growth. Finding the right person to fill your role is a long-term process.
    • Bring in 3 to 4 solid candidates as employees in important roles. Test them with challenges to see who can grow into the larger role of company manager.
    • Look for people who can grow your downstream businesses as candidates to manage the full business.
  • In the current market you have time on your side. While hiring is improving in some regions, there are still many more candidates out there than available jobs. This is unlikely to change soon.

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How Do You Motivate Hourly Employees? Five Suggestions

Situation: A company pays employees based on skill level. Raises are given as an employee learns additional skills. In some cases, when they give an employee a raise, productivity drops. The company has tried other approaches including bonus systems and profit sharing but did not find these effective. How do you effectively motivate hourly employees?

Advice from the CEOs:

  • Before trying a new motivation scheme, find out what matters to your employees. It may not be either bonuses or profit sharing.
    • Develop and send out a questionnaire listing different factors – revenue sharing, bonuses, creativity, doing quality work – ask what matters to you? Get their feedback.
    • People work for respect – many studies have shown that as long as the payment offered is fair, salary is secondary.
  • Hire an advocate for your employees – a part-time HR person. An important role for this individual will be to determine what motivates employees, what they want from their jobs, and how improvements in both processes and the working environment can boost productivity.
  • What is the real issue: employee motivation, employee productivity or cost reduction?
    • If material waste is more expensive that labor – create metrics and rewards to reduce waste.
      • At companies that use the Toyota Production System employees receive points for process improvements. At the end of the year they receive a cash payout based on the points earned during the year.
      • Employees are rewarded publicly. The incentives are cash, recognition and respect. These companies find that recognition and respect trumps cash.
    • Depending upon your cost structure, it may be more productive to focus on scrap reduction. Bring in someone with experience who can find the sources of scrap. The effort will pay for itself rapidly.
  • During the hiring process, require educational attainment as evidence of the individual’s commitment.
    • Look for skills experience – machinist, etc. Match skills and experience to your needs. This will lead to faster learning curves and will help to reduce waste.

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How Do You Attract Interns from Top Schools? Six Guidelines

Situation: A company has hired interns in the past and wants to upgrade their intern program to attract more interns from top schools. How do you attract interns from top schools?

Advice from the CEOs:

  • Top schools want to build lasting relationships with the companies to whom they send interns. In addition, the ability of top schools to attract top students increasingly relies on the placement rate of the school, so this can be a win-win proposition for both company and school. Take the time to cultivate this relationship and let the school’s representatives know your intentions. Get to know the top professors in programs from which you wish to recruit interns.
  • Provide a high quality internship experience. Treat interns as though they were normal employees during internships. Give them a job, objectives and tell them that you will evaluate you as though they were FTEs. They will feel more like members of the team and will have a higher quality internship experience. They will likely tell their placement office and other students about their experience. Interns should understand that if all goes well, the company MAY have a job for them; no job is guaranteed.
  • If you want more applicants from top schools then view your internship program as an investment. Look at it as a recruiting tool, not as an expense.
  • Pay for interns may not be same as FTEs – frequently interns are paid less, and don’t get the same benefits as FTEs. Before you make an offer or hire, call the school from which the potential intern comes and check out the candidate’s representations as to expected salary, etc.
  • Hire more than one intern and compare their performance against each other.
  • The CEO of a technology company has hired many engineer interns. Many of these were subsequently hired as employees. Overall their success has been good, but not fantastic. Similar to a new employee, it takes time for an intern to get up to speed.

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How Does a Small Company Build an HR Function? Four Thoughts

Situation: A small company has no formal human resources, pay scale or performance review systems. The CEO wants to create a structure to address these gaps, as well as to encourage employee feedback. How do you build an HR function for a company with under 20 employees?

Advice from the CEOs:

  • Many small companies outsource HR services. There are a number of firms who provide outsourced HR services, and through them much of the HR activity can be conducted online. Examples include ADP, Administaff, Express Employment Professionals and PayChex.
    • These systems cover all of the mechanics of HR, and help to assure that the company is in step with changing regulatory requirements.
  • There are also a host of individual consultants who put together HR systems for smaller companies. These are most easily found using locally-focused Internet searches.
  • Employees in small companies are used to wearing many functional hats. Hire or assign a manager to create an HR system and implement it once it is set-up. This person will be in charge of the personnel review schedule, changes to regulations and contact with outside HR resources.
    • One company’s HR Manager has a one hour conversation with the company’s lawyers once a year to make sure that the company is up to speed on any regulatory changes.
  • Hire a Director of Operations and include HR in this individual’s responsibilities. This person can research options for discussion by the leadership team. Empower them to bring in resources that will meet the company’s needs.

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How Do You Set End of Year Owners’ Comp? Three Thoughts

Situation: A company is a C Corp with several owners. As it is the end of the year, there is an active debate on owners’ compensation. The CEO has looked at a number of options, but would like the advice of others in a similar situation before making a decision. What do you see as the pros and cons of various options for end of year owners’ compensation?

Advice from the CEOs:

  • In one company, profits are split among owners according to stock ownership. This is similar to a public corporation where dividends accrue according to stock ownership. The pro is that it is equitable; the con is that smaller owners who may have made significant contributions during the year don’t necessarily receive the recognition that they may believe they deserve.
  • Another CEO varies owners’ compensation according to company performance. In good years, there is the option to be generous through enhanced bonuses, etc. In slim years it is more important to conserve cash, and quite frankly company performance didn’t justify significant bonuses. The pro is that this offers the CEO more flexibility than the first option to recognize significant contributions; the con is that the recognition of some may seem arbitrary to others.
    • In response to the latter observation, a third CEO sees this as acting like a good father – sometimes you just have to declare your prerogative if employees squabble about your decisions or push too hard for unreasonable requests.
  • The CEO who originally asked the question followed with an additional question – how do you present your compensation decisions to owners or staff who may think that they deserve more than their stock position or company performance over the year allows?
    • This is a facts of life situation – once the final determination is made it is not negotiable.

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