Creating a Client-Centered Organization – Six Guidelines

Situation: We want to make our company more client-centered. What are the most important considerations?

Advice from the CEOs:

  • One CEO transformed their company into a client-centered organization based on conversations with customers.
    • The new structure is based on client-market groups.
    • The core of each group is cross-trained professionals who focus on client needs.
    • These groups are supplemented with a cross-trained support staff who can shift between projects depending on market conditions.
  • Organizational structure must start from, and support, a strategic vision. The vision must be informed by the realities of your market and the products/services that you offer.
    • Once you have determined strategy and analyzed customer markets, develop an structure that allows you to adapt to market changes. Structure follows strategy and market.
    • Things to watch:
      • Flexibility within the structure. You want most of your staff to be flexible, so that you can move them among projects as market conditions change.
      • Cross-training is critical.
      • You need strong leaders who can develop market segments.
      • Create objectives and accountability that will tell you how the market segments are operating, and whether staff are meeting cross-training objectives.
  • As you implement a new structure, be aware that:
    • Any change is met with insecurity. Coach your managers to communicate with their teams.
    • The core message is assure employees that they are valued, that any change will be gradual, and that you will provide them with the appropriate training and incentives that they need to succeed.

Key Words: Customer Focus, Cross-training, Communication, Strategic Vision, Structure, Objectives, Accountability  [like]

Planning Compassionately for Tragedy at Work – Seven Suggestions

Situation: A long-standing employee committed suicide away from work. Relatives of this person work in the company. How can the CEO assure that assistance is available to help employees resolve their emotional shock?

Advice from the CEOs:

  • First, do not assume that this is a passing situation and that all will recover without assistance. One never knows what may have passed between employees in the days or hours prior to the event or what lingering feelings of guilt or involvement may remain and impact future performance or development.
  • Initiate personal contact with those employees closest to the individual to console them.
  • Search for local resources on death and dying that provide trained counselors to work with employees. The service is generally free of charge, but a donation is appropriate.
  • Be proactive – create a remembrance fund to allow employees to contribute as they wish. This can assist them in their personal bereavement process.
  • Establish a company bereavement policy – for example 3 days time off with pay with guidelines as to situations that trigger this benefit – so that they can deal with their loss.
  • One company has an Employee Assistance Program. They pay about $5000/year to access services for employees. This has been a very good program for the company.
  • There will inevitably be future situations that arise through accident, illness or other causes that will directly impact employees. It is best to be prepared with a plan in case any of these occur.

Key Words: Performance, Bereavement, Policy, Planning  [like]

On-boarding a New CFO – Four Imperatives or Considerations

Situation: The Company is hiring their first CFO. How do they integrate this key person into the company?

Advice from the CEOs:

  • The company should reflect the values, needs and desires of the CEO.
    • Have a clear discussion and agreement with the CFO candidate on values, role, and organizational structure before hiring or announcing anything to the company.
    • The talents of the CEO and CFO should complement each other.
  • The CEO may put the CFO in charge of areas that they want to delegate – accounting, administration, finance and contracts.
    • The CEO should remain involved in banking relationships.
  • Recommended announcements and timeline:
    • When the new CFO is announced, simultaneously present the new organization chart (broad responsibilities, not detailed position descriptions).
    • Set a timeline for realignment of roles. It is not necessary to specify exact roles at the time of the announcement – let everyone know that this is a work in progress and give a time frame within which all will be resolved.
  • Once the CFO is in place, the CEO and CFO should meet at least weekly, to assure that the CFO has the support and resources needed to accomplish their responsibilities.
    • All decisions within the CFO’s group, personnel responsibilities and any shifts in roles should come from the CFO, with the support of the CEO.
    • This will help the new CFO to more rapidly assimilate into the company and will give them the authority needed to manage their organization.

Key Words: CFO, On-Boarding, Values, Roles, Responsibilities, Authority, Personnel, Delegation  [like]

Great Deal on a New Space . . . Now We Must Move! Five Recommendations

Situation: The Company has taken advantage of favorable lease rates to secure a larger space. How can they minimize work flow disruption during the move?

Advice from the CEOs:

  • Plan the move in detail: electrical, intranet and telephone needs; office space and facilities; design or production space and facilities.
    • If you can’t move everything over a short period of time – a 3-day weekend – consider moving in steps – a series of discrete moves over time, each with its own requirements and timetable.
  • If you carry inventory, pre-build inventory to see you through critical steps of the move.
    • If you have a major customer with strict delivery deadlines, try to negotiate a delivery window during which you can conduct the move.
    • Determine if there is seasonality to order delivery that makes a particular time of year more convenient to move critical operations.
    • Custom work will require special planning.
  • If you plan to upgrade equipment, consider purchasing, installing and operating the new equipment in the new location instead of your existing location.
  • If you will be leasing the new facilities – maybe even if you are purchasing – ask the new lesser or seller to provide cash to:
    • Finance delayed shipments at a price discount,
    • Cover expenses of the move and outfitting the new location to your needs.
  • Consider converting to a wireless intranet and telephone system to avoid the expense of wiring the new facility.
    • Look at plug and go options.

Key Words: Planning, Location, Work Flow, Inventory, Technology, Customer Service, Logistics  [like]

Developing Leaders within the Ranks: Four Approaches

Situation: As they have grown, the Company has used Bay Area talent to seed new locations around the country. Leadership is now short at headquarters. What have others done to fill leadership gaps?

Advice from the CEOs:

  • Develop a formal Leadership Development Program.
    • Identify the top leadership candidates with the company – the top 10%.
    • Identify their individual goals and determine whether these are consistent with company values.
    • Clearly communicate the roles and expectations that you have for future company leaders – both the upsides and the sacrifices that you anticipate that they will have to make.
    • Team the leadership candidates 1/1 with mentors to guide them.
    • Consider an “internal” Board of Directors for developing leaders. Members are considered advisors to the true Board of Directors, understand company strategy, are coached on company values, and are involved in an advisory capacity in key company decisions.
    • Consider a leadership “boot camp” program to groom potential leaders and weed out those who like the idea of leadership more than the reality.
    • From the standpoint of a very hierarchical company, the following items are involved:
      • Time
      • Talent
      • Defining the traits for key positions
      • Identifying candidates who appear to possess these traits
      • Assigning leadership roles to these individuals in executing the annual strategic plan – with senior managers mentoring leaders-in-training
      • Include training and development in professional development plans
      • Investigate employee assessment tools, for example the Myers-Briggs tools.

Key Words: Leadership, Development, Goals, Values, Roles, Expectations, Mentor  [like]

Gee, I Like Your IP! Let’s Talk: 3 Steps to the Dance

Situation:  The Company is moving from a specialty solution to a complete solution. They have identified a partner with intellectual property (IP) that will help them fulfill this vision. How should the CEO approach this company to access their IP?

Advice from the CEOs:

  • There are two aspects of any deal: technical feasibility that will produce value; and the emotional needs of the principals.
    • The technical aspects are the most straightforward and easiest to value.
    • Frequently, a favorable deal hinges not on technical feasibility, but on the desires of the principals and their ability to trust one-another.
  • If you are convinced of the value, you must convince the other party that their best option is to work with you. Then you can negotiate the specifics.
    • Sell your vision: the technologies together are much more valuable than they are alone: 1 + 1 = 5!
    • If control of the technology is an issue, you must negotiate an arrangement where they are comfortable with your control.
      • Do you and the other party have a trusted advisor in common or is there an individual who is respected by both of you? This person can help communicate your good intentions.
  • If your best efforts do not produce an appealing arrangement, your fall-back position may be a partnership. If the partnership is backed by modest investment with options for future purchase, this may be another way to for you to eventually gain control of the technology.

Key Words: IP, Intellectual Property, Negotiation, Emotional Needs, Feasibility, Deal, Partnership  [like]

How do you Create Performance Incentives? Four Approaches

Situation: The Company is considering options for both team and individual recognition. What have other companies found to be effective?

Advice from the CEOs:

  • One company has foremen compete on project quality, cost containment, and other measures. Bonuses are based on a mix of team performance, project difficulty and individual initiative.
  • One company uses year-end bonuses, but places more emphasis on frequent small recognitions: pedicure, manicure, going out for a meal on the company – things that let the employees know that they are appreciated on a regular basis. Any incentives paid are based on a mix of individual and team performance.
  • One company has completely eliminated bonuses. Salaries were raised to make up the difference, and individual incentives are created and paid during the year. Incentives reward specific accomplishments which are highlighted when the incentive is paid. Incentives are a mix of team and individual performance.
  • One company is very generous with bonuses – $5K to $10K at a time at the discretion of the CEO. These are paid face to face by the CEO and the individual is congratulated on their performance. However, the bonus recipient also signs a paper pledging not to talk about the bonus. If they tell others about their bonus, they are eliminated from the bonus pool. The company also uses publicly announced annual awards, performance-based monthly awards, shirts, etc. that are presented at company meetings. Interestingly, the smaller rewards and public recognition appear to have the most impact.

Key Words: Recognition, Bonus, Reward, Public Recognition, Effectiveness. Competition, Incentive  [like]

How do You Pay Sales Reps? Two Examples

Situation: The Company is considering two options to pay sales people – base/draw plus commission, or no base/draw and larger commission. What do other CEOs find most successful?

Advice from the CEOs:

  • Align your sales incentive plans to your company objectives. Two examples, one of an aligned system and one of a dysfunctional system:
    • Aligned System
      • Sales reps are 100% commission (including expenses) with no caps on income. They are measured by two sets of metrics.
      • To keep their jobs, they have to achieve a minimum of 85% of their revenue goal. Fall below this and out the door.
      • However, commissions are calculated on the gross profit achieved on sales, and reps are provided with software to calculate GP and commission.
      • This company is the most successful in its market.
    • Dysfunctional System
      • Sales reps are paid a base plus quarterly commissions calculated on achievement of revenue goals.
      • The net result was that reps had no incentive to preserve gross margins.
      • The result was constant conflict between sales and finance; the situation only started to improve as reps’ commissions were converted to a combination of revenue and margin.
  • Issue: what is the role of the rep within the sale?
    • Is the rep a door opener or a closer?
    • What percentage of the close is attributable to the rep?
    • In a complex or staged sale, allocate commissions based on contribution to the close. Reps who can’t close are not as valuable as those who can.

Key Words: Sales, Commissions, Commission Plans, Objectives, Alignment  [like]

Micromanage – Me? Four Observations

Situation: The CEO is concerned about the performance of both the company and individual employees. The employees are good, but there are many minor details of day-to-day operation that the CEO feels are important. How involved should the CEO be in the details of the business?

Advice from the CEOs:

  • The answer to this question depends on you.
    • What is your own priority on the use of you time?
    • How much do you want to be involved?
    • How confident are you in the people whom you’ve hired?
    • Are you comfortable delegating?
    • Do you want to stay small or scale and grow?
  • The good and bad of involving yourself in details:
    • The Good Side – communicates that you are willing to roll up your sleeves and do what it takes to get the job done.
    • The Bad Side – don’t do your employees’ jobs for them.
      • This is demotivating and communicates a lack of trust in their abilities.
      • If the workload is so demanding and the benefit so great, then secure additional resources to enable employees to get the job done themselves.
  • More broadly, remember the lesson from many business gurus – you increase the value of your company by getting the “U” out of your bUsiness. You may enjoy the detail of the business. However, do not let this interfere with your long term objective of having others doing the “doing” while you mature your role as manager and leader.

Key Words: Manage, Leadership, Delegation, Confidence, Growth  [like]

We Only Want A-Players – But Do They Want Us? – Five Strategies

Situation: An early stage company will staff-up over the next year. In the past the CEO has recruited individuals with big company experience and solid resumes, only to find that they had difficulty transitioning to the hands-on responsibility of a small company. How do you find candidates who are highly experienced but who can also excel in a small company environment?

Advice from the CEOs:

  • The best candidates are not in the job-search pool. They are currently working but open to a change. Some will wish to return to a more hands-on situation.
  • Let people know that you are looking for “the best” and have a great opportunity. Create some buzz.
    • Go to your network ask “who do you know?” Don’t be shy!
  • Look for achievers – with proven performance in companies of the size that you plan to be in 12-18 months. Check their references carefully.
  • What can we do now, while we seek the right people?
    • Use contractors and consultants. These people are more entrepreneurial, self-starting, and self-accountable. Monitor their work. If they are good, add them to your team as permanent employees.
    • Develop a milestone-based personnel plan as part of your business plan:
      • When we hit Milestone A, we will need an operations manager.
      • When we hit Milestone B, we will need channel or market development expertise.
    • Conduct case studies of how other companies in your or similar spaces have facilitated their scale-ups. What worked? What didn’t? Why?

Key Words: Candidates, Recruiting, Fit, Culture, Start-up, Achievers, Performance  [like]