Tag Archives: Business

How Do You Develop an Employee to the Next Level? Four Points

Situation: A CEO has a key employee who wants a higher level of responsibility. Currently this employee is primarily focused on business development. He’s good at this but wants a higher level of experience. The CEO agrees. How do you develop an employee to the next level?

Advice from the CEOs:

  • If you ask this individual what needs to be done, what happens?
    • Revenue is number one. This is where he is focused, but he wants more than this from his role.
    • If this is also the CEO’s primary objective then the CEO needs to back off and direct him to split his time between closing high level opportunities and training his direct reports to be able to close lower-level opportunities on their own.
  • To the CEO – thinking about your own experience, how did you mature to a higher level when you had primary responsibility for business development?
    • Answer: I built and trained staff to do this and delegated these responsibilities to them.
    • Allow this individual and other key managers within the company to do the same thing, and coach them along the way.
    • Empower this individual to build his staff and enable them to take on more of the functions that he no longer wants to handle himself. Allow him to prioritize his time to focus on: hiring and training of his key staff and coaching and supervision as they grow into their new roles.
  • Consider this solution as a larger project manager role. Take a key product and empower this individual to design, build and manage the organization to deliver this product.
  • To frame this solution short-term, start with a 1-on-1. Ask about his vision – what he wants as his role and how he sees building this.
    • Follow by laying this out in terms of the company’s objectives – be specific as to what this looks like.
    • Look for a win / win reconciliation between the CEO’s and the employee’s visions that meet both of their objectives. Get on the same page with this individual, so that this fulfills both of your needs.

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What are the Options for Your Next Phase? Six Suggestions

Situation: It’s a new year, and a CEO is thinking through options for the coming year and beyond. She has decided to leave her company and establish a new role and career for herself. Immediate concerns are funding the transition and entry into a new career. What are the options for your next phase?

Advice from the CEOs:

  • The area that can be built most quickly to provide income is a consulting practice based on the experience developed as a CEO and as a specialist leveraging past experience. Building a new practice is a big commitment. Make this the initial focus and get a few gigs to get the ball rolling. The company is an early option, as well as some of their key customers. These relationships are already in place.
  • On the academic side, investigate Executive Education programs in Business Schools. Here the clientele is different from normal undergraduate and postgraduate education – actively working managers and executives. For this audience the combination of experience as a CEO and academic credentials is advantageous. For this audience, a lack of credentialed teaching experience is largely counterbalanced by the weight of professional experience.
  • The Professor / Consultant track looks best if established as a 5-year plan.
  • While getting established in a new role there will be an initial challenge managing the time demands of teaching, research and developing a consulting practice. Think of this as managing the multiple functions of a company. It will be important to establish early priorities to accomplish the desired plan.
  • A professorship does not necessarily tie financially to current goals but can be an important strategic adjunct to consulting efforts. In a certain sense, teaching will have to be its own reward.
  • To the extent possible and depending upon how the board responds to the decision to leave the company negotiate the best possible severance package. This can tie into some of the suggestions, above.

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How Do You Evaluate Management Team Performance? Four Points

Situation: As the end of the year approaches, a CEO is evaluating management performance over the year. An area of focus during the year have been evaluating new business opportunities and the impact of these on the company. The CEO has been uncomfortable with disagreements between departments which have slowed opportunity evaluations. How do you evaluate management team performance?

Advice from the CEOs:

  • Breaking down issues of concern, there are two areas of focus.
    • Problems that should have been resolved by two people have required a referee (the CEO) to mediate the solution because the two parties could not work things out themselves.
    • Individuals who are otherwise highly skilled have become overly sensitive about minor issues that have prevented them from developing their own solutions
  • The most important step is to have the management team agree on a protocol for dealing with new business opportunities and the impact of new sales opportunities on development and support. A protocol will help to avoid the two issues of concern that have been identified.
    • Direct the team to come up with a protocol that they all agree to, subject to CEO review.
    • Once it is finalized, announce it with great fanfare as the new process that will guide the company. Make it mandatory.
    • Support this process with daily (short – 10-15 minute) or weekly (longer but 1 hour or less) team meetings to anticipate and remove blocks to execution.
  • Tension between sales, service and engineering are natural and healthy. This is because each is driven by different priorities, all of which are necessary to serve the customer.
    • Resolution of this tension requires a turnkey handoff protocol, involving checklists and flow charts.
    • The best protocols are not imposed on people but are developed by the people involved. This gives them ownership, and a stake in implementing and maintaining the protocol.
  • If, despite everyone’s best efforts there is ongoing dysfunction, it may be necessary to replace difficult people. As challenging as this seems, those who report to difficult top managers likely experience similar difficulties with them. Organizations often respond with relief after leadership eliminates a difficult manager.

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What Do You Manage as You Adapt to Market Conditions? Four Points

Situation: A company is in the process of adjusting its customer and business focus in response to changing market conditions. Gross margin on projects that have been the company mainstay in the past have fallen significantly. The CEO is evaluating different adjustments to address this. What do you manage as you adapt to market conditions?

Advice from the CEOs:

  • The company’s business model is shifting from a staffing agency to a product development model. This means that the business must be driven by a different set of parameters and metrics:
    • A different time/utilization mix.
    • Different personnel – the company needs managers.
    • Changes to the organizational chart and incentives.
  • How does the company currently charge clients for Project Management?
    • Currently it is time and materials.
    • Consider charging on a percent of project cost basis. For example, 15% of total project cost. The pitch will be that the client will be able to reduce the overall cost of the project – ideally in both dollars and time – and that the company will have increased accountability for delivering these results.
  • How will this impact the company’s cash position? How will the company retain adequate cash flow during the transition?
    • The current cash position is 4 months of projected monthly cash plus receivables.
    • If there is drop to 3 months, flag a yellow caution light.
    • Two months becomes a red light.
    • What is the backstop if the company runs shy – if, for example, some engineers are not very active? In this case, will deferral of unpaid vacation time and other options allow the company to survive without further draining cash? Have a meeting with key managers to evaluate the impact of this option.
  • Consider looking at competitors for possible collaborations. This can be delicate because they may want to steal the company’s personnel and there are other risks, but sometimes promising deals can be arranged.

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How Do You Plan for a Leadership Transition? Four Points

Situation: A CEO is planning a transition to the next phase of his life. This will include resigning as CEO and preparing  the company for this transition. What are the important steps for the transition, and what can he do to best prepare the company for the change? How do you plan for a leadership transition? 

Advice from the CEOs:

  • Prepare a transition plan for the board and set up a meeting to discuss the plan.
    • If the CEO is not the Board Chair, then a preliminary step is a conversation with the Chair about the CEOs plans, timing, and an update on short and long-term issues which must be addressed.
    • Given that the CEO will be leaving, the Board Chair’s responsibilities will include overseeing the transition. Prepare the transition plan with this in mind.
  • By solving the problem of transition for the Board, their task is eased, and opportunities for future relationships and alternatives are created.
    • Update the business plan for the company, including a SWOT analysis.
    • Line up search firms in advance who can assist in finding a replacement if internal candidates are not available.
    • The proper attitude is “my job is to make your job easier.”
  • As to the timing of the transition, 3 months is short notice. If personal needs dictate a transition in this timeframe, develop options to facilitate the transition and offer these as an alternative.
  • If the CEO’s career options for the future include consulting, the company can become an early client.

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How Do You Get and Keep the Right People on the Bus? Four Solutions

Situation: A company is experiencing an employee turnover rate of 12%, vs. a company target of 6-7%. This has occurred due to a change in the company’s business environment during the recent downturn as they sought to optimize business practices. Long term employees no longer felt like the office was the “same place.” How do you get and keep the right people on the bus?

Advice from the CEOs:

  • Turnover has been a problem principally in the home office – the largest office – but has not been a problem across the rest of the country.
    • Has the company looked at what works in the other regions, vs. what has not been working in home office?
    • Could the problem be related to size and structure of the home office operation? The home office has 55 people whereas the other regions are composed of smaller working groups of 12-15 employees. Does it make sense to look at smaller working sub-groups within the home office, or some different structure that more closely mirrors the regions with low turnover?
  • What can be done to boost morale in the home office?
    • Try creating smaller working teams to mirror the smaller team atmosphere of the other regions.
    • Create a “small office” atmosphere. Build walls to visually separate subgroups – creating their own “space” to foster subgroup affiliation and bonding.
    • Increase the autonomy of the subgroups – and enhance the career path possibilities within the subgroups.
    • Focus on successes, what the “Teams” are achieving, and the contributions that they make to customers and the company. Express Team successes in terms of the impact that they’ve had on customers.
    • Look at the Olympic Team model – individual performers who support each other ferociously to accomplish Team performance goals.
  • Create a visual mural on a large wall representing – perhaps with some humor added – the vision of growth for the company and the opportunities that will accompany this growth.
  • Ask the home office team for input on how to build strong functioning teams or challenge them to define and build the teams.

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Do You Diversify or Stay the Course? Five Thoughts

Situation: A CEO seeks advice on the direction of her company. Her objective is to build a lasting company which is a wonderful place to work. She has a creative group of employees who have suggested options to expand the scope of the company. Should she maintain the current direction or entertain exploration of these options? Do you diversify or stay the course?

Advice from the CEOs:

  • With a solid, sustainable business model and the current level of revenue, diversification is not as important as it was when the company was a fraction of its current size. Current objectives could well be reached by just doing more of what the company does now.
  • The most important question to ask is: “What do we want from this or that option?”
  • Concerning the top opportunity under consideration, the group felt that:
    • It’s not the company’s core business and doesn’t play to the company’s strengths.
    • However, there are aspects of the opportunity that fit both the company and the existing client base. These represent an opportunity that fit’s the company’s culture.
    • Explore these aspects in small steps that do not detract from the current business.
  • If culture is a key ingredient of the company’s offering, how scalable is this, particularly into new markets? Look for ways to grow that are consistent with the strong culture that already exists.
  • Improve selling the full breadth of the company’s offering. The company offers many services that may be of interest to clients, but which are not mentioning in initial sales calls.
    • In sales presentations focus on the client, rather than a detailed description of the service offering. Offer clients a small brochure that covers the range of the company’s services.
    • By focusing on clients’ needs it is easier to selectively mention options that will serve these needs.

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How Do You Create a Good Lead Generation Campaign? Five Thoughts

Situation: A CEO wants to increase the company’s customer base. What have others done to generate leads in order to expand their customer base. What techniques have worked best? How do you create an effective lead generation campaign?

Advice from the CEOs:

  • One CEO who targets large customers used outside telesales at first but found them to be ineffective. They have since gone to an inside team. There is a learning phase, but with experience this can be an effective solution.
  • Another company uses an inside telesales team. This started with one individual and has become a team. Because this provides more control, one can hire for quality. This is often older callers who sound very professional on the telephone. It also provides the opportunity to tweak the telephone script for special promotions or circumstances.
    • For this company the number of calls per lead and closed account are high – up to 5% for leads and 1% for closed accounts. With a disciplined team and proper incentives, this is very doable.
  • Investigate the availability of local business lists such as Craig’s List or Rich’s Business Lists These lists are searchable by industry and business parameters.
  • Consider small professional conferences that attract target personnel of your key potential prospects. These are great networking and lead generation opportunities.
  • Make sure that there is a good link between the telemarketing and sales teams. This includes tracking, credit and rewards for landing accounts, and similar incentives.

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How Do You Find the Right Funding Source? Six Solutions

Situation: A company is short of cash and needs a source to fund their cash flow needs. Their needs are mapped out for the next four years and they can fund current operations for a few months. However, their bank will not extend their credit line. How do you find the right funding source?

Advice from the CEOs:

  • Try another bank. Ask friends and contacts about their banks and see if they’ll refer the company to their bank.
  • Explore renegotiating the company’s lease to ease the cash flow needs.
  • Explore renegotiating payment terms with suppliers. See what can be worked out. The bottom line – if the company goes Chapter 7 or 11, they get nothing.
  • Consider going to a larger company and working out an arrangement.
    • Ask that they allow the partners to operate as an “independent” entity retaining their titles.
    • In exchange for funding the company’s cash needs, the larger company shares in the profits.
    • Seek a temporary arrangement to allow the company can get back on its feet financially.
    • Use the friends and reputation that the company has developed over the years. The company is a good outfit and respected. Others may help if asked.
  • A similar tactic is to approach a larger company to negotiate an arrangement that will allow the company to survive. Start with a business plan.
    • Highlight the company’s reputation and the quality of its products. Use references from highly satisfied customers.
    • Highlight the company’s key strength – developing the critical path and plan for a successful project.
    • The thrust of the presentation: the partner gets a quality team and shares in the profits from projects completed. The partner provides the cash to fund the projects. Compare the risk and return on these funds compared with other investment options available to highlight the value of the proposal.
  • Other CEOs shared similar situations that have worked for them.
    • The financial realities were kept secret from staff, customers, and competitors.
    • All unnecessary expenses were cut.
    • The focus was on making money today.
    • Supplier payments were delayed as necessary to manage cash flow.
    • The process was managed creatively, sometimes with the assistance of friends, and the companies were able to prevail.
  • There is no shame in facing and dealing with this problem. Determination will pay off.

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What are the Pros & Cons of In-House Software Development? Three Points

Situation: A company used internal resources for a small in-house project – developing web-based time sheets. They had obtained bids for external development but found that internal resources could do the same time for about half of what external development would cost. The trade-off was slow delivery. What are the pros & cons of in-house software development?

Advice from the CEOs:

  • Why was delivery slow?
    • When faced with a choice in priority between the internal development task vs. responding to the needs of external customers, internal delivery was pushed back in time.
  • This is exactly what others have experienced when faced with the choice between internal and external software development. Look at the trade-off, not just in terms of “cost” quoted by internal developers, but also in terms of opportunity cost. The real cost is what these resources could have provided had the same time been spent to support external revenue-producing projects.
  • Just as the company did in the first place, get external bids. If the use of internal resources is an option, compare time to delivery forecasted using internal resources plus any other internal costs. Then analyze the opportunity cost of not dedicating these resources to revenue-producing activity. The sum of these costs should then be compared with external bids. Adding opportunity cost to the analysis can make a big difference.
  • Once the company has this information, make a business decision as to the best choice. Keep in mind that unless the priorities of the internal group doing the development work are changed, they may not respond to the needs of the internal project on a timely basis. It will be the CEO’s call as to whether the developers prioritize their time to support external projects or the internal project.

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