Tag Archives: Change

How Do You Shift a Key Employee to Manager? – Pt 2 Three Points

Situation: A CEO wants to promote a key employee from rainmaker to manager. This will not involve a change in expectations or metrics for either the new manager or the employees who will report to her. However, there needs to be more forcefulness and clarity on what needs to be accomplished, both for the new manager and her team. How do you shift a key employee from rainmaker to manager?

Advice from the CEOs:

  • Don’t just measure calls. Measure the outcome from calls. Develop an objective and a metric or set of metrics that they can run to. Link their activity to business results. They will respond because they will be able to impact the firm as well as their careers.
    • Tie individuals’ metrics to the business culture that the management team is creating and create win-win links.
  • What is involved in changing the business focus to new markets?
    • Build a replicable system for servicing a particular channel. Use the lessons from this exercise to build systems for new channels. As the team moves into new channels, tweak the replicable system so that it responds to the specific demands of that channel.
    • For new channels, identify the most important needs of the new customer – from their perspective – and develop a client service model to meet this need. For example, if the goal is to develop an investment service for foundations and endowments, the key variables may be acceptable return with a high degree of safety. Tailor an investment portfolio, as well as a client service strategy to meet the most important needs of this sector.
  • What is involved in creating a smooth hand-off within client relationships?
    • Start bringing in others to whom will be handed off the relationship as early in the client relationship development process as possible. Allow rapport and trust to develop, and prep the client for the expectation that a smooth hand-off is part of the ongoing client relationship.

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How Do You Train Others to Do Your Old Job? Four Points

Situation: A CEO has a key employee who has just been promoted to an important managerial position within the company. The task for this individual is to train others to do what he has done in the past. However. this individual feels uncomfortable training others to do what he was able to do. He feels like he is obsolescing himself. How do you coach this individual to let go of past responsibilities? How do you train others to do your old job?

Advice from the CEOs:

  • This individual was promoted because he excelled in his former job. His mastery of these skills, plus his past management background, prompted the CEO to offer him a managerial position. It is critical to understand that his job and responsibilities are no longer what they used to be.
  • As a manager, an individual is no longer expected to be a “doer”. The primary responsibility is now to select, manage, train, and promote others whose primary responsibility is “doing.”
  • As this individual is coached, encourage him to step back and look at the big picture of his new role.
    • The CEO does not expect perfection from the start. He understands from his own experience that learning management takes time.
    • However, he also knows that to become a new manager requires giving up many of the hands-on activities that one used to perform. The job is no longer to do these yourself, but to coach others to be able to perform these tasks to the standards of the firm.
    • Initially, this takes more time than “doing it yourself.” However, this individual now has talented people reporting to him and they will learn quickly. In a short while, it will take less time to delegate than to do it himself.
    • From a big picture standpoint, a manager justifies the higher salary and greater prospects that come with a new position by training his or her team to do what used to be “their job” at a lower salary than the manager’s current salary.
  • In short, in the role of manager, the better one is at developing others who can take on the skills that they used to demonstrate, the more successful that individual will be as a manager, and the more value they will bring to the Company.

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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 Build Teamwork Across Account Teams? Four Observations

Situation: A CEO is concerned that there is a lack of teamwork across the company’s account teams. Often, they compete with each other rather than sharing knowledge and information. While some competition is good, too much can stifle growth. How do you build teamwork across account teams?

Advice from the CEOs:

  • It looks like the company needs to change its account management culture. There is a need to review the entire operation and rethink how the account teams interact with each other.
    • Schedule meetings with the full account staff – attendance required – describe the concern and encourage teams to share ideas and resources.
    • The commission structure drives performance. Tie financial incentives to collaboration. Reward the teams on collaborative efforts disproportionately to individual team effort – Y% commission for individual team effort vs. 1.5 x Y% commission for collaborative effort.
    • Increase monitoring of revenue and client acquisition – for the full group as opposed to individual account teams.
  • To keep a manageable level of competition among teams, group them into “leagues.” The leagues compete against each other for production and financial rewards. Encourage them to develop social interaction to build the league spirit.
    • A twist on this is temporary “leagues.” Shift team and league groupings from time to time to share best practices and resources. Measure the results. Track and reward the best league performance over time.
    • Be sensitive to the possibility that individuals may respond differently to league vs. individual team incentives. Those who respond more positively to the league concept can become the collectors and disseminators of best practices among the teams. This creates a status incentive to complement the financial incentives.
  • Consider the peer-programming model from the software industry. In this model, two people are occasionally teamed with one as lead and one as back-up. Let them learn from each other for a period and then return to normal operation. The same can be done with teams.
  • Does the company really have a problem? If the corporate competition leaves at 5:00PM but the company’s staff are working weekends to produce, maybe things are OK!

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How Do You Manage Through a Difficult Period? Six Solutions

Situation: The CEO of a company is wrestling with issues concerning change orders and high labor and materials cost. To get back into good financial shape, they are considering options including reduction in estimator time and selling equipment; however, either of these could gut the business. How do you manage through a difficult period?

Advice from the CEOs:

  • It is critical to get on top of change orders. This is potentially a big profit-loss swing for the business.
    • Does everyone understand what’s happening?
    • If the answer is yes, teach them more about the business nuts and bolts so that they can help develop solutions? Share a portion of the savings in the form of spot bonuses for those who develop solutions.
  • Take a lesson from The Great Game of Business. Let employees know about the challenges and challenge them to help develop solutions.
    • As an example, look at change orders and the percent of change orders that are not correctly completed, approved and invoiced as a critical number. Let’s say that 50% of change orders are not completed, approved and/or invoiced correctly. The objective for the year is to reduce this to 25%. Calculate the value of lost billings from the past year. If this can be reduced by half, the value will be $X. If the company can meet this objective, consider making half of $X available for distribution as gifts or prizes.
    • To support this, allow each new project to design its own minigame to reduce the number of incomplete and uninvoiced change orders.
    • The idea is to have the project and inside teams design the minigames and come up with ways to reduce incomplete and uninvoiced change orders. They will learn new ways of being more efficient from this process. This is the long-term benefit to the company.
  • If it is necessary to reduce staff, cut early instead of later. This is painful but laid-off employees can be hired back on a contract basis as necessary.
  • A common solution during a difficult period is to cut back to core, reducing overhead as a survival strategy, and focus on winning as may bids as possible to rebuild the business.
    • Look at all departments and the gross margin that each produces minus the overhead that each requires. Focus cutbacks on those that are not positive.
  • Increase annuity contracts – contracts with major companies that are growing and frequently require the company’s services.
  • Transfer equipment to a separate corporation. Lease it back as business requires. This increases cash flow flexibility – for example, don’t make lease payments when cash is tight.

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How Do You Manage Conflicting Demands from a Client? Three Points

Situation: A CEO is struggling to manage conflicting demands from a key foreign client. The client frequently changes targets and priorities; however, the performance contract with the client does not allow variations from plan. In addition, the CEO and client have different expectations concerning ROI. How do you manage conflicting demands from a client?

Advice from the CEOs:

  • Recruit or access expertise from an individual who knows both cultures to coach you on intercultural communications. This will help you to avoid inadvertent miscommunications where your well-intended queries are negatively interpreted by the other party.
    • Cultural interpretation is an increasingly important factor for multi-national business growth.
  • Are there elements of the client’s structure and the agreement with the client that offer significant benefit, but which are underappreciated by company staff?
    • Access to capital?
    • Access to funding or allowance on expenditures that allow the company to increase staff to meet company demands?
    • Assure that staff are aware of these benefits and how critical these can be to the company’s, and their future growth and income.
  • Meet with the client’s leadership to outline the conflicts that the company faces meeting the client’s needs and demands. Explain to them how these conflicts are compromising the company’s ability to meet their needs. Once the conflicts in priorities are clearly expressed this may help the client to understand and resolve the conflicting demands.
    • This may involve a considerable personal risk and cost to the CEO. However, if the effort is successful it will, in the long-term, benefit both companies.

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What Are Your Five- and Ten-Year Plans? Five Points

Situation: A CEO is considering her exit strategy between five and ten years out. She wants to do what is best both for her, the company and her employees, assuring that both personal and company needs are met and the company is ready for transition. What are your five- and ten-year plans?

Advice from the CEOs:

  • The personal side and the company’s future are closely linked. The solutions and strategy must fit both the CEO’s priorities as well as those of the company. By looking at the CEO’s role, the current and future needs of the company, and any changes that need to be made, the CEO is preparing for an eventual exit.
  • The CEO must decide what lifestyle she wants – both as she prepares for eventual exit and as she prepares the company to continue under new leadership.
    • She must decide what she wants to do with her time in an ideal world. What will make her happy as she prepares for the future?
    • This must be considered both for herself and her business partners. Have conversations to align both business and personal expectations.
    • Conduct a strategic planning retreat on the future of the company as well as the transition of leadership.
    • Have a talk with significant others to align personal expectations.
  • What changes in leadership are necessary to implement the plan? What are the key roles and who will fill them? What is the succession plan for each key role? Are current personnel in place to fill these roles, or is additional hiring and training necessary?
  • Consider an ESOP or a virtual stock program to enhance employee incentives and sense of ownership in the company’s future.
  • Decide what exit means on a personal level.
    • Transitioning from founder to leader gets the CEO more involved in the company.
    • Meditate on priorities and engage in ongoing discussions with key personnel to jointly plan the future.

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How do You Manage a Key Partner Relationship? Five Points

Situation: A company was created from IP originally developed by the founder at a large corporation that was not interested in commercializing it. The new company has now become successful and visible, with the large corporation as an important partner. The CEO wants to make sure that she has all bases covered to secure the future of the new company. How do you manage a key partner relationship?

Advice from the CEOs:

  • There must be clear agreement between the company and partner on ownership of the original IP – a legal document signed by both parties. You can bet that should a conflict arise, the lawyers representing the larger company will argue that their client owns the IP. Once this is secured, focus on developing and licensing software that you clearly own.
  • Develop contingency plans should the key partner decide to exit the business on which your relationship is based. Identify what other companies could replace lost revenue. Start to build these relationships.
  • If the partner helps to fund current development, take the money that you save and develop your own IP, independent of the partner relationship. As an alternative, at least develop critical components of the software as your own IP, without using the partner’s funding.
    • This will free you to develop other customer segments to broaden your business base.
  • What concerns does the partner have? Strategically, large corporations can be uncomfortable if they feel dependent upon a much smaller company. There are two things that you do:
    • Makes a concerted effort to assure that you are essential to the large corporation’s overall business.
    • Make change as painful as possible.
  • How would you get paid if the large partner exited the relationship?
    • Negotiate a contract with a 2-year window to any change that partner wants to make. This will provide you with the room to develop new clientele should the partner exit.
    • Have contingency plans to rebuild capabilities that might be lost and sell it to other clients.
    • Customize your software by client. In the process, you will develop new methods to keep your edge over competitors.
    • Keep critical parts of your processes “manual” so that they are essentially trade secrets and not easily replicable if the partner were to try to take over the IP.

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How Do You Plan for Market Evolution? Three Suggestions

Situation: A tech company competes in a rapidly changing marketplace. The companies they serve constantly evolve their platforms. The company must respond rapidly to assure compatibility with both hardware and software innovations. Users adapt to new platforms at different rates, and the company must address their needs, as well. With so much time spent tending these diverse needs, how do they plan for market evolution?

Advice from the CEOs:

  • In the market you serve you must constantly reinvent yourselves as technology changes. Some platforms make changes on a 5-year cycle, while mobile platforms are currently on a 6-month cycle. This may force choices as to which platforms to serve. You also may want to focus on platforms where what you bring to the table is most useful.
  • You have made the strategic choice to tie the future of your company to a few large companies that dominate their markets. It is imperative that you cultivate close relationships with the technology as well as strategic leadership of those companies. This will give you more advanced insight into their plans, and they may even involve you in discussions about how the market evolves. If so, you will have positioned yourself for that evolution. These relationships may also become your exit strategy.
  • Businesses run on cash, or access to cash. As you cultivate relationships with your key customer companies, look for opportunities to invest in developing markets on a subscription basis which will provide ongoing annuity revenue. Figuring out how to leverage advertising or positioning options into your offering offers an additional revenue stream.

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How Do You Work with a Resistant Employee? Five Points

Situation: A CEO feels overworked, fatigued and ready to retire! The core problem is a long-term employee who is constantly resisting the CEO’s the company’s strategic direction. How can the CEO alleviate this situation? How do you work with a resistant employee?

Advice from the CEOs:

  • If this individual is valuable, try to work with him first.
    • Can you give him a different focus – another role within the company for which his talents are suited and where he will make a significant contribution?
    • For a change like this to be effective it must be offered and accepted with the condition that this becomes his focus and not your strategic leadership of the company.
  • How is it best to have this conversation?
    • First, clearly state the direction of the company.
    • Then ask a question: What do you want to be doing for the next 5 years?
    • You may be surprised by the response to the question. It may lead you to a win-win solution; or it may become clear that this individual needs to be doing something else.
  • Conduct the discussion in two stages – but without a lot of time between these two discussions.
    • “You are valuable but things have to change. I prefer that you remain as part of the team, but on the strategic front you have a choice – are you on board or not?”
    • If after consideration the answer is that he is not on-board then you must let him go.
  • Don’t blindside this person. Think of a Resurrection versus a Come to Jesus Meeting.
  • If it turns out that you must get rid of this person you will wonder: why you didn’t do this 6 months ago.

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