Tag Archives: Day-to-day

How Do You Boost Financial Understanding Within the Team? Five Points

Situation: A CEO is concerned that her team doesn’t appreciate the financial implication of their decisions on the company. This applies to both day-to-day decisions and strategic decisions that team leaders make. What can be done to better connect them and their decisions to the bottom line? How do you boost financial understanding within the team?
Advice from the CEOs:
• Go down the management levels from top to bottom and take the time to explain, in understandable terms, the company’s financial objectives, why they are important, how these are measured, how managers’ day to day decisions impact company performance, and the financial consequences of those decisions.
• Give employees a stake in company performance! For some this may be an ownership stake, for others it could be linking financial performance to their compensation and promotion track.
• The objective is for everyone to view the company as “ours”. This is a critical culture shift from the usual view in terms of “me vs. them”
• Work with the team to establish understandable and trackable formulas for profitable performance.
• Establish meaningful rewards for meeting the company’s plan and financial targets. When employees see a direct link between company financial performance and their paychecks they will pay attention.

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How Do You Use Metrics to Focus Your Team? Three Points

Situation: A CEO wants to improve company performance and is interested in how others use metrics to focus their teams. How do you use metrics to focus your team?

Advice from the CEOs:

  • Engage your employees in the development of metrics.
    • The team members are close to the customer and the company’s key vendors. What makes sense to measure? What metrics are tied both to performance and a healthy or supportive but competitive environment? What would create adverse conflicts within the business or with either customers or vendors?
  • Metrics need to be meaningful and applicable.
    • They have to directly pertain to day-to-day, week-to-week and month-to-month objectives and performance.
  • Factor in personal issues.
    • Everyone doesn’t need to have the same metrics – instead formulate metrics that are pertinent to the different roles and individuals within the company.

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How Do You Preserve Exit Strategy Value as a Minority Owner? Five Points

Situation: A company has been in business for 38 years. The majority owner founded the company. One of two minority owners has obtaining her share position through sweat equity. Another minority owner is on the Board but is not involved in the day-to-day operations. There are buy-sell agreements in place to preserve the interests of the three owners. In the case of an exit how do the minority owners preserve the value of their shares of the company? How do you preserve exit strategy value as a minority owner?

Advice from the CEOs:

  • Details of the current arrangement:
    • All partners are currently capped at 33% ownership.
    • The expectation is that in 10 years the two minority owners will buy out the principal owner and split ownership between themselves.
  • It is far better to negotiate potential ownership position up front – at the time of entry into a business, rather than along the way. As this apparently was not the case the minority owner has two points of leverage:
    • The minority owner has a good relationship with the principal owner, a very important factor, and the owner cares about the minority owner.
    • As the minority owner develops a track record of success, this should be leveraged in addition to the relationship to assure that the interests of the minority owners are preserved.
  • Additional key points of leverage of the minority owner asking the question:
    • The option to walk away as principal manager of the business if not happy with the situation.
    • Upside value of the company.
    • The desire of all owners to maintain their current life-styles, which are dependent on income from the business.
  • Separate management and control of the business entity from day-to-day operations. These are distinct and different areas of focus.
  • Another option to consider is the use of insurance policies to fund a buy-out of the majority owner.

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How Do You Shift from an Operational to a Strategic Focus? Three Points

Situation: A CEO is concerned that her company is too focused on day-to-day operations with much less focus on strategic objectives and initiatives. She estimates that the company is 75% day to day vs. 25% strategic. What is the best way to shift the focus, and over what timeframe? How do you shift from an operational to a strategic focus?

Advice from the CEOs:

  • Look at the current mix between day-to-day and strategic activity, set a timeframe for the shift and set interim objectives.
    • For example, if the current mix is perceived as 75% DTD / 25% Strategic, set monthly objectives to move first to 50% / 50% and eventually 25 DTD / 75% Strategic.
  • While the objective is to move the CEO’s and company’s activity more in the strategic direction, it is necessary to assure that the day-to-day bases are being covered.
    • Select a key member of the team to take on this responsibility and train that individual to assure that the day-to-day operations are covered as the company makes this transition. This will be a bonus for the individual selected and will help to deepen the organizations talent pool.
  • During weekly meetings push the discussion more toward the strategic direction.
    • How can the metrics and operational reports be automated and readily available to team members so that less time is spent on this during weekly meetings? Consider an executive dashboard – developed by the CEO and key staff but maintained and updated by staff.
    • This will help to build confidence that the team is able to monitor the business and should reduce the time spent understanding operations. This will allow the team to focus more on strategic vision and plans.
    • This is also important to the company’s ability to monitor operations in its remote locations as these are set up.

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