Situation: The CEO is moving a key employee from head of engineering to a more customer development focus. To support this, she will have to bring in or promote another employee to fill the position of leader/supervisor/manager of the engineering group. The CEO seeks advice on the best way to approach finding a replacement for this key job. How do you replace a key position?
Advice from the CEOs:
• First, it is necessary to develop a timeline for finding and transitioning the replacement. Realistically, count on 6 months to find a replacement and transition the responsibilities to a new person.
• Keep in mind that anybody you find or promote will be different from the individual who currently occupies the position, and will not handle their new responsibilities the same way as the current individual. Their motivation and their approach to their new responsibilities will be different, at least at the outset, and they will not handle their responsibilities the same way that the current individual does.
• Seek an individual, either currently within the company or an outside hire with strengths that, over time, will add significant value to the organization. Prepare for this by brainstorming and developing a profile of the ideal candidate.
• If you have qualified candidates, the ideal person will come from within the organization. This has the added advantage of demonstrating to other employees that they, also, may become candidates for future positions to grow both their skills and income.
Tag Archives: Different
How Do You Downsize Intelligently? Three Perspectives
Situation: A company has run into a rough patch and needs to cut costs. The CEO is considering a number of alternatives, but wants to hear input from other CEOs on how they have faced this challenge. How do you downsize intelligently?
Advice from the CEOs:
- The key to intelligent downsizing is to take a different perspective. Look at the needs of the business in terms of a 3-5 year plan, not just at what is needed to do to survive today.
- What key talent will be needed 3 years out? What key roles will need to be filled? Who is on-board today who will be needed in 3 years? How does this affect the decision on where to trim? Are there other options to simply laying off staff?
- Answering these questions helps to consider options with a rational long-term view.
- Establish a new paradigm. What do you want the business to become?
- Is it the same as, complimentary to, or completely different from the current business model? Once the paradigm is developed plan personnel needs in line with this paradigm.
- Look at all resources proactively.
- For example, if you are considering moving your offices to a smaller space, look at your vision for the company 3 years out.
- It may be more sensible to stay where you are and negotiate a new lease with your landlord that is more favorable short-term than paying for multiple moves.
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How Do You Improve Infrastructure to Manage Cash Flow? Seven Points
Situation: A CEO wants to improve management of his company’s cash flow. While this is particularly important during times of tight cash and rapidly changing market conditions, the CEO wants to know what others focus on when monitoring cash flow in their companies. How do you improve infrastructure to manage cash flow?
Advice from the CEOs:
- Track project mix and margin contribution both in part and in total. To accomplish this estimate relative contribution margins of different project types.
- Adjust sales targets and commissions to emphasize projects with higher contribution.
- Segment the company’s business model by margins, overhead, and cash flow. Set targets and drive focus on profit per “X” (selecting the proper indicators).
- Analyze contribution per direct cost factor, for example per engineer on payroll.
- Develop detailed cash budgets on a monthly or even weekly basis when times are uncertain. For example, inflows and outflows by major category tracking actual cash receipt or disbursement.
- Start with broad projections, and refine the analysis over time as the company better understands the factors that drive cash flow and profitability.
- As understanding improves, formulate value propositions for salespeople which reflect the most advantageous cash flow contributors of the business.
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How Do You Generate Buy-in as You Change the Business Model? Six Points
Situation: A company is changing its business model from fee for service, driven by individual contributors, to a contracted project model with teams delivering service. The driver for the new model is to deliver full solutions to meet client needs. The CEO is struggling to obtain buy-in to the new model from all stakeholders – employees, managers and shareholders. How do you generate buy-in as you change the business model?
Advice from the CEOs:
- The objective is to obtain agreement on vision and direction as the company adapts over a 3-5 year horizon.
- Benefits include: product vs. service sales, a growing annuity revenue base, increased stability for the company and improved career paths for all members of the team.
- Risks include: massive change, fear accompanying any change, too rapid growth, and the changes to company culture that will accompany this
- Acknowledge and celebrate what the company and team have done well and the success that this has generated. In addition, share the lessons learned from experience to date, as well as the new opportunities that these lessons have created and the reasons to change to take advantage of these opportunities.
- Create an exciting vision that expresses the new opportunities. Consider an off-site “WOW” event to announce your vision.
- Focus on what’s in it for them as stakeholders. Address how they can participate in the change.
- Where are the opportunities? Do they include investment and ownership?
- Focus on the next major steps and the doable objectives associated with each step.
- The new direction will require a different type of manager – with skills and experience managing teams. This is a growth opportunity for all involved. Provide training to assist the transition.
- Employee and manager skill sets (including the CEO’s) will need to adapt – identify what skills will be needed and how they can be found or developed.
- The past culture has been highly entrepreneurial with little middle management. The new model may be different from the current model, but it can still be entrepreneurial in a different way.
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Should You Combine Sales and Marketing? Five Points
Situation: A company is considering combining its marketing and sales teams. The company’s overall objective is to expand their marketing presence and to bring on new customers. Some team members believe that these two functions are distinct, while others believe that they should work in tandem or even be combined. What do others think about these options? Should you combine sales and marketing?
Advice from the CEOs:
- The skill sets required to create and operate an effective marketing effort are different from those required to create and operate an effective sales organization.
- Sales and Marketing are two different sides of the same coin – they complement each other but are distinct.
- Direction begins with the CEO; however it is imperative to make certain that everyone in the organization buys into both this direction and the organization to achieve it.
- Some feel that it is not a good idea to have one person covering the role of Sales and Marketing. Sales is tactical while Marketing is strategic. It is Sales’ job to implement the Marketing Strategy and report back what is working and what is not. Marketing’s job is to take the feedback from Sales into account and revise the strategy accordingly.
- Challenges which can create a constant battle between marketing and sales are due to:
- Lack of common direction, and
- Poor or inconsistent communication between Sales and customer on one side and Sales and Marketing on the other.
- These challenges need to be resolved to have an effective Sales + Marketing organization.
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How Do You Build a New Channel? Four Cases
Situation: A company wants to increase business by building a new channel. The new business is different from the company’s base business, but won’t change the company’s focus on its base business. What lessons have been learned by other CEOs who have accomplished this? How do you build a new channel?
Advice from the CEOs:
- One company created a new channel without changing the base business.
- They responded slowly to the opportunity before deciding to change.
- They needed to change infrastructure by adding more people.
- They also needed to redefine the offering to meet the needs of new clients.
- This involved adding additional data which had been accessible previously but hadn’t been presented.
- At first the hand off wasn’t smooth. Hiccups that could have been foreseen with more planning were extra data fields and rough hand-offs. Future new releases will focus on improved process review and more challenging of assumptions, and more patience in the scoping stage.
- The second company created a new branch with different products and operations, but maintained one financial and inventory management system.
- The initial produce was sold and installed, utilizing union labor. The new product is sold wholesale business to businesses and is non-union.
- After struggling with attempts to house both operations under one roof the new operation was moved to a separate location.
- This enabled company to set up separate operations and to fully understand the financials of both operations. It also makes it easier to assess the viability of each business and to implement changes in one without disrupting the other.
- The third company created a new offering to sell to the same customer base, with no change in the back-end systems.
- The new business created an insurance model for the company’s services as an alternative to the original break-fix model.
- The two systems use a common sales team, network engineers, and back-end system. Customers choose either insurance or break-fix.
- The challenge was that the two models need completely different monitoring and incentive systems for the engineers. This took time for development and training.
- The fourth company created two production operations: turnkey and component.
- This called for different sales and contracting processes and separate production areas on the plant floor, with clear delineation but using the same back end, financial, and engineering support systems.
- The component process is short-run, high value, high margin; the turnkey is high volume runs, lower value, low margin.
- The challenge has been in setting up a new set of contract agreements and monitoring systems to monitor the financial success of the turnkey operation.
- What is the common thread?
- Put sufficient time into planning and evaluating options and challenges so that there is a solid understanding of the new channel before starting.
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How Do You Encourage Others to Take the Initiative? Five Points
Situation: A CEO has a challenge getting employees to take initiative in areas that she wants to delegate. Part of the challenge is that she needs to “let go” and tends to do too much checking in. She is concerned that this results in employees’ hesitation to demonstrate the initiative that she desires. How do you encourage others to take the initiative?
Advice from the CEOs:
- Continual checking-in alters the “urgency.” It feels more like a lack of confidence in the individual’s ability to complete the task to specifications and on schedule.
- Work to establish more trust. Do this incrementally – start with less urgent / important responsibilities or tasks and move toward more urgent / important ones.
- Determine boundaries and clearly establish deliverables.
- Write the objective down ahead of time – as well as how much information to give them.
- Ask yourself: Is this providing “just enough” information to guide them without micromanaging or over specifying the solution?
- Is an objective being set, or are you trying to teach a methodology to reach the objective?
- Unless the methodology is critical, focus on the objective and let them determine the methodology.
- Once the objective is completed review and learn from them how it worked. Ask how they prefer to complete the objective so that you can provide the appropriate level of guidance in the future.
- Delegating takes more time than doing it yourself.
- Employees will complete a task differently than you will. As long as an acceptable result is achieved, be tolerant that the method or tone is different. They may be coming up with a better way!
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How Do You Balance Scalable Growth with Quality Service? Five Thoughts
Situation: A CEO wants to determine whether and to what extent his company’s service model is scalable. He wants to determine whether it is possible to add additional clients by adjusting the ratio of clients to staff. The tricky part is determining whether the company can increase the client to staff ratio while minimizing the impact on client service. This is critical because client service is the company’s “secret sauce”. How do you balance scalable growth with quality service?
- Start by profiling the current client base from high to low maintenance. For example, set up a grid with axes of sophistication and frequency of desired contact as follows:
- A – unsophisticated and desire frequent contact
- B – sophisticated and desire frequent contact
- C – unsophisticated and desire infrequent contact
- D – sophisticated and desire infrequent contact
- Analyze the client base and assign each current or new client to category A, B, C or D.
- Distribute client relationships so that no member of the team has too many A’s. This may make it possible to assign more clients to each staff member.
- Also consider matching staff to client type. Some staff may be better working with unsophisticated clients, while others are more adept with sophisticated clients.
- As this model is developed and built, try different alternatives for matching staff to clients. This can help to identify additional alternatives for achieving the company’s objective.
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How Do You Handle a Difficult Employee? Five Observations
Situation: A CEO is pondering how to handle a difficult employee. This individual has brought in good business but is never satisfied with his level of pay – though he is highly paid. While he is good at bringing in new accounts, he doesn’t make the effort to grow them over time. How do you handle a difficult employee?
Advice from the CEOs:
- It is necessary to establish a mutual understanding with the employee that no matter the level of pay, the employee will think that it is too little. This reframes the discussion because it establishes that there is no win by paying the individual more. The unspoken part is “why bother?”
- Given this reality, the maximum level of pay for the employee is $X.
- Note that there is no negotiating power until once this is said it is acceptable to let the employee walk away.
- The CEO feels indebted to this individual because he has brought the company many new accounts. He is a good hunter. But the task now is not to hunt but to cultivate and grow the opportunities that that the company has in hand.
- The issue is that this individual doesn’t build relationships that will grow business in his accounts.
- He has done well for the company. The company has rewarded him handsomely. However, now a different talent is needed.
- What’s the best alternative for action, and how is this communicated to the staff?
- Do not lay this individual off – terminate him for cause.
- This individual has repeatedly been asked to act as a team member, but he has steadfastly refused to do this.
- His attitude, while good for his own efforts, is bad for the company and is clearly counter to the desired culture.
- He is better off in a situation that aligns with his talents and style.
- Terminating this individual for cause sends a critical message to the rest of the company – culture is important. You are determined to establish a healthy culture even it if means eliminating your best performer.
- To those who ask, answer that this individual was treated fairly. Clear expectations were established, and ample opportunity was given to be a part of the culture that you are establishing.
- Ultimately, the culture that you seek to establish – one that is good for the whole team, not just for star performers – was not right for this individual.
- Use this situation to relaunch a campaign to build a company culture of collaboration and best practice development between teams. With the elimination of this individual there may be new enthusiasm around this initiative.
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How Do You Hire and Retain the Right People? Four Suggestions
Situation: A CEO is concerned about employee turnover, particularly among promising younger employees. He doesn’t know whether these employees are different from past employees, or whether it is a function of the current economy and recovery. They look like a good fit during interviews and appear to fit well with the company when they come onboard. Yet, after a few weeks or months they leave. How do you hire and retain the right people?
Advice from the CEOs:
- Ask other companies in your area whether they are experiencing the same phenomena, and what they are doing about this. Are their experiences similar? Why do they think this is happening? Have they developed successful strategies to stem the resignations?
- Conduct follow-up interviews 3 months after the employees leave. Use an independent party – or at least a neutral party within the company – to conduct the post-departure interview. While there may be a variety of reasons why individuals leave, are there similar themes in their motivations?
- Are employees being treated similarly to the way that Margery Mayer and others have discussed treating customers – are they being heard?
- Ask and listen to their true motivations – perhaps they value the opportunity to take an extended vacation for a life experience more than they value a raise. Intel and other companies offer their employees an extended sabbatical after a certain number of years of service. The employee does with this time what he or she wants.
- Host informal beer and pizza sessions with employee groups. Keep the mood relaxed. Let them open up and complain if they so wish. It’s far better to let them air these feelings with the CEO than as buzz within the office – particularly if the see that they are being heard.
- It is important to follow up and respond to what is heard. Employees appreciate the opportunity to be open and honest, but only if they sense that their input is producing the changes that they desire.
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