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: Future
How Do You Improve Morale and Performance in a Professional Services Company? Four Observations
Situation: The CEO of a professional service company says that his employees have been through a lot of stress over the last few years. He wants to improve company morale to boost performance and is interested in how others have done this. How do you improve morale and performance in a professional services company?
Advice from the CEOs:
- Manage Morale and Employee Feedback – In times of economic change and adjustment, it is important to have a good handle on what employees are thinking about their jobs and the company as a whole. The use of anonymous surveys administered via computer or a neutral 3rd party generally yields more objective and honest feedback than 1-on-1s with the CEO. They offer employees an opportunity to anonymously share their concerns, and to offer constructive feedback on how to boost company performance.
- NOW is the time to act – whether the economy is positioned for a rebound or another dip. Employees have dealt with a lot over the last few years and may be starting to look at opportunities outside the company. Therefore, it is important, right now, to put programs in place to:
- Retain high performing employees, and
- Communicate to employees what the company is doing to position itself for growth so that they see a bright future for both the company and themselves as employees within the company.
- Professional services are people-to-people businesses. Focus on relationship building to increase market presence. Recognize and reward employees for their efforts to build new relationships with clients. Use these as examples to inspire other employees.
- Many more women have entered and become an important component of the workforce. Conduct group meetings to compare the experiences of male and female sales people in relationship selling situations. These will differ between purchase decision makers in different markets and situations where one gender vs. the other predominates. Sharing experiences offers the potential to learn from and to support each other as well as to improve performance. Ask employees how these meetings should be conducted and whether they prefer same or mixed gender meetings.
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How Do You Fund Growth Strategically? Five Approaches
Situation: A CEO is looking at a significant investment in capital equipment. Being considered are not just the cost of the investment, but the opportunity cost of not making the investment and the impact that this will have on the business. An additional consideration is the business mix of the company and whether to shift focus from low volume/high margin to low margin/high volume products. What tools have others used to assess these trade-offs? How do you fund growth strategically?
Advice from the CEOs:
- Review the company’s approach to contracts. It may be desirable to revise the approach in light of the new objective. The switch from low volume/high margin to low margin/high volume products impacts not only production but also marketing, sales, finance and accounting.
- Price some early new contracts below market to finance the additional equipment expenditures, as well as to test market response to the new offering. This will help to identify additional adjustments that are needed for the new approach and offering to succeed.
- Structure the financing options for equipment purchases creatively, for example by allowing for participation by customers and investors.
- Watch changes in working capital at all times and keep it under control. Working capital is a commitment of resources just as is buying equipment or facilities.
- Consider all resource commitments as investments, regardless of the way the accountants deal with them as in expensing vs. capitalizing these investments on the balance sheet. For example, a marketing program is an investment even though it will show up as an operating expense. Make sure that this can be justified in terms of future cash flows expected.
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Should You View a Competitor’s Illegally Published Code on the Internet? Four Points
Situation: A CEO recently learned that the proprietary code for both his company’s and his principal competitor’s products have been published on an international web site. He is conflicted about whether he should look at his competitor’s code, knowing that this would potentially be illegal in the US. Lawyers have offered conflicting and vague advice. Should you view a competitor’s illegally published code on the Internet?
Advice from the CEOs:
- Consider the status of IP protection outside the United States.
- In some countries there do not appear to be clear legal guidelines. One of these countries is likely where this situation originated. The country in question either lacks rules governing IP or the ability to enforce rules that exist.
- The frustrating thing is that the playing field is not level between US and non-US companies. US companies are held to a high ethical standard by US law, whereas competitors in other countries that are not held to the same standard are free to review the illegal source code and learn from it as they can.
- How complicated and expensive would it be to change the code? If this is feasible and not prohibitively expensive this may be the best option. Updated code can be provided to users through a software update.
- Any company has to assess their own ethics as they craft a response to this situation. Make sure that the solution is consistent with the company’s ethical standards.
- Could this have been an act of economic terrorism and/or theft?
- If so, it is possible that the U.S. Justice Department could step in if one can make a case for national or economic security (unfair trade) based on violation of software copyright laws.
- An action like this would, at a minimum, discourage similar future events. It could also help reduce the likelihood that competitors would try to profit from this situation at the company’s expense.
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How Do You Guide a Company Through a Sale? Five Thoughts
Situation: A company was built on capital equipment complemented by annuity sales of supplies used by the equipment. The company is moving toward automation of technology and offshore production of OEM equipment. An OEM partner will take on the equipment side of the business and the company will focus on automated supply solutions with sales direct to the end customer. The OEM partner has approached the company with a purchase offer. How do you guide a company through a sale?
Advice from the CEOs:
- It is important to determine the value proposition, both from the company’s standpoint and the standpoint of the OEM buyer. The company’s objective will be to optimize the intersection of these two views of the value proposition — to its benefit.
- Look at current employees and the technology and determine what to do to preserve their positions and interests. This will become part of the negotiation, but it is essential to have a clear idea of how this meshes with the CEO’s personal priorities.
- Look to outside experts for advice on exit and succession planning.
- Determine the CEO’s vision and path of involvement up to the sale. This involvement is negotiable, but should remain consistent with the CEO’s vision during the negotiation.
- What is the company’s patent position, and the value of the patents in terms of future revenue? IP produces a future revenue stream. Consider the valuation to be in the range of 4 years of IP value.
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How Do You Align Cash Flow with Growth? Eight Points
Situation: A Company is growing faster than its cash flow allows. This concerns the CEO because this growth involves promising technologies and products critical to the company’s future. What can the company do to improve current and new cash availability? How do you align cash flow with growth?
Advice from the CEOs:
- Every growing company has experienced this problem and solved it; so can this company.
- Grow more selectively. Review the available opportunities and select the most promising and profitable for focus. Restrict progress on less promising options for available time.
- Search the Internet for books and resources that on this topic. For example, try “101 Techniques to Manage Cash While you Grow”.
- There are experts, consultants and “Rent-a-CFOs” who specialize in this. Work with trusted contacts and/or search the Internet to identify appropriate resources who are familiar with the company’s industry and market.
- Explain the situation and challenge to your vendors. Ask for opportunities to extend payments and “borrow” from them.
- Explain the situation to customers and ask for better payments terms.
- Borrow from an aggressive bank, factor payables, and/or find additional lending sources that offer attractive payment terms.
- Be aware of and watch out for pitfalls that may cause serious problems. For example, an extended market contraction can leave the company stretched for cash.
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How Do You Assess Team Morale? Five Points
Situation: Given current uncertainty about the future of the economy, a CEO wants to assess team morale. In the past, as the company grew, she received lots of input on how people were feeling about their jobs. As the company has grown, she no longer receives this. What can she do to gather more input without alarming people in the process? How do you assess team morale?
Advice from the CEOs:
- Find opportunities to spend time informally with your employees. Talk to them one-on-one or in small groups in the lunchroom or while getting tea. Organize, or have others organize company events where individuals can be more relaxed and open about their feelings.
- If you have lunch in the lunchroom 3 times a week, and sit with different employees each day. Over the course of a month or a few months you can talk to the majority of them – perhaps several times.
- Ask how they are – family, friends, relations, and their neighborhood. They may be hesitant to talk to the CEO about their jobs, but it is possible to get a sense of how they feel indirectly by asking about family and friends. Listen to what they have to say. Be sympathetic.
- Be open to others. MBWA – Manage By Walking Around.
- Ask supervisors to be your ears. They work with their teams on a daily basis and will have a sense of what is going on and how employees are feeling. They may have good ideas about improvements that the company can make in employee relations.
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How Do You Maintain a Culture Focused on Quality? Five Points
Situation: Quality is a CEO’s #1 objective for his company. As the company has grown and processes have become more complex with more people involved, consistent quality is becoming an issue. The CEO wants to refocus and reestablish a quality culture to support future growth. What have others done to increase the quality of their product or service? How do you maintain a culture focused on quality?
Advice from the CEOs:
- Trust is a company’s most important commodity. This trumps financial exposure. In case described, the client trusts the company to produce and deliver a quality service upon which they can rely.
- Go all of the way back into system design – or how any particular product system is set up.
- Assemble a diverse group to review both the company’s deliverables and the system inputs.
- Brainstorm everything that can break.
- Prioritize the list based on potential exposure to the company.
- Do a deep-dive analysis of the top 5 or 10 exposure areas.
- Reprioritize after the deep dive has been completed.
- Fix all issues identified in order of exposure.
- Repeat the exercise periodically to assure that quality is maintained.
- Empower and reward anyone who develops improvements in quality control.
- Shield the company from any exposure over which it has no control. This can be accomplished through language in the company’s service agreements, and through language covering service deliverables.
- Once the company has shielded itself from an exposure, set up flags in the monitoring systems that will alert the company of events or situations that will impact clients. This allows the company to inform clients of situations that may impact them without making recommendations as to how the client should handle the situation.
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How Do You Reduce Interruptions in the Office? Three Points
Situation: A CEO of a small company finds it difficult to focus of company strategy and direction because on continuous interruptions to handle customer and company issues. Frequent phone calls and employees coming in to ask for guidance or to talk about issues make it difficult to focus on plans for the future. How do you reduce interruptions in the office?
Advice from the CEOs:
- The company has grown to the point that it is time to build a management structure to facilitate decision-making. It’s time to delegate.
- Identify promising individuals within the company who have the capacity to take on management responsibility. Provide them with the training to assume managerial roles and to handle direct reports.
- If the talent is lacking in some areas, hire managers to oversee these areas.
- The phone is the #1 problem – interruptions to deal with customer issues.
- Hire an assistant to manage incoming calls and to transfer these calls to the appropriate department.
- Learn to say no. For example, if an opportunity requires the CEO to be off-site to evaluate and estimate a project, that individual could not answer the phone in the office. Similarly, it is necessary to carve out concentrated time for strategic and critical tasks when in the office.
- Explain to the team the challenge, and the benefits of spending uninterrupted time each day working on strategic direction. These benefits include additional growth and opportunity for both the company and employees.
- Establish an official time – during regular hours – that the CEO is not available to respond to calls or other immediate needs. During these times, have an assistant direct these requests to the appropriate department or schedule time later in the day to handle an issue.
- Any executive in a Fortune 500 company plans time for planning and other essential work when they cannot be interrupted. Working without interruptions is essential to efficient, high-quality work.
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How Do You Sell an Onsite Business? Five Perspectives
Situation: A company has several locations for its operations. One is onsite at one of their principal customers where they perform services for the customer. The rest of the business is pursuing a different direction, so the CEO wants to sell the onsite business and focus all efforts on the main business. How do you sell an onsite business?
Advice from the CEOs:
- Do onsite business (OS) personnel identify themselves as part of the company or the customer’s company?
- The older personnel themselves as part of the parent company; the new engineers see themselves as tied to the customer which is far larger and enjoys broad and positive brand recognition.
- Now may be the time to sell from a price perspective. Companies are hungry for revenue sources and experienced personnel. The price that they would pay for the OS business is small change for them.
- The decision comes down to price – can the company get the right price at the right terms?
- Consider this alternative – break the OS off into an independent entity. Make it a separate company with own managers.
- This allows the sale of the OS to be set up with its own operating rules and incentives, independent of the company’s other operations.
- This move queues the company up for whatever is possible – ongoing operation or possible sale to a buyer. It also simplifies the sale scenario as OS would be a stand-alone unit, with its own personnel and management structure. There may be some shared infrastructure services with the company’s other locations, but these are services that would be taken on by the buyer using their own systems.
- An option is to give stock to the managers of the OS – a piece of the pie to encourage them to stay on.
- Given the company’s strategy and direction, investing additional funds in the OS doesn’t make sense. Selling and keeping the money makes more sense if the company is ready for this and feels that there is little or only a limited future for the OS business.
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