Tag Archives: Performance

What are Your Plans for 2011 Bonuses? Seven Thoughts

Situation: A company has historically given Christmas bonuses at the rate of 10-20% of salary in a good year. The CEO is concerned that employees may stay until their bonus is received, and then leave for another job. What are your plans for 2011 bonuses?

Advice from the CEOs:

  • First, what is your objective in granting bonuses? Which among the following are you trying to achieve?
    • Showing appreciation.
    • Acknowledgement of effort.
    • Effort above and beyond the norm.
    • Once you determine your goal, design a structure that will effect this goal.
  • What practices are typical for your industry – your competitors, vendors and clients?
    • Background research on industry practices provides a basis for your own practice. You can then evaluate whether varying from industry practice can give you an advantage.
  • Company performance should be a factor in determining bonus payment. So should performance against individual employee goals and objectives.
  • How much discretion should be given to managers for setting bonuses for their direct reports?
    • Talk to your managers and get their input on how they would handle bonus evaluation.
    • A number of companies give managers a pool guideline, and have them produce a spreadsheet of recommended bonus distribution for executive review and approval.
    • Individuals should not decide their own bonuses. Bonuses for all employees/managers should be decided by their direct supervisors.
  • Should the CEO be concerned if an employee takes their bonus and then leaves?
    • If an employee has earned their bonus, then you are granting them an earned reward. Their departure likely has much less to do with whether or not they receive a bonus than other factors.
    • Human resource research consistently demonstrates that compensation is at the bottom of the ladder of reasons that workers remain or leave – particularly workers who exercise critical thinking and judgment in their jobs.

Key Words: Strategy, Team, Bonus, Annual, Christmas, Incentive, Objective, Industry, Reward, Performance, Measurement, Discretionary

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What are Best Practices for Effective Delegation? Three Thoughts

Situation: The CEO of a small company finds that whether he gives broad direction to employees or very specific instruction he gets the same result: they don’t seem to understand what he wants. He feels that they don’t have a sense of buy-in or urgency. What are best practices for effective delegation to improve results?

Advice from the CEOs:

  • You recently fired an employee for inconsistent performance but didn’t tell your staff. When you return to the office this afternoon, get the employees together and tell why the individual was fired. Let them know that this is part of a broader pattern that you see within the company and that if you see other cases of individuals not following through on their assigned responsibilities you will have to take additional action. Unless your employees understand that nonperformance has consequences, there will be no change.
  • In your operations, set subassembly goals and intermediate milestones coupled. Create and post a set of charts in the operations room so that employees have a regular visual reminder of how they are doing. Bring these charts to employee meetings and discuss how the company is doing. If deadlines aren’t being met, ask for input on how to improve performance. Celebrate successes with recognition for individuals or groups who demonstrate the ability to meet objectives.
  • Hire an operations manager with experience working with teams the size of yours. You want an individual who excels at motivating and getting results from people, and who has supervisory versus managerial experience. Think platoon leader – a person who excels at effectively running small teams.

Key Words: Delegation, Direction, Buy-in, Urgency, Performance, Consistent, Consequences, Vision, Priorities, Goals, Milestones, Chart, Review, Employee Input, Improvement, Celebration, Manager, Motivation, Results

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How Do You Fund Growth? Five Points of Focus

Interview with Hannah Kain, President & CEO, ALOM

Situation: While funding from banks and institutional sources has been challenging in recent years, growing companies need to fund their growth. How have you funded your company’s growth?

Advice from Hannah Kain:

  • We focus on frugality and prevent wWhile funding from banks and institutional sources has been challenging in recent years, growing companies need to fund their growth. How have you funded your company’s growthasteful spending. However we invest in tools that enable staff to purchase wisely and stay ahead of customer demands. We also collaborate with vendors to manage costs.
  • As a result, the last two years have not forced us to change how we fund growth. We are getting large contracts and work globally to solve customers’ logistics challenges. Our challenge has been moving from centralized distribution to strategically placed centers around the globe, increasing inventory costs and cash needs.
  • Where we have changed is in how we negotiate terms and credit with our customers. We manage vendor accounts payable to maximize cash flow while treating them as business partners. This requires close vendor communications to assure that everyone’s needs are met.
  • We have been cautious with our banks and seldom dip into credit lines. Managing vendor payments has been more effective.
  • Essential to vendor communications are open sharing of information and goal setting. We work to create a team atmosphere. This is similar to what we do in our offices. In our experience, instilling the right culture is far more powerful than financial incentives.
    • We share information through all-hands company meetings and regular updates so that everyone gets the full picture.
    • We also share information with our vendors so that each side is aware of the other’s needs.
    • We create an annual one-page business plan for the company, and parallel plans down to the supervisor level. Performance against plans is updated regularly to assure that we remain on top of situations.
  • We focus training on new tools. Our staff gets technology they need to be successful.
    • We generously provide technology to our employees, provided that they give a logical business rationale. This includes home computers, iPhones or Applets to help them do their jobs.
    • Similarly, when a vendor or customer asks for a service improvement or a new service with a good business rationale, we invest to support this.
  • These methods have allowed us to finance most of our growth internally.

You can contact Hannah Kain at [email protected]

Key Words: Funding, Bank, Institutional, Growth, Spending, Tools, Empower, Customer, Demand, Costs, Vendor, Cash, Needs, Terms, Credit, AP, Partner, Payment, Information, Sharing, Goal, Culture, Performance, Technology, Service

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How Do You Take a Guilt-Free Vacation? Seven Suggestions

Situation: A CEO has not taken a vacation for years due to focus on the company. He knows that he needs a vacation and wants to take one. However, he feels guilty taking time off. How do you take a guilt-free vacation?

Advice from the CEOs:

  • For your general health, you need to take time off to refresh and recharge!
  • Think of the vacation as your CEO Test – have you created a team that can perform in your absence?
    • You may be amazed at the initiative that some will take given the freedom to do so. As a corollary, initiative is accompanied by risk and your employees may make some bad choices. Be patient. Congratulate them for taking initiative and coach to improve choices.
    • Stay out of touch. Don’t call in daily and see what happens. If and when you do call in, don’t solve challenges that come up – let your people solve the challenges. Keep a few notes. On your return see where you need to adjust procedures to allow employees to make independent decisions.
    • More than one CEO has found that taking 3-4 week vacations each year has had very positive results. The company actually performs more efficiently and with more energy upon their return than it did when they left!
  • To ensure that you take a vacation, schedule it in advance. Let everyone know that you are going to take it and Just Do It!
  • If you can’t take the time to plan a vacation, have your spouse or a loved one plan the vacation.
  • If you need to feel in touch during your vacation, take your laptop. You may never even use it, but it will be there as a security blanket. Once you are on vacation, let family and personal priorities rightly take precedence over your need to stay in touch.

Key Words: Vacation, Company, Focus, Guilt, Health, Refresh, Recharge, Initiative, Patience, Coach, Problems, Valuation, Performance, Planning, Priorities, Family, Stress, Support

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How Do You Fire a Founder? Three Suggestions

Situation: A founder of a company also heads business development. This person had no prior experience in business development, and no other skills to offer the business. Over the last two years he has generated only a fraction of his salary in new or additional business. The CEO has concluded that it is time to hire a business development professional; however, the Board is reluctant to act. What are the steps that you would take to let a founder go?

Advice from the CEOs:

  • Because the individual in question is an owner, the situation is delicate. Staff relationships are involved as well as morale. Therefore, it is essential that you create a convincing case for replacing the individual and show that this is the best for the business. Don’t rush the process. However, once you’ve built a solid case for what needs to be done, act expeditiously.
  • Start by evaluating and documenting what the individual is doing to develop new business.
    • Count customer connects per day. Set a baseline expectation and measure against this.
    • Look at the pipeline. Historically what does your new business funnel look like – contacts, presentations, evaluations, closes. How does this individual’s pipeline stack up?
    • What are his business advancement and close ratios? How do these compare with industry standards?
  • For the individual: Demonstrate that his performance is penalizing his own return as an owner. Create a spreadsheet that shows:
    • The current situation, and his return as a shareholder from current results, versus
    • Hiring two effective business development people, and how this could change his return.
    • Show the individual a graceful way out – one that works for him.
  • For the Board: if the current direction is negative, create a model that shows your current direction and the break even implications. Present this analysis to the Board to show that the company needs a change.

Key Words: Business Development, Founder, Principal, Experience, Performance, Replace, Document, Pipeline, Return, Model, Trend

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How Does an Entrepreneur Evolve from Doer to Leader? Four Suggestions

Situation: A company has grown largely through the determination and energy of the founding CEO who is still the principal business development resource. The CEO wants to move from day-to-day focus to a leadership role, planning for the future. How have you evolved from principal doer to leader?

Advice from the CEOs:

  • Start by developing and managing an organizational chart for the business.
    • Create the organizational chart initially by role and responsibility.
    • Match existing people to the roles. Individuals may fill more than one role, but be sure that the individuals are suited to the roles to which they are assigned.
  • Give ownership of areas of responsibility to others.
    • Make it clear for each area of responsibility that the individual assigned is now in charge.
    • Match projects or assignments with individuals’ abilities and available time.
    • Establish quarterly or annual performance objectives WITH as opposed to FOR each individual – objectives that support company objectives.
    • See that people are rewarded for their results – both soft and monetary rewards – as appropriate to the responsibility held by each.
  • While you continue as the lead of business development, hand off new clients to others as soon as you get them on-board. Let others take on the customer nurturing and maintenance roles. Establish a plan to replace yourself in this role.
  • The EMyth Revisited by Michael Gerber provides a soup to nuts recipe for moving from doer to leader of a company. Everything starts with your organizational chart.

Key Words: Leader, Doer, Role, Focus, Organizational Chart, Org Chart, People, Match, Ownership, Responsibility, Performance, Objectives, Reward, Results, EMyth, Gerber

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How do you Manage a Multi-generational Staff? Nine Suggestions

Situation:  Employee pools are now multi-generational, with Baby Boomers, Gen X, Gen Y and Echo-Boomers. Each group may have different expectations for work environments and careers. How do you connect with different generations? How have you set up mentoring programs?

Advice from the CEOs:

  • People may be of different generations, but they are still individuals. Ask what drives or motivates them, and what they would consider an ideal reward for hard work.
  • Some companies offer a sabbatical after several years of employment – the opportunity to work on hobbies, go on an adventure or use the time as they wish. This attracts employees and encourages retention.
  • Some employees don’t seek promotion but are good contributors. They may prefer an extra week of vacation over a promotion.
  • One company gives employees budgets to spruce up their work space – allowing them some control over their work environment.
  • What are good tips on working with younger employees?
    • Coach them to communicate thoughtfully and carefully – instead of shooting from the hip without considering impact or consequences. Younger managers may find that they need more patience communicating expectations to older staff.
    • Establish individualized performance metrics and enable them to monitor progress on their computers.
    • Bring them into the process; don’t tell them to wait. Let them start as an observer. Listen when they have questions or suggestions. Ask their opinion.
    • Break down job tiers into additional levels with more achievement incentives. Allow them to reset expectations frequently.

Key Words: Multi-generational, Boomer, Gen X, Gen Y, Echo-Boomer, Expectations, Environment, Career, Mentor, Motivation, Reward, Sabbatical, Incentive, Communication, Performance, Expectations                                   [like]

What are the Strategic Components of a Sales Model?

Interview with Sanjay Sathe, President & CEO, RiseSmart.com

Situation: RiseSmart is in the process of building an inside sales program to complement their outside sales capabilities. What are the most important strategic components of an effective sales model?

Advice:

  • In a marketing and sales system, marketing is the precursor to everything. If you can’t effectively deliver your message to your audience, you have no lead generation machine and sales must resort to cold calls.
    • In an online world, one of the key components of a marketing system is the email campaign, combined with tools for rapid and responsive follow-up.
  • In RiseSmart’s system, the inside sales team is primarily responsible for following up on leads.  The team’s role is:
    • To qualify the prospect responding to our marketing efforts. Is this person the right buyer for their company? If not, who is?
    • Does the company have a budget for our services? If not, when will they?
    • Is this the right time? Do they have a current contract in place? Are they actively looking?
  • The most critical aspect of the inside sales rep’s role is to be an effective filter in collecting and passing data to the field sales force.
  • Many inside sales reps fail because their performance is measured on the number of calls made, not the quality of the calls or information gathered.
  • Our incentives for inside sales are based on the quality of data gathered and on the success of field sales in closing the leads they receive.
  • The effectiveness of outside sales really comes down to choosing the right people.
    • The 80/20 rule applies here.  One out of five field sales reps hired is truly successful, one is marginal, and three don’t make it.
    • We hire based on experience selling to our target customer groups, subjective elements, and careful reference checks.
  • As CEO, I consider hiring good people the most important thing I do.

You can contact Sanjay Sathe at [email protected]

Key Words: Inside Sales, Field Sales, Qualify, Filter, Performance, Measurement, Incentive, Selection  [like]

Working with an Off-Shore Business Partner – Six Recommendations

Situation:  The Company has an off-shore business partner. Primary concerns involve team performance, process documentation and anticipating sales/marketing problems before they become issues. What have you found effective to monitor these areas?

Advice from the CEOs:

  • At the executive level, keep things simple – identifying the major goals and pieces of projects that are the make-break points.
  • Simplify the high level summary and make sure that all of the supporting activity is aligned with and supports key project or company goals. Some members manage projects with weekly or bi-weekly meetings.
  • The benefit of keeping it simple in your own mind is that you can always return to this simplicity when dealing with detail level queries from the partner. It keeps you grounded and on track.
  • One company uses project timelines that clearly show each of the teams where they fit into the project and how important it is for them to complete their portion of the project on time and to spec. Keep everything simple and direct.
  • Sales tracking and management is different from development projects. Drive monitoring off forecasts, pipeline, and achievement of metrics that track with the forecasts.
  • In working with your off-shore partner, organize your presentations so that the key points of emphasis are readily visible. Have back-up slides to show detail aspects of particular projects or initiatives, and be prepared to cover the details if needed. This will help to build confidence between you and your business partner.

Key Words: International, Partner, Performance, Process Documentation, Sales, Marketing, Alignment, Project Management, Communications                 [like]

Planning Compassionately for Tragedy at Work – Seven Suggestions

Situation: A long-standing employee committed suicide away from work. Relatives of this person work in the company. How can the CEO assure that assistance is available to help employees resolve their emotional shock?

Advice from the CEOs:

  • First, do not assume that this is a passing situation and that all will recover without assistance. One never knows what may have passed between employees in the days or hours prior to the event or what lingering feelings of guilt or involvement may remain and impact future performance or development.
  • Initiate personal contact with those employees closest to the individual to console them.
  • Search for local resources on death and dying that provide trained counselors to work with employees. The service is generally free of charge, but a donation is appropriate.
  • Be proactive – create a remembrance fund to allow employees to contribute as they wish. This can assist them in their personal bereavement process.
  • Establish a company bereavement policy – for example 3 days time off with pay with guidelines as to situations that trigger this benefit – so that they can deal with their loss.
  • One company has an Employee Assistance Program. They pay about $5000/year to access services for employees. This has been a very good program for the company.
  • There will inevitably be future situations that arise through accident, illness or other causes that will directly impact employees. It is best to be prepared with a plan in case any of these occur.

Key Words: Performance, Bereavement, Policy, Planning  [like]