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: Position
How Do You Redefine the Top Executive’s Role in the Business? Four Points
Situation: The President of a family-owned business that has been in operation for over 30 years wishes to change her role by increasing delegation of responsibility and accountability within the business in preparation for her eventual retirement. Other family members in the business are happy with their current responsibilities and are resistant to taking on more responsibility. What advice does the group have for this member?
Advice from the CEOs:
• Given that you are preparing for retirement, it is important to let others know about your plans and your desire to increasingly hand off your responsibilities to others. Ideally, one or more of the others will express a desire to take on more leadership, particularly if it includes a boost in pay.
• It is important to clarify responsibilities and prioritize which ones you wish to hand off. Once this is done build and execute a hand-off plan.
• Transition current managers who are misplaced in their position to other roles. Work with them to identify alternate roles where their talents can better benefit the company. They may be aware of their current discomfort and welcome the opportunity to take on a different role more suited to their abilities.
• Focus on removing barriers to delegation that may be in place. For example, bring others into the discussion and review the projects that they are overseeing. Identify the challenges underlying those projects and ask for their suggestions on how to address these. Don’t provide the answers. Ask questions and push them to develop appropriate solutions.
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How Do You Find and Keep Good People? Seven Suggestions
Situation: A company needs to both find and retain good people to continue its profitable growth. What experience can the group share to assist the CEO in his efforts to address these needs? How do you find and keep good people?
Advice from the CEOs:
• Before starting the recruitment process create specific position profiles including desired skill sets, qualifications, and functional responsibilities.
• Set up a recruiting team to develop current and future employees and candidates. Offer scholarships to new and existing associates to continue their education.
• Once a new person is hired, create a first 90 day skill set plan. Include challenges that they have to pass, as well as scheduled training and support.
• The first 90 days is critical. If someone slips up during the first 90 days it is taken very seriously as a sign or more to come.
• Profile and hire attitudes as well as focusing on skill sets. Lots of people have skills. It is those employees who possess both the right attitude and right skills who make great hires and who will stay with the company.
• Share the company’s culture and goals. Let candidates and new hires know how they fit into both.
• To boost retention, focus on charities that employees care about. Encourage employees to participate in worthy causes and give them time to support these charities.
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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 Grow Knowledge Workers into Servant Leaders? Three Methods
Situation: A company’s staff is made up primarily of knowledge workers. These are highly skilled individuals who excel in their roles. The CEO wishes to shift their focus to servant leadership – where the focus is the growth and development of the company. How do you grow knowledge workers into servant leaders?
Advice from the CEOs:
- One option is to create a different set of incentives. Offering key managers the option to invest in and hold shares in the company will change their perspective. This, in turn, can change their behavior because servant leadership will improve company performance and the value of their shares.
- Another option, used by Accenture and many Fortune 500s, is to hire a lot of the best and brightest individuals that they can find out of college and see who rises to the top.
- The ratio in large firms is generally 15 hires to produce 1 high performer. Another CEO at the table is now shifting to this model at his company.
- Create an entry level position for recent graduates that will allow for this sifting without disrupting the company’s culture.
- Speed identification and retention of the best talent through annual evaluations of the company’s talent. This includes ratings by employees’ supervisors of both how the individual is doing and their ultimate potential within the company.
- Be aware of the downsides to this model. One is that the two groups that tend to leave of their own accord are the best and the worst employees.
- A third option is to create two career tracks within the Company.
- One track is upwardly mobile. This is the track that identifies, develops and grooms future servant leaders.
- The other track is a specialty track, which can produce servant leaders along a different dimension – breadth of experience and expertise in key skills of value to the firm.
- This second track also allows for growth, characterized by levels of title, salary and recognition that reward the acquisition and perfection of skills in key disciplines.
- Several “kinder, gentler” environments such as 3M have used parallel tracks with great success.
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What’s Your Exit Strategy – Both Timing and Price? Four Considerations
Situation: A CEO is considering an exit strategy for the company that she founded. The company has been very successful, and the CEO wants to optimize the value of the company on sale. She seeks advice on how to both maximize the company’s value and how to best prepare for a sale. What’s your exit strategy – both timing and price?
Advice from the CEOs:
- Value is tied to revenue and profit growth. Revenue growth is based on expansion of the customer base and reshaping the product offering to optimize its market appeal.
- Consider a usage-based price for the offering. Accompany this with a range of usage offerings based on current customer use patterns.
- Consider tiered pricing or pricing/use to access lower tiers of the market.
- Consider bundled products, for example along with complementary products of another company with whom marketing partnerships could be formed.
- As part of the valuation exercise, determine the best exit strategy and timing:
- Identify the companies that could be buyers.
- In each case, identify why they would buy the company.
- The most compelling reason to purchase the company will be strategic, not financial.
- Identify the key decision maker in each of the potential buyers.
- Also identify any factors that would make the company less desirable to any potential acquirers and develop remedies for these.
- This exercise may help to plan the timing and to understand more about the price that could be fetched.
- To appeal to a buyer, optimize the organizational chart.
- If the CEO occupies too many seats on the chart this presents a substantial risk to an acquirer if the founder leaves.
- Evolve the organizational structure to support growth.
- If there is no compelling reason to sell in the near term, then staff the company with professional marketing, financial talent, and so on.
- A lack of talent in key positions limits both the company’s growth and its appeal to potential buyers.
- In the case of this company, the most important hire will be in marketing. Note that marketing does not equal sales. The company is creating a market and convincing people to change their habits. This is a marketing task, not a sales task.
- If the analysis of the factors mentioned above determines that now is time to sell, then stay slim.
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How Do You Rapidly Ramp Sales? Three Tactics
Situation: A company’s key marketing partner has excelled at analyzing key potential customers, the right decision makers within those customers, and completing sales to them at a premium price. The CEO wants advice on what more they can do with this partner to leverage and boost sales. How do you rapidly ramp sales?
Advice from the CEOs:
- The company’s current strategy is to start a customer on the company’s product to add additional functionality. Once the customer learns to use the product, they work to extend the customer to other products from the company.
- It is difficult to win with a “push” sales strategy. The situation described is like that of Linux competing with Microsoft. Everyone knows how to use MSFT, and for most of what they do MSFT is good enough. It takes a particular level of pain or need to justify the pain of transitioning to something different.
- The only alternative is to show a significant pay-back for the pain that the customer must endure in order to convert, large scale, to another solution.
- The company’s target customer will be the key manager who will shut down the line because they don’t have the company’s solution. This forces the purchase decision above the manager’s boss to the executive suite. The company’s solution then becomes the alternative that saves the day.
- Seek a forum or trade show that will put the company’s solution in front of these key managers. Through this venue, create buzz that will make the company’s the booth to visit.
- It is critical to have a compelling story for potential users when they respond to this gambit and visit the company’s booth.
- The solution to this dilemma is the same as the solution to the company’s overall strategy.
- The company’s offering, at this point, is just another alternative available to the customer. While the company has a compelling product, it is not world changing and the company lacks the market presence to make its solutions first to adoption.
- The solution is to focus. Stop what the company is currently doing and take the time to develop a technology strategy.
- Once this strategy has been defined, focus efforts on developing the killer application that becomes the reason that people must come to the company to satisfy their need.
- Once this killer application has been developed, positioning and gaining traction with the customer will become easier.
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How Do You Establish the Company’s Brand? Four Approaches
Situation: A company has developed a leading local position in an important new technology. The CEO is concerned that the company’s suppliers may try to move into their market and replace them. What’s the best strategy to counter this threat? How do you establish the company’s brand?
Advice from the CEOs:
- Exhibiting high growth is the company’s best shot – whether to preserve exclusivity in the company’s geographic area or to build the company’s brand. Aggressively build the company’s service presence to build a sustainable advantage.
- The primary question is – What is the objective? The objective is to build the company’s own presence and brand.
- What would happen if another, better technology was launched? Wouldn’t the company want to offer this?
- Think Web 2.0+. Build the company’s website as the place to go to discuss the technology, share thoughts, designs and software, and easily source prototypes – provided by the company. Let users define the site and the market for the company.
- The bottom line: exclusivity may not be in the company’s best interest if it inhibits access to the best technology. Strive to build the company’s brand instead and be opportunistic on the exclusivity issue.
- What markets have gone through similar development? What can you learn from them?
- Document other rapidly changing markets. Hire a current undergraduate or MBA student to research how these markets have developed.
- Select a target vendor with multiple locations and do a deal with them to locate your technology and service in their locations.
- Look at a franchise for which the company’s technology is a compliment and see whether franchise owners are open to adding the company’s technology in their locations.
- Does the company have a partnership strategy? How can they accelerate strategic development?
- Where is the place to focus?
- Who is the perfect partner for this focus?
- Identify the most promising markets and use partnerships to accelerate penetration of those markets. Write partnership agreements so that once an area is developed the company has the option to take it over. This is a classic market development strategy.
- Give away some of the company’s margin to partners in lieu of salaries or commissions to support market development.
- Look for partners in key locations in the company’s territory. Do a demo at a Starbucks where engineers like to hang out.
- Hire a sales or business development person to work on partnership development.
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How Do You Change the Company Structure to Support Growth? Ten Points
Situation: A CEO is concerned that her current company structure may not be set up to support envisioned growth. She is not sure how to differentiate managers from developers. She also seeks guidance on how to evolve the CEO role. How do you change the company structure to support growth?
Advice from the CEOs:
- How do you differentiate and select managers versus developers?
- Use an organizational development process to facilitate this selection.
- First, outline the organizational structure that will evolve as the company expands. Share this with key staff and listen to their input.
- Next, with key staff, determine the metrics. For example, what revenue or net profit before tax milestones will trigger the addition of managerial staff.
- For each managerial position create a position description and a list of talents and skills that a candidate for that position should possess. Review these with staff and adjust with their input.
- Let the company know the plans for the organization, and the positions that will be created as the company hits the milestones that will trigger growth. This will prompt anticipation of the opportunity and professional growth for staff that will accompany expansion.
- Schedule a 1 or 2-day planning meeting with staff to discuss how to develop and improve both the organizational structure and operations. Continue this discussion in staff meetings at least quarterly.
- The CEO’s role within the company.
- The first question to ask is “what do you enjoy?” Is it being CEO, or is it leading the development teams? These are different roles.
- Look at immediate needs. If the CEO is doing the books, it may be time to either choose or hire a COO – someone who can handle accounting, HR, and all the back-office functions.
- Up to this point, the company has had a flat organization. The difficulty with this is that the first real crisis will take up so much CEO time that the company will fall behind in key areas currently overseen by the CEO.
- Maturing the organizational structure is the right way to go. It will remove CEO from a “doer” role and allow the CEO to take the “leader” role – moving from working IN the business to working ON the business.
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How Do You Develop Current Managers to Support Growth? Six Suggestions
Situation: A CEO is concerned that the current management team is not mature enough to support planned growth. Sales skills are necessary to start an office, but there is a wide range of business acumen and people skills among the managers. How do you develop current managers to support growth?
Advice from the CEOs:
- Company policy requires manager candidates to demonstrate competence in at least three of five areas: sales, technical skills, customer management, customer management, and business acumen. A coaching or mentoring process from senior management would be beneficial.
- A minimum number of clients is required to start an office. There are important differences in the skills needed to grow and sustain an office. More evaluation of the managerial skills of manager candidates will help.
- Another CEO shared story of a regional office with a manager who was technically competent but had poor business development skills. This created a growth issue. Clear, mutually agreed upon, written goals helped. Office growth requires good administrative performance as well as technical or sales skills.
- Frequent group meetings with managers and a deliberate agenda help. There is merit in allowing the field people to contribute to the agenda, having a “round table” type of review, and peer dialogue. In addition to current individual weekly telephone conversations and quarterly operations reviews, there is an opportunity to modify the format.
- Sometimes there is a double loss in taking a good individual contributor and making them a poor manager. For example, of a good salesperson may turn out to be a bad sales manager. The transition may not play to the person’s strength. A more rigorous selection process will help.
- Another CEO shared a story of one of his plant managers who reached the limits of his competency and could not continue to grow the plant. He was moved to a support position and a new plant manager was hired. The former manager found new satisfaction in the support role and was successful sharing his knowledge and skill with the new manager and a broader audience within the company.
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