Monday, August 25, 2014

What makes a business successful?

The keys to success for any organization are directly related to what an organization is, and how it operates in the world. Once you understand what an organization needs to survive, you can better understand how to succeed.

Here are a few factors that may be applied to your business.

1. Managing and developing people 
 People today want some direction and structure, but they also want freedom and encouragement to develop their skills and knowledge. Effectively managing people requires balancing constraining forces (providing direction, structure, organization, some rules) with liberating forces (encourage personal growth, development and creativity).

2. Strategic focus 
 In today’s rapidly changing world, it’s not just enough to have a purpose for existing. Leaders have to focus the organization’s resources on the greatest opportunities, which can shift with each new day. If you review what has happened in the world or your organization in the past year or two, and you’ll understand what we mean by the reality of constant change. Opportunities come and go. Major customers or income sources can change or even go out of business at any time. So it’s necessary for leaders to keep focused on the desired goal of increasing sales and profits, or more satisfied customers, while constantly steering the organization across the stormy waters of the marketplace. The job of focused leaders is to optimize business in a changing environment.

3. Operations, or what people do all day
 What the people in your organization do day in and day out to create value for customers, to earn or justify income, strongly determines whether you succeed or fail. You can’t separate operations from strategic focus which gives direction, people who do the work, customers who pay the money and physical resources needed to do the work.

4. Resources 
Finances, facilities and equipment are the big 3 physical resources. If you don’t have enough money, you can’t start or sustain an organization. And one of the biggest expenses is providing adequate facilities and equipment for people to work in and with. Experienced managers learn that cash flow is king. It doesn’t matter how much customers owe you, it’s when their money enters your bank account so you can use it to sustain the organization. Failing to manage cash flow is the No. 1 reason for business failure.

5. Customer relations
Customers are where the money comes from, so in many ways this is the most important success factor. As the famous business guru Peter Drucker said years ago, the purpose of a business is to get and keep customers. Getting customers involves marketing – indeed this success factor includes all kinds of marketing and sales. The key to successful customer relations is to give them what they need, not just what you want to sell. Effective sales and marketing begins with asking existing and potential customers what they need, what problem they want solved or deficiency filled. By keeping in touch with customers and asking these questions often, you’ll do a better job of developing customer loyalty and keeping competitors away.

I hope these ideas help understand the keys to success in your organization.  Please let me know your thoughts.

Monday, August 18, 2014

Thinking About Staffing Additions?

The following outline identifies issues small businesses may deal with on staffing:

1. Should the business hire permanent staff or contract help?
Staffs usually provide more continuity and stability but add to cost due to employment taxes and perhaps benefit programs.
Staffs provide the advantage of employee loyalty and an edge in a more positive morale and productivity.
Contract people can be terminated at any time negating the costs of severance programs.
Contracting can add flexibility by allowing the adding or deleting of staff as demand requires.
Compatibility is sometimes harder to than competence so staff can be more productive within a group or department.
Hire a contract person as a temp. If the person works out you can make the job permanent.

2. Should business promote from within or add new employees.

Promoting from within does enhance employee morale and loyalty to the company. Employees who see the company as interested in career development and loyal to staff tend to make a greater effort in supporting company goals and success.
Introducing new employees from the outside does provide a fresh approach to some positions and can re-energize the company. Also, securing new outside talent may reduce the cost of training and development of current staff.

3. Full time vs part time staffing

Businesses should be careful not to add staff too soon. Temp or part time staff can be used as the business grows and changes to permanent positions can be made as the business matures.
If the business has seasonal peaks and valleys, use of part time staff provides the flexibility to adjust to demand.
In some situations, job sharing can provide the opportunity to maintain a larger pool of employees who are familiar with the work but prefer to work part-time.
Let growth, profitability, and demand dictate when to expand permanent staff.

I hope these ideas provide a little insight into options for staffing as the organization grows.

Monday, August 11, 2014

Keeping Key Managers

Keep Key Management Personnel

There is a key role for incentives in managing and retaining key executives for the company. Here are some reasons for and examples of how to structure effective incentive programs for management.

Reduce Turnover
You want to retain key management personnel for a number of reasons. High turnover destabilizes the company and can have severe effects on moral of employees and the bottom line. You want to retain high performing managers to enhance your own company’s growth potential and to keep key people from wanting to look at other opportunities

Set Goals
Good managers don’t expect a bonus without achievement but don’t set the bar so high as to be unachievable. That becomes a disincentive to achieve.
Set goals that help improve your bottom line; just achieving new sales records is not a priority if the costs exceed the benefit. Sales executives should be just as concerned about profitable sales as the CFO.

Share Profits
Pay executives for overachieving by sharing profits. As profits goals are exceeded rewards can continue to be major incentives if shared fairly. Reward contribution.
You don’t have to give everything away in this process. Be competitive but unique and allow key employees to participate in goal setting. When they are part of setting the goals they are more likely to increase efforts to reach the bar.

Be Transparent
Be completely transparent. If goals are profit based show actual revenue/profit results so that there is a clear understanding of achievements. Conduct periodic reviews to ensure all incentive participants know where they stand. Let’s not have surprise results announced at year end….good or bad.

Incentives are important tool to maintain a motivated and dedicated management team and a well-designed plan can bear fruit over the long term.

Monday, August 4, 2014

Do your business ethics measure up?

Have you ever wondered how many of the successful businesses get caught in the public spotlight and are criticised for the lack of integrity in the organization.

Culture counts and it starts at the top with senior management or the board of directors. Organizations need to understand that ethics drive compliance and the leadership is responsible for setting the tone.

Checks and balances require care in how the organization structure is designed, how human resource decisions are made, and how overall business is conducted. Organization integrity is paramount; when difficult decisions are faced the instinct must be to default to core values.

Larger organizations often pressure smaller business for concessions they can ill afford but if they don’t concede an entire contract may be lost. This happens even if the original pricing were agreed between the parties. Where is the pride in living up to one’s word? What values are at the core of that behaviour?

Ethics are derived from values and they make integrity a way of life in the organization. Honesty, respect, and responsibility can be pillars on which to build. It is essential that these values are shared throughout the organization through practice in decision making.

The vast majority of businesses are ethical and at least have informal standards expressed through the behaviour of the CEO and senior managers. Anyone working in an organization that seems to behave in an overtly unethical way and chooses to stay or ignore the behaviour is part of the problem.

Corporate governance is used to promote business ethics and social responsibility. It also creates the framework for guidelines used by all individuals who are part of the organization.