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Ask Your Employees

Employees can be your single best resource for suggesting changes to the way things are done. Since they are the front line contact with customers, employees often know a lot about how customers view your business. And employees often have excellent ideas about how to make processes better and more efficient. Try to create an environment where employees are expected to make suggestions about improving things. Avoid suggestion boxes or do away with them since they rarely are effective and they imply that not everyone should participate in making the business better. Actively ask employees for their input about what is working and what isn't working. And ask them to provide suggestions about how they would make those things that aren't working better. It is important to act on or respond to all suggestions. Obviously not all suggestions will be appropriate, but employees need to understand why their suggestions won't work. For the suggestions that are appropriate, take action and include employees in the process of implementing changes when possible. The important thing to keep in mind is that employees represent a wealth of potential ideas about how to make your business or work unit better.

What Needs Managed

It it critical that managers and owners understand in great detail how the various aspects of their business interrelate and how they impact the bottom line. In too many organizations, the managers are more focused on reacting than they are on being proactive in terms of managing the variables that affect the bottom line. In broad terms the most important variables for any business are people, processes, strategy and culture. These four variables should be focused on daily by all managers and if managed effectively will have a tremendous impact on bottom line results. Hiring, training and promoting people that fit their jobs well, creating and managing processes that are efficient, developing and implementing sound goals and strategies and instilling a customer-driven and high accountability culture are all vital to the long-term viability of a business.

Here are some simple tips for improving your listening skills

Try hard not to think about your response until the other person is done speaking. Trying to from your response while the other person is still talking means you probably won't hear everything you need to hear.

Don't talk prematurely or interrupt. Allow the other person to complete their thoughts before jumping in. Interrupting a train of thought can often get the conversation off on a tangent and make it difficult to get back to what the other person wanted to say.

Concentrate carefully on what the other person is saying. Look at the other person when they are speaking. Don't thumb through papers or appear distracted. Carefully listen to every word.
Listen without bias. Before forming an opinion, let the other person explain their position. If you allow past experience or your opinion about the other person to bias your ability to listen effectively, what they are saying and what you interpret them to be saying could be entirely different.

Never assume you know what the other person meant if the wording is unclear. If someone says that they need something "as soon as possible" does that mean now, tomorrow, next week or some other time? If you assume that it means one thing and the person meant another, you have a problem. Ask what they specifically mean when they make a comment that is unclear.
Listen actively by nodding your head to acknowledge, making good eye contact, saying things like "I understand" or "that's interesting", for example. This tells the other person you are listening attentively. Be careful not to overdo in terms of nodding or making acknowledging remarks, however.

• Clarify by repeating in your own words when necessary what you understood the other person to say.

• Practice your listening skills every day. You will be amazed at how much more effective your communication will be when you assume the responsibility of becoming an excellent listener.

• One of the biggest obstacles in business is ineffective listening. Don't let it negatively impact your performance.
  

Exercise:
1. Describe below an incident where ineffective listening by you, the other person or both contributed to poor communication.

2. In what ways can you improve your listening skills and how will you begin to apply those skills in your job?

Under-promise and Over-deliver

Telling customers what they want to hear rather than what they should hear is a sure way to lose them. Some employees have a terrible habit of making promises that they or their company can't keep. In a nut shell, they over-promise and then can't deliver on that promise.
There aren't many things that agitate customers more than to be told something will be done and then not have it happen. When this happens, the employee is essentially lying to the customer, or so it is perceived. There are a number of reasons that things don't get handled as promised including an inability to say no or deliver bad news, laziness, an uncaring attitude and lack of information. The first reason is at least understandable while the others are not.

A business must instill an employee discipline to serve customers at a very high level. To do this, customers need to feel that they are being told the truth. When an employee over-promises and under-delivers, the credibility of the employee and the company are negatively impacted.
A motto that some customer-oriented businesses adhere to is "under-promise and over-deliver". Simply put this means that they tell the customer the truth, are conservative in their estimates of when something will happen and work hard to deliver as promised or ahead of schedule. Unfortunately, we don't find many companies that fall into this category.

Developing a culture of this nature requires hiring the right people and instilling in them the need to gather as much information as needed before making promises to customers, to make conservative estimates of when the desired action will be completed and to work very hard to ensure that the action is delivered as promised. This requires follow up and attention to detail as well as an attitude that puts the customer first.

If your business does not have this type of culture, it's time to evaluate where there are problems and to develop a training and accountability framework for customer service performance. Your managers and supervisors must understand how to manage a culture that calls for under-promising and over-delivering. They need to be keenly aware that the life blood of your organization depends on instilling this type of culture.

Differentiate Your Business Based On Outstanding Customer Service

There is so much lip service paid to customer service that even those businesses that provide lousy customer service begin believing their own hype about how the customer comes first. The fact is that most businesses do a very poor job of serving their customers. Many have simply fooled themselves into thinking that they are doing a wonderful job of providing outstanding service. Avoid being one of those businesses.

Nothing short of outstanding customer service should be acceptable in any business. But virtually every day we run into examples of customer service that ranges from pitiful to barely acceptable. Rarely do we encounter truly outstanding service.

Outstanding customer service does just that....it stands out. The fact that most businesses are clueless when it comes to instilling a customer service culture that accepts nothing short of outstanding represents opportunity for your business. If you can master the art of serving the customer, you have the opportunity to differentiate your company, or stand out, from your competition and gain a competitive advantage.

Outstanding customer service requires several things: 1) a sincere and powerful commitment to serving customers and prospective customers at the highest possible level each and every time, 2) excellent people, 3) stringent expectations and policies regarding how customers are served along with a high level of accountability for enforcing those expectations and policies and 4) a discipline about serving customers consistently in manner that not only meets customer expectations, but often exceeds them.Achieving outstanding customer service means hard work and attention to detail as well.

In order to deliver outstanding customer service consistently, each and every facet of your business must be "fine tuned". Because each part of a business is interconnected, each has the ability to create either favorable or unfavorable impressions with customers. For example, a customer might order a product and have a great experience placing the order and receiving it on time. But they discover a billing error and deal with accounts receivable to clear it up. In doing so, the customer encounters a rude employee that is less than helpful. All of the hard work to please the customer in ordering and shipping the product is wiped out by another area of the company. We emphasize that all employees should fully understand what their roles are in providing outstanding customer service. And all employees must be held accountable for delivering it.

Outstanding customer service must become a way of life for your employees. It must be focused on and become almost a mantra with employees. They should have some healthy fear about delivering anything less than outstanding service. Hiring employees that are capable of delivering outstanding customer service is critical to your efforts. Some people simply cannot deliver outstanding service consistently. And the key here is consistency.

Once excellent employees are in place, they must be trained and retrained continuously. They must be evaluated based on, among other things, their ability to deliver outstanding customer service to both internal and external customers. An employee having a bad day is unacceptable as an excuse for delivering less than outstanding customer service. Employees must be "on" every hour of every day that they are on the job. You can't expect anything less. Customers don't care that an employee is having personal problems or isn't feeling well. They want to be served at a high level.

The success of your business is directly tied to how well customers are served. Remember that your focus should be on building value in your business. One way of doing so is to increase your customer base over time. Delivering outstanding customer service will help ensure that your base of customers does increase rather than deteriorate.

Your company should have a well conceived customer service program in place. This program clearly defines how the company will hire, how and when it will train employees in customer service and it documents procedures and clearly delineates company customer service policies. It also outlines how employees will be evaluated and how customer satisfaction will be measured. If there are incentive plans based on delivering outstanding customer service, those should be detailed in the program as well. In short, outstanding customer service won't happen without a well conceived and well managed approach to making it happen.

Take the opportunity that exists for your company to truly stand out from your competition by delivering customer service that is clearly different and better. It will make a significant difference in how customers perceive your business and what they tell others about it.

Don't Just Talk About Customer Service

There is so much lip service being paid to customer service these days with very little actually being done about it that it is almost laughable. How many organizations do you see promoting themselves as leaders in customer service or just generally bragging about how well they serve their customers? The truth is most organizations are not coming close to delivering even average customer service, let alone outstanding customer service which is what they should be striving for.

Just talking about customer service and telling your employees that they are to provide outstanding customer service is not going to affect the level of service to your customers enough to make any sort of positive difference. While some short-term buying decisions are based on price, over the long-haul customers will often base their decisions about who to buy from as much on the quality of service they receive as price. In fact, it appears that the relationship between business failure and poor customer service is dramatic. Conversely, those organizations that understand how to deliver outstanding customer service can often times overcome competitive pricing strategies by their competitors and still maintain strong gross profit margins.
Outstanding customer service is generally viewed as an added value by customers. Why? Because it is so rarely encountered that it leaves an impression when they do experience it.
Look closely at the level of customer service being delivered by your organization. It's not the perception of you and your employees that count. Rather, it is the perception of your customers that matters. Ask them how they feel about the quality of your customer service. Remember that you won't hear from many disgruntled customers. They just go away.

Do your employees really understand how to deliver outstanding customer service? Do they really understand what is expected of them? Does the company understand how to achieve outstanding customer service? Outstanding customer service stands out. It can truly help you differentiate your organization from your competition. To achieve it takes constant care and nurturing. It must be measured. Outstanding customer service needs to become a "trademark" of your company.

Hiring customer-oriented employees is the starting point for delivering outstanding customer service. Some employees will have a difficult time being customer-oriented because of their personality. Putting people with poor basic people skills in a position to deal with customers is a common mistake in the business world. Think about your own buying experiences and the people you encounter. How many really deliver outstanding service?

Look at your customer service quality objectively. Does it need work? How much work? Develop a plan for correcting deficiencies. Make outstanding customer service a part of your culture. It will pay dividends

Is It Time To Retrench?

Sometimes a business will grow too quickly and outstrip its ability to sustain success. This is most often caused by ineffective management of processes, people and strategic direction during the chaotic growth. The foundation becomes weak and additional attempts to grow put a real strain on cash and human resources. On occasion, it makes some sense to step back and retrench.....or slow down. Because processes, people and strategy can be out of kilter, it can help to temporarily reduce the rate of growth by being less aggressive from a sales and marketing perspective and focusing on improving processes, getting people trained, hiring better people and setting a firm strategic direction. This does not mean that the business pulls back permanently. The reason for retrenching is to strengthen the foundation to allow the business to grow even more.

Is Yours A Low Output Culture?

Every organization has a certain culure or "way of life". One element that defines an organizational culture is work ethic. Some organizations are characterized by hard work and high levels of productivity while others have what we refer to as a lazy culture and the rest fall somewhere in between the two. Typically, managers and owners set the tone for the work ethic of the business through their own behavior as well as the expectations and subsequent level of accountability they instill. Organizations should strive to develop a culture of hard work and high levels of output. In many instances the employees and management believe such a culture exists when, in fact, something less exists. It is important to be objective in assessing what type of work ethic culture exists within your organization. How would you describe the work ethic and output within your business?

Spend Advertising Dollars Wisely

One of the most common marketing mistakes occurs in the advertising arena. In terms of enhancing profits, advertising can have both a positive influence and a negative influence. The obvious positive influence comes from increased awareness, interest and consumption by customers. The negative influence comes from haphazard placement of ads. Placing ads hoping to attract customers is a lot different than understanding your market(s) and placing ads in mediums that target your market(s) most effectively. One of the first mediums to scrutinize is the Yellow Page advertising that your organization has in place. Some organizations believe that Yellow Page advertising should be their primary advertising medium. And in rare cases, that could be true. But in many situations a disproportionate amount is being spent on Yellow Pages advertising diverting money away from potentially more effective mediums. We certainly don't advocat that you abandon the Yellow Pages since ads placed here can be effective. But we regularly see businesses spending too much on this medium and not enough elsewhere. With any advertising campaign, you must be able to measure results. How much "traffic" is being generated by any of your advertising. Remember that resources are limited and the way you spread your advertising dollars is extremely important.

How Morale Affects Profit

Success in business is primarily a result of the quality of people employed. It is well known that productivity is a key factor in the level of profitability attained. Productivity is a result of a number of factors, but none more important than the morale of the employees involved. Most managers and owners fail to recognize that maintaining high levels of morale generally translates into higher levels of producitivity and, therefore, higher profit levels. Morale is affected in many ways, but primarily by how the employee is managed, developed, coached and treated. Too many managers treat their employees as commodities that can be disposed of and easily replaced. Others don't take the time to foster a strong enough working relationship with their employees. And most don't set clear expectations or enforce policies consistently. In short, employee morale has a direct impact on productivity. It takes time and effort to achieve high levels of morale within an organization. How much attention does your business pay to achieving and maintaining high levels of morale?

Business Problem: Hiring In A Tight Labor Market

In a strong economy, current and prospective employees have a broader range of employment opportunities. This means that the always challenging job of finding good people becomes even more challenging. It's important, however, that you not compromise your requirements for top notch people. Once you begin to allow your organization to fill positions with marginal people, you have started the performance erosion process. Try to stay focused on the fact that the success of your business is highly dependent upon the number of high performers you bring in and keep in your organization.

The basis for hiring high performers is found in an organization's ability to keep them. If a business can create an environment that is stimulating, rewarding, positive and even fun, good employees are less tempted to leave. Most bright people are astute enough to understand that the grass really isn't always greener elsewhere.

Here are a few thoughts on hiring in a tight labor market:

-As mentioned, the fewer high performers you lose translates into a less urgent need to hire more except in the case of accelerated business growth. Refer to Business Problem: High Employee Turnover to learn more about reducing employee turnover in your organization. A significant issue as it relates to hiring people in any type of labor market is the reputation your organization has as an employer. Word about the kind of company they work for travels quickly from current employees to outsiders. It doesn't take long for a company's reputation to become tarnished by current and former employees who are disgruntled about the way they are/were treated. When a company has a very solid reputation as an employer and it is known as an organization that cares about its employees, prospective employees will be more proactive in seeking employment there. When an organization has a bad reputation as an employer, the chances of hiring and/or retaining high performers are slim. This issue is very often overlooked as a reason why a company can't seem to attract good employees.

-Look at who's in charge of your hiring efforts. If you have a Human Resources department, do those involved in hiring understand the process? Are they aggressive in identifying strong candidates? If managers or supervisors are responsible for finding people, are they skilled in promoting the organization to prospective employees? Are they taking enough time to do justice to the hiring process? Is there laziness in the hiring process?

-Placing ads in newspapers can be a futile effort in a tight labor market. The likelihood of attracting more than a few potential high performers is not good. And the likelihood of hiring one of them can be even more remote. If you are going to place ads, place them in newpapers or magazines that provide some chance of attracting quailified candidates. The most important thing in placing ads is to be as specific as possible about the requirements for the job. If you are unclear about the specific requirements, you run the risk of attracting fewer qualified candidates and a host of unqualified candidates. Spend a little extra money to buy a larger ad in order to have enough space to promote your organization and to furnish the specific position requirements.

-Be aggressive and creative. Most organizations lament their inability to attract good candidates, but they are strictly using traditional methods such as newspaper ads to find them. Using your contacts, put out the word to as many people as possible that you are looking for a particular type of individual. Don't be afraid to ask them if they know anyone matching what you are looking for. Ask aquaintances and friends if they had former employees who were excellent employees matching your requirements. If they have someone in mind, find out where they are now and don't be afraid to contact them either by phone, mail or email. Attend as many business functions as possible. Remember that you are always on the lookout for prospective employees even when you don't have an immediate need. When you meet someone who seems to possess the qualities and background you deem important in your employees keep their business card and make a note on the back of it about your impressions of the individual. Keep these cards in a separate location specifically for prospective candidates. When you are shopping, make note of employees such as receptionists or sales clerks who seem to have the skills you are looking for. Don't be afraid to plant a seed about future employment. The point here is that you need to keep your eyes open constantly for prospective employees. We all run into them every day, but fail to make the connection that they could well be working for us.

-Use head hunting and search firms carefully. Many are nothing more than resume handlers and don't carefully screen candidates for "fit" to your jobs. There are some, however, that do a good job of matching candidates to employers and positions. Ask your friends and aquaintances if they have used search firms. If so who do they recommend you use and who should you stay away from. Keep in mind that you will pay a healthy fee when using a search firm. If you are using a firm for the first time, negotiate a lower first time trial use fee and let the firm know if they do a good job you will use them again.

Identifying and hiring qualified high performing employees is one of the most difficult tasks of the business world. Employers simply have to be aggressive in their efforts to locate good people. Look at your current hiring practices and modify them to become more efficient and more aggressive in locating good candidates. But, be selective in who you hire. Even in a tight labor market you are better off leaving a position open than filling it with a marginal employee.

Sometimes It Pays To Spend A Little More

When purchasing equipment such as production machinery, forklifts, copiers and computers, there is sometimes the tendency to look for a less expensive solution. However, it often makes sense to pay a little more and buy more reliable or faster equipment. Down time and inefficiency cost businesses a lot of money. Buying equipment that could break down more often or not produce as quickly as other equipment is one way of slowing down or even stopping work flow. The cost of lost time or time spent waiting is almost always going to cost more than the additional money it would have cost up front to purchase (or lease) better equipment. Before you buy equipment, ask yourself how important time lost is to your organization.

Don't Assume Good Times Will Last Forever

One mistake that some businesses make when they are realizing some success with strong sales and profits is that the success will last forever. Virtually all businesses face the prospect of downturns in business. The economy can and will cycle from good to bad and back again. During periods of a strong economy many businesses succeed almost in spite of themselves. It's easy to get lazy and not effectively manage the business if owners and managers assume that the strong economy will continue and help carry the business. It's best to assume that things could turn sour at any time. This type of outlook will help keep management sharp in terms of managing the business as effectively as possible. A number of businesses begin to lose management discipline during good times and an erosion of the business begins to take place. During good times this erosion is sometimes masked by strong sales and profits. But when sales and profits begin to deteriorate, the management and operational deficiencies become magnified. In some cases, the damage is so severe that it cannot be reversed. Try to instill a discipline about how your company will be managed in good and bad times. Having sound management fundamentals in place is critical during good and bad times.

Value Your Reputation

The reputation of your business should be treated like gold. That is if it's worth anything to begin with. Building a reputation based on honesty, standing by the product or service you sell and placing significant emphasis on having satsfied customers will pay dividends over the long-term.

How you deal with vendors, employees and customers all factor in to the reputation you develop. And all three of these constituent groups are critical to the success of any business. Too many companies don't understand the importance of developing and maintaining a solid reputation as a company that can be trusted, relied upon and that treats people fairly. The basic philosophy and culture of the organization will fuel the perceptions of employees, customers and vendors as well as the public at large.

We believe strongly that organizations have to manage their reputations. They do so from the top. Owners and top management must buy into a philosophy that has at its center honesty, fairness, responsiveness and consistency in how the organization deals with internal and external constituent groups.

Top management should strive to communicate clearly to all employees that they expect them to treat each other, vendors, customers and the public they come in contact with while representing the company in a manner that is consistent with the philosophy described above. When employees deviate from that philosophy, it is important to clarify for them those expectations and reinforce the fact that behaving in a manner inconsistent with the organization's philosophies is not an option. For employees who just can't buy into those philosophies, they will be better off finding an organization that better fits their own values and perspectives.

Since each employee has the opportunity to impact the reputation of the organization, all should receive appropriate training in dealing with people in routine and in potential conflict situations. When the reputation of an organization becomes too tarnished, it is either impossible or it takes a long period of time to shift negative perceptions that have been created.

The way an organization conducts business is critical to its long-term success. People want to do business with companies they feel good about. If there is any doubt in their minds, they are less likely to take a chance. Take time to assess what kind of reputation your organization has. Ask employees, customers, vendors and the general public what they think of your company. Use that input to improve upon your approach to doing business.

Are Your Goals Really Goals?

Appropriate goals are the driving force behind successful organizations. Successful organizations have taken the time to diligently develop realistic, attainable goals that provide legitimate focus for the organization. The goals are not just words on paper.

Goals should be a part of a formalized, written strategic plan. The strategic plan is your road map...the strategic planning process determines what you market, where you market it, how you market it, and, more simply, how you are going to allocate precious money and people resources.

Goals should have the following characteristics:
-They are attainable.
-They require hard work to achieve.
-They are easily understood.
-They reflect critical aspects of the organization.
-They support the overall mission or purpose of the organization.
-They are consistent with the organization's capabilities and resources.

Goals are the jumping off point, so to speak, for developing specific objectives, strategies and tactics. The combination of goals, objectives, strategies and tactics form the strategic plan.
Your people should be well aware of and focused on the organization's goals. Without this focus, your people are never sure where the company is headed and, therefore, cannot fully embrace the importance of the various decisions being made.

Ask yourself and your employees these questions when you sense that impending decisions might be drifting away from the direction provided by your goals; What are our goals? Does this decision help us achieve one or more of those goals?

Make sure that your goals are not really strategies in disguise. This example illustrates the difference between goals, objectives and strategies for a company looking to grow through diversification:
Goal: Achieve profitable diversification of the company.
Objective: Have in place one new division by 12/31/99.
Strategy: Diversify through acquisition as opposed to product development.

This example clearly shows one of the key areas of focus for the company; diversification. And it shows how they intend to achieve this goal; by acquiring another company. This goal and its supporting objective(s) and strategy(s) clearly communicates to interested parties that at least part of the company's growth will come through diversification by acquisition.

Look at your comany's goals. Are they clear, concise and meaningful? Do they provide real focus? If you achieve each of your goals, will your company be successful or more successful than it is today? Do your people know what the goals are and are the goals ingrained into the culture? Have you limited the number of goals to somewhere between 3 and 7 since too many goals will confuse and muddy the focus and too few might not provide enough focus.

If your company doesn't have a sound strategic plan in place, you are living dangerously. Without one your organization is like a rudderless ship. Today's business climate is much too competitive to not have a well constructed strategic plan.

Successful, high performing companies, large and small, have a long-range plan and they live it and breath it. Their focus is on that plan and on their goals.

Lost Customers and Profitability

Losing customers is generally a sympton of problems somewhere in the organization that need to be addressed. Every customer that goes elsewhere takes a piece of your bottom line with them. We stress customer service so heavily because of this fact. Customer service is a bottom line issue. When management has the attitude that "we can replace that customer with another one" or "we have plenty of customers", the company has a mentality that runs counter to optimal bottom line performance. Do you track your customer base and look at purchase history and average length of tenure as a customer? Analyzing your customer base will often uncover problems that need to be corrected. Take every customer seriously and look at them as a piece of your bottom line. Keep in mind that businesses erode their bottom lines by not paying close enough attention to customer retention activities and the level of service provided.

Show Your Employees That You Care

Good employers care about their employees. They take an interest in them, they provide good wage and benefit packages, they spend time and money developing their skills and they hold them accountable for performing at the level that is expected of them. In a competitive environment it is critical that employees have a high degree of comfort with their employer. Turnover is very costly and being ambivolent about employees can lead to high levels of turnover. Companies that truly care about their employees tend to have significantly lower rates of turnover and less internal turmoil.

The Struggle Between Efficiency and Effectiveness

Business books, magazines and newsletters are full of recommendations about becoming more efficient. They talk at length about the importance of the bottom line and incremental gains from reengineering and total quality efforts. And they talk about how technology can provide a real boost in efficiency.

But with all this talk about efficiency, are we losing something in terms of being effective? To distinguish between effectiveness and efficiency, a brief definition should help. Effectiveness is doing the right thing. Efficiency is doing things right. These simple definitions point to a clear distinction that has major implications for businesses of all sizes. The implications arise from the difficulty in balancing both efficiency and effectiveness.

With the pressure to constantly be as efficient as possible, an organization can get caught up in focusing too much on reducing process time and/or the number of employees and not enough on what makes sense for the organization. For example, suppose a distribution company decides that it is taking too long to process orders because there is an additional review step in place to ensure that the order is accurate. But often times, orders get backed up slightly for shipping because the people doing the additional accuracy check on outgoing orders fall behind. So the decision is made to eliminate this additional step and at the same time save some money by eliminating two positions. This is done in the name of efficiency because orders will go out faster which has some real merit. But the result of eliminating this additional step is a significant increase in incorrect orders being shipped. The impact of this is additional time dealing with more customer complaints, additional picking and restocking time, additional costs of returned shipments and, above all, customer ill will.

This example illustrates how doing the right thing is often overshadowed by doing things right. What employees often view as being efficient can many times impact the company negatively. This is why it is important for management to create an environment where employees are encouraged to look for ways to become more efficient, but do so without degrading the level of customer service and quality.

Bringing a balance between efficiency and effectiveness is one of the critical jobs of any owner or manager. In the above example, the company might have been realizing a competitive advantage because it was shipping orders with a higher degree of accuracy than its competitors. When it decided to save some money by streamlining a process and eliminating some positions, it lost that competitive advantage. And in terms of saving money, any savings realized from the streamlining were in all likelihood given back several times over.

It is important for businesses to constantly look for ways to do things right....to become more efficient. But it is equally important that decisions along those lines be made by asking questions about the impact on quality, customer service and employee morale. Bad decisions relative to efficiency can very often have a negative effect on all three of these variables.

With regard to technology and efficiency, does the addition of new technology to any process have a positive impact on these variables? Business processes and what's good for the customer should drive the implementation of technology. Technology should not dictate how a process gets defined. Start with the customer and work backwards. Define the process based on the best way to serve the customer and the best way to accomplish tasks. Once the business process is defined, match the technology to the process. When technology is allowed to drive the business, things tend to get forced to fit and the customer, productivity and employee morale with often suffer.

We can safely say that balancing efficiency and effectiveness is not easy. But it is important for organizations to stay focused on the long-term impact of all decisions. Yes, short-term performance is important, but if it takes precedence over long-term viability it could lead to a decline in performance over time.

How Does Your Company Do Performance Evaluations?

Although we are in the 21st century the majority of companies are still doing their performance reviews as if it were still 1990. We'd like to find out who uses online software (like ReviewSNAP), proprietary software, traditional paper and pencil and what companies don't do performance evaluations.

At the top of the blog there is a poll to let us know how your company does performance evaluations. Simply click on how your company does performance evaluations or if you don't see how your company performs them, please feel free to leave a comment.

Customer Retention

Keeping good customers is a must for a business to be successful. In fact, it is more important than gaining new customers. Because if you have done your job, you will have their loyalty. The key to retaining customers is customer service with price, accessibility and quality close behind. Businesses that have a high incidence of customer "leakage" typically struggle with profitability. In some cases, the lack of attention to retaining customers causes the business to fold. Your business should have a focus on customer retention. First, identify the factors that are most important to your customers. And then develop a plan/program for ensuring that the customers' needs and preferences are met. Without such a focus your business will be at the mercy of your competition and the customers' whims. With a customer retention focus, customers will at least think twice before going elsewhere.

MyBusinessBooks Performance Review Manual

Online Business Advisor's sister site MyBusinessBooks just released the Performance Review Manual. This manual will help you develop an effective Performance Review/Appraisal process. Whether you already have a review process in place or are looking to streamline your current process this manual provides excellent insight into the entire process of reviewing employee performance.

ReviewSNAP, a company offering an online performance management system, offers a free copy of the Performance Review Manual when you purchase a subscription to their online solutions. ReviewSNAP currently offers an online performance review solution and will soon follow with 360 degree feedback, Exit Survey and Employee Satisfaction Survey solutions.

Think Before You Grow

Virtually every organization wants to grow and get stronger. And a business should strive to grow in a controlled, profitable manner. But, what happens when a business tries to grow outside its core business or core "competency" or grow beyond its ability to manage the organization?

If a business is fundamentally sound and well managed, the opportunity for growth outside of its core business is better than if there are significant problems. Companies often attempt to grow by diversifying into marginally related or unrelated businesses and then end up divesting themselves of those business units after a short period of time. But why? It can be for a variety of reasons, but most often the reason stems from simply not understanding the new line of business. What made the company successful in its core business was probably a good understanding of the products or services, the market(s), the competition and the nuances of the industry. Transferring that knowledge into a marginally related or unrelated business is not very often an advantage. In fact, it can be a decided disadvantage because the tendency is to do business a lot like it has always been done. In the new business unit, it's likely that things are accomplished in a different manner.

And the mere fact that resources are being drawn toward the new business and away from the core business can have a negative impact on the core business unit. This is particularly true if management personnel are expected to divide their attention among several different businesses. The focus and discipline that is so important to being successful in a single business is compromised by adding the new line of business.

The other scenario that we often witness is the company that is poorly managed or that has some other significant fundamental problem(s), but tries to grow its way out of trouble either through diversification or through expansion of its existing business. In this scenario the business is already struggling to some extent due to poor fundamental management. Then the company adds fuel to the fire by stretching resources beyond their capacity and capability. If a management team is struggling with managing the existing business in its current state, why would management or ownership want to take on more? Unless the company is a dinosaur operating in a dinosaur industry, this is an excellent question.

What makes more sense is to closely analyze what the company does well and what it does poorly. Then address those things the company does poorly and develop a plan for strengthening them. Until the core business unit works through the fundamental management issues, it rarely makes any sense to try to grow either through expansion of the existing business or especially through diversification.

Before making a conscious effort to expand, ask yourself if you and the rest of the company are ready for it. Be objective and take your ego out of the assessment. Your ego will tend to drive you to wanting to expand so it is important to be honest with yourself about the motives for wanting to take on any sort of expansion. Once ego is neutralized, inventory those problem areas and prioritize them in terms of what needs to be addressed first. Then develop a plan for attacking each of the issues or problem areas and start the plan in motion. Until the fundamental problems are corrected, think twice about expanding or diversifying.

Stay In Touch With Customers

In the early stages of building a business, the owner is heavily involved with selling and/or customer service and, therefore, in constant contact with customers. The owner has a good feel for what they want and their reactions to and perceptions of how you conduct business. As the business grows, the owner becomes less involved with hands-on operations and sales and loses the pulse of the market and the customer.

It is important for top management to stay very much in touch with customers. Finding the time can be difficult, but it might be one of the single most important activities an owner or manager can partake in.

One way of remaining close to the customer is to schedule specific times to ride with sales people, spend time on the retail floor or take calls in customer service. While it might sound like unproductive time, the amount of valuable information that can be obtained can be significant and, in some cases, critical to the success of the business.

A key is to be disciplined about staying involved with the customer. Avoid jumping in and doing it and then forgetting about it. Customers should also feel like they can talk directly to someone in top management. An open door policy for customers is an invitation for customers to let their feelings be known and for you to fix whatever problem they need fixed.

Being a customer-driven company means staying in close touch with customers. Too many owners and managers become almost arrogant about not wanting to deal directly with customers. Their attitude reflects their lack of understanding about how high performance companies achieve that status.

Start today with a customer contact program that puts you and other top management personnel in consistent and constant touch with your customer base. Develop a specific plan for getting these people out of their offices and into customer locations, on a phone with customers or on a retail floor interacting and dealing with customers.

Keep It Simple

For some unknown reason, business people continually try to make things more complicated and complex than they need to. When it comes right down to it, business is not all that complicated. A business exists to make a profit. To do so, a company must offer a product or service that has appeal within a market or set of markets, it must hire good people, it must market its product or service effectively, it must control expenses and it must provide high levels of customer service.

But something happens in many businesses along the path to success (or failure). The people responsible for running the business begin to make their lives and others' lives difficult by adding levels of complexity that often don't need to exist. Most of this is a result of poor planning and implementation and a lack of adequate management skills.

In every facet of a business, it is wise to constantly think in terms of how things can be kept simple. Processes should be as simple as possible. When processes become unduly complex, communication breaks down, mistakes occur and customer service suffers. Communication should be kept very simple as well. The more words that are used in communicating, the greater the chance of miscommunicating. It is important to provide enough details to clearly communicate what it is you want to get across, but do so in a concise, straightforward manner.

When dealing with problems whether they are operational in nature or related to employees, avoid the tendency to make more out of the problem than is really there. In other words, stay away from making things appear worse than they are. Taking a "sky is falling" approach to problems simply encourages havoc and chaos that often clouds the ability to resolve the problem. It is important to stay calm, think rationally and positively and to remain optimistic. Work through the issues methodically and work toward a solution. Effective managers are adept at keeping their emotions in check and not allowing negativity to creep into their thinking.

Using common sense in resolving business issues is critical. Most business issues and challenges can be dealt with by using simple common sense and keeping things in the proper perspective. Managers who possess a high level of common sense tend to be more successful because they apply sound reasoning and logic to getting things done. Those who try to apply a lot of theory to getting things done often find it difficult to move beyond the theory and into practice. In other words they tend to get caught up in deriving complex models for getting things done when a relatively simple approach would suffice.

We often refer to blocking and tackling when it comes to business success. Blocking and tackling represents the fundamental business practices that must be in place to be successful. We also break businesses down into four fundamentally simple, but broad categories:
1) people
2) strategy
3) processes
4) culture

We believe that managers must deal with these four variables effectively to create a successful business and create value in the business. This approach also allows businesses to focus on four relatively straightforward areas and encourages simplicity in planning and management. Knowing that these four variables must be affected to be successful is a big first step in getting to a simple, logical approach to managing a business. Why? Because it brings focus to what needs to be dealt with.

Sure there are a number of sub-variables within each of these broader categories, but most businesses fail to compartmentalize their businesses in a way that makes sense. Management should look at these four variables and begin by asking these simple questions:
1) do we have the right people in the right jobs?
2) do we have the right strategies defined?
3) are our processes as simple and efficient as possible?
4) do we have a high morale, customer-driven culture?

In most organizations, the answer will be "no" to one or more of these questions if management is willing to be honest and objective in assessing the situation. A "no" answer is a call to action. A simple, but well defined plan of attack needs to be assembled to deal with deficiencies that might exist.

Maintaining simplicity in business whenever possible is important. Is your approach logical and based on common sense? Are your daily processes and procedures simple and efficient? If not, take a look at how you might simplify your business and, therefore, your life.

Beware Of The Culture

In any organization a certain culture exists. Culture can be defined many ways, but we refer to it as "habitual organizational behavior". In other words, organizations tend to repeat behavior in certain ways depending on the way the organization is managed and the type of people hired.
A small minority of organizations take on a high accountability, high performance profile. This becomes the culture that employees become accustomed to and strive to meet expectations built around this culture. The vast majority of organizations, however, develop cultures that fall short of high accountability, high performance. They range from very low accountability and performance to just short of high accountability and performance.

The culture is a result of management and people. Over time, "behavior" becomes so deeply rooted that it becomes very difficult to change. New leadership/management is sometimes brought in to turn the business around and change the culture. But this can often be troublesome for the new manager or leader.

Because a culture is so interweaved in the daily acitivities and behavior of the organization, it takes time to change it. It is most difficult to shift a low accountability culture to a high accountability culture. Employees in a low accounability culture are often marginal in terms of their ability to perform at a high level. When a manager suddenly makes a shift toward higher performance expectations, these employees often fight back in subtle and not so subtle ways. Even the best managers in these situations can sometimes fail.

A culture can fight change in such a way that the old guard becomes convinced that any planned change is bad and will have no part of it. Change in a low performance/low accountability culture is a threat because the employees fear being able to execute the plan and they fear being held accountable for high performance......something they might not be able to achieve.

To avoid a culture backlash, move slowly in making changes. Get a good feel for the type of employees and what they will fear most. Try to minimize those fears through strong communication and a commitment to helping them become better employees. Assure employees that any change will be accompanied by necessary training and patience in moving to a higher level of performance and accountability.

But bear in mind that even by moving slowly and trying to put employees at ease, there can still be significant resistance. Remember that most of the employees in a low accountability/low performance culture are comfortable with that culture and would rather leave it that way.....even though sustained low performance can lead to business failure.

Watch Those Shifting Priorities

Let's assume that you are operating with a well developed strategic plan and a well developed operating/business plan in place. We assume that because if you aren't you should be. Following that assumption, it makes sense that there should be a relatively consistent focus on the priorities of your business. But is there?

An all too common problem in businesses with (and without) sound plans in place is a constant shifting of priorities based on ill-conceived reasons for making the shifts. Often times the shifts occur because the owner or manager can't maintain focus and discipline in carrying out a plan. Or, as is more often the case there is not a good plan in place and any sort of focus is next to impossible to achieve. Sometimes the personality of the owner or manager is such that decisions are based far too much on emotion or impulse and those decisions can contradict a decision that might have been made only hours or days earlier.

When priorities and direction shift for no apparent reason other than the whim of the owner or manager, employees become very frustrated. They find themselves working hard to achieve one objective one day and perhaps an entirely different one the next. Or they sense there is indecision on the part of management and they lose confidence in management's ability to lead the company effectively.

To avoid shifting priorities, make sure that you have a well developed and sound strategic plan and a well conceived operating/business plan in place. Stay focused on the goals set forth in your strategic plan. Goals should change only when there is compelling evidence that your direction is inappropriate. If the plan is well conceived to begin with, this will rarely be the case. If you tend to be an anxious person, make sure your stress doesn't interfere with good judgement. Just because you have a setback or two doesn't mean that a shift in your priorities in needed. Every business encounters setbacks of some sort. Expect them and deal with them. But don't change your focus unless you know that you are headed in the wrong direction (remember that it's just as damaging to stick with a bad decision/strategy).

Business Problem: Difficulty Closing Sales

Without question, closing a sale requires hard work and persistence. The success rate for most companies is dependent upon a number of factors including:

-The quality or perceived quality of the product or service in question.
-Price.
-The strength of the relationship between the sales rep or other key company representative involved in the process and the customer.
-The quality of the sales presentation(s).
-The strength of competition.
-The reputation of the company.
-The diligence and timeliness of the sales rep or other key company representative in responding to the customer's questions, concerns and issues.
-Past buying experience(s) with the company.

While there are probably other factors that enter into the decision of the customer, we believe the factors identified above are the most critical. Most organizations think that price is the single most important factor in closing sales. However, price is most often a factor when there is little differentiation in the other factors identified above. Otherwise, it is not generally the primary reason for purchasing from one supplier over another.

But, concentrating on keeping costs down to support as low a price as possible is certainly not a bad idea. It is always a good idea to control product/service input costs without sacrificing quality to allow flexibility in pricing while maintaining reasonable gross profit levels. This is certainly an area that many organizations need to work on. Obviously, most customers will not pay an unreasonable premium even when a strong relationship exists.

Beyond price it is extraordinarily important for businesses to focus on developing as strong a relationship as possible with their customers. A relationship is built in a number of ways. Previous buying experiences help the customer evaluate courtesy and quality of staff, follow up, responsiveness to questions and problems, product/service quality and overall level of customer service.

In the absence of previous buying experience there is little for the customer to go on in terms of evaluating the company. Therefore, it is imperative that sales reps and others involved in the selling and relationship development process do an excellent job of contacting the customer, establishing an initial relationship, developing that relationship throughout the selling process and beyond and following up diligently and carefully to questions and concerns of the customer. Sales reps that have a "quick strike" mentality are those that believe that relationship development is secondary to getting the sale. In fact, if reps would view the process differently and focus first on the relationship and second on the sale, the closing rate will almost always go up.

Here are some tips for closing sales at a higher rate:

-Set clear, demanding and reasonable expectations for sales reps about making sales calls and territory coverage. See Expect Your Sales Force To Make The Calls for more information.
Hire relationship-oriented sales people with strong customer service skills.

-Train sales reps carefully in presentation skills. Making poor presentations can hurt closing rates due to lack of clarity and the fact that a negative perception is created. Train reps in handling objections. Sales reps sometimes handle objections in objectionable ways such as putting down competitors. Teach your reps to focus on what your company can do for the customer and how it will benefit them.

-Be persistent without being a pest. Don't leave the customer wondering if you are interested in his/her business by leaving long intervals between contacts. By the same token, don't make contact so often that is becomes annoying.

-Be honest. Don't lie to customers or make things up. If you don't know an answer, don't offer one. Tell the customer you will get an answer and get back to them quickly. Then do it. Don't leave the customer in the dark!

-Make certain that the proposal or sales material is well written, clear and concise and provides enough detail for the customer to evaluate your offer.

-Ask for the business! Making a presentation and following up on a customer's questions will generally only get you so far. Don't be shy. Ask for the sale in a way that shows you care about the customer and value his/her business. Don't be overly aggressive, but don't be reluctant to go for the gold, so to speak.

-After the sale, follow up to ensure a high quality of service. Work on strengthening the relationship and assist in dealing with any after-sale problems that arise.

-Clearly, closing a sale is a process. It is rarely a matter of making a single call and getting the order. It requires diligence, patience, professionalism and tenacity.

Common Attributes of a Good Manager

We routinely study managers and supervisors seeking answers as to why certain managers are successful and others seem to fail. It is somewhat difficult to find a truly good manager. But it really is not all that difficult to identify the attributes that separate good managers from average or bad ones.

Contrary to what many believe, a significant problem in any business is a lack of qualified management personnel. Bear in mind that people are the key factor in the success of any business. And it all starts with the management team. There seems to be such a dearth of good managers that organizations tend to accept mediocrity as a way of life rather than deal with the difficult issues of turning bad managers out. Or their managers are not good mentors and coaches and haven't worked to mold them into effective managers. It really seems to be a vicious cycle in most businesses.

But when it is time to identify someone for a management position, it helps immensely to look for certain attributes that tend to be found in good managers. The following list is probably not a complete one, but it seems to form a good foundation in terms of identifying what attributes are common among good managers:
-They have strong people skills.
-They possess strong communication skills, both verbal and written.
-They have a sense of fairness in dealing with people and issues.
-They exhibit consistency in behavior.
-They are able to control emotions and keep them out of decision making and interactions with -others.
-They believe that employees are more important to his/her and the company's success than he/she is.
-They are honest.
-They are willing to seek input from employees and build consensus.
-They are open minded.
-They are flexible.
-They have well controlled egos.
-They are self-confident.
-They are good listeners.
-They possess the ability to be direct when needed without being abusive or offensive.
-They have a sincere interest in people and their well being.
-They have good perceptive/intuitive abilities.
-They possess a good understanding of what makes people tick.
-They are mature.
-They allow others to get credit for positive outcomes.
-They understand that hiring good people is critical to their success and they do not micromanage.
-They are willing to admit to their own shortcomings and mistakes and do not feel a persistent need to be right.

How do you and other managers/supervisors working in your organization stack up against each of these attributes? Using a five point scale with 1 being little of a particular attribute and 5 being a lot, rate yourself against this list. If you feel comfortable doing so, have others do the same and compare your perception of the attributes you bring to the workplace to the perceptions of co-workers and subordinates.

Keep in mind that all of us bring certain personality traits and associated behaviors to the workplace. Probably the two keys to becoming an excellent manager are; 1) being self aware and 2) understanding that changes in behavior are likely necessary. Those who can achieve self awareness and appropriate behavioral modifications that coincide with the list above will typically achieve the highest levels of success as managers.

The award winning Managing People For High Performance self-study training manual provides additional in-depth information regarding management and supervisory attributes and skills. Also included in this widely used workbook is a personality assessment tool that will allow you to better compare your personality and behaviors to the attributes most desirable in managers. Visit our sister site mybusinessbooks.com to order your copy today.

There Is No Silver Bullet

Do you ever find yourself looking for some magical answer to all of your business problems? Often when businesses are underperforming, owners or managers start looking for that one program or fad theory or what we often call the silver bullet to solve all of their problems.

It's important to recognize that there is no magic solution to business problems. Reengineering, total quality management, budgeting for results, activity based costing and a host of other programs have been introduced to the business world only to meet with very mixed results. Many times, businesses buy into programs like those mentioned hoping that they will replace the fundamentals required to successfully manage and grow a profitable business. The bad news is that it won't happen. Millions of dollars are spent each year on programs that leave owners and managers perpelexed as to why they didn't have the impact they had hoped for. These programs can have a positive impact on organizations that are fundamentally sound. They won't really help businesses that have a shaky foundation of management fundamentals in place.


These organizations, to varying degrees, have a difficult time just managing day-to-day activities. Attempting to assimilate a "silver bullet" program into the organization requires time away from putting out the fires that are sure to arise from marginal management practices. This tends to merely compound the problems the business is experiencing.

It is important for businesses to first examine their fundamentals. Or as we sometimes refer to it, their blocking and tackling. For those of you who enjoy sports analogies, think about a football team that is fundamentally weak at blocking and tackling. These two tasks are the foundation for success on the football field. When a football team can't block and tackle well, there is little chance of stopping the other team or scoring touchdowns. The same holds true in business. Think of managing people, functions and projects as blocking and tackling. If a business does a marginal to poor job in these areas, there is little chance for long-term success.

Sure we can all point to organizations that are successful in spite of themselves. They have found a strong niche and are making solid profits without sound management practices. But what happens when the economy turns down or the nice little niche the firm has carved out no longer is as viable as it once was? Without a solid management foundation in place there is little chance that an organization caught in this predicament will fight through it. We see this happening almost daily.

Before agreeing to bring any comprehensive packaged program into the organization, make sure that the basics are being handled well first. Then feel free to implement programs that make sense for the organization. There are incremental benefits to be gained from many of them. But the point of this Brief is to emphasize that these programs will not replace sound management practices.

Sales Compensation Plan Components

A sales compensation plan cannot be developed carelessly if sales reps are to be properly motivated and compensated. We find that many companies have ill-defined, confusing and generally inappropriate sales compensation structures.

It is important to create a sales compensation structure that motivates sales reps to higher levels of performance. It is also important to allow sales reps to earn compensation as a direct result of their efforts without crippling their ability to meet their monthly obligations. In other words, pay sales reps well by creating incentives to achieve higher levels of sales, but provide a safety net that is not too high or too low. This can be a challenging task.

There are essentially four possible components from among which to choose in developing your sales compensation plan; salary, commission, bonus and sales incentives. We believe that a well constructed sales compensation plan can include all four components.

If you opt to pay your sales reps a base salary, try to keep it low enough to allow room to create sufficient incentive and motivation, but high enough to give your reps some breathing room in meeting financial obligations. Generally a base salary will fall somewhere between 15 and 40 percent of total compensation. Obviously as a sales rep becomes more successful, the percentage of total compensation will fall. Therefore, a rep whose base salary represents 40 percent, for example, of total compensation in the early months of employment might end up with 15 percent of total compensation made up by salary after a period of time. Some organizations provide a training or "greenhorn" salary that is initially higher and is reduced over time to allow sales reps to get their customer base established and sales volume up. The thinking here is logical and acceptable since the sales reps are not worried about paying bills in the early going and can focus on selling and building relationships.

Some organizations prefer to base sales compensation on straight commission. The thinking here is that a straight commission structure allows reps the opportunity to get out of selling exactly what they put into it and the reps can directly correlate their activity with their compensation. And to some extent this line of thinking has some merit. However, a straight commission structure can be a disincentive for some potentially outstanding sales reps to join an organization. In most cases, it takes some time to get to a level of sales that provides an acceptable level of income. Therefore, in the early months or years of a rep's tenure with the company the income level is often not sufficient to meet the reps' monthly obligations. This can be a distraction and an incentive to give up. Some will argue that if the rep gives up they didn't have what it took to make it anyway. Some industries such as the insurance and brokerage industries have made it virtually standard practice to offer a straight commission structure. And they have been successful in doing so. But, there are a number of industries where this type of structure simply won't work.

According to MyBusinessBooks, commissions that make up a part of a broader sales compensation plan tend to work better. Commissions can be based on sales or gross profit. However, be careful not to provide commissions based on sales whenever the sales rep has any control over pricing. Sales reps are human and commissions based on sales only invites price reductions to make the sale. In some cases, the price reductions can be too deep leaving the sales rep with commission, but the company with little gross profit on the sale.
In a plan that involves several components, commissions should make up the biggest part of total compensation. Generally, this will range up to 80 or 85 percent of total compensation. A well balanced plan will have commissions making up in the neighborhood of 65 percent of total comp.

Adding a bonus structure to a sales compensation plan can add incentive to reach new levels. Generally speaking bonuses should be paid at year end for meeting or exceeding sales goals, for reaching certain target incentive levels or for some other specific, measurable reason. As an example a bonus structure could be set up to pay $5,000 for reaching a certain level of total sales, $7,500 for reaching yet another level, $10,000 for reaching yet another and so on. Be careful not to add too many levels. It will simply complicate the plan. Also, make the bonused big enough to incent reps to want to hit each level. One interesting approach is to create a wider gap between bonus levels and make the bonuses cumulative.

The final component that can be included in a sales compensation plan is sales incentives. These are generally non-monetary incentives such as trips or gifts. These are often associated with sales contests, but can also become a part of a sales compensation plan. Incentives are best used for achieving short-term results. The incentives selected should be significant enough to get sales reps' attention. Incentives that aren't attractive are not worth offering. The offer will fall on deaf ears and won't provide sufficient motivation to stretch to higher levels.

Putting a sales compensation plan together needs careful study. Run a sensitivity analysis to assess the impact on sales rep compensation and company profitability at various levels of sales. It is important to build a plan that is simple, straightforward and easily administered. Avoid complicated, confusing plans at all costs.

Five Common Business Mistakes

We have compiled this list of five common business mistakes that can be crippling to any business:
1. Making poor hiring and promotion decisions and repeating this process over and over again. It is truly amazing the number of companies that do not have a sound hiring process in place. It is equally amazing that most organizations do a very poor job of matching people to jobs.

2. Lack of accountability. In addition to poor hiring and promotion decisions, employees are often not held accountable for meeting reasonable, but demanding expectations. This impacts the organization in many ways, but most importantly in overall performance, employee morale and customer service.

3. Operating without a GOOD long-range strategic plan. Too many companies live for today. Some have developed plans, but they often lack vision and substance. Developing a long-range strategic plan is often viewed as an exercise that needs to be completed because companies should have one.

4. Managing with a short-term mentality. At the expense of the long-term viability of the company, management is too often focused on maximizing profits over the short-term. A short-term mentality very often leads to numerous operating and customer service problems that do significant damage to the company's credibility and image. This is often caused by cuts in the workforce that are too deep or simply unwarranted, an unwillingness to spend money on activities or infrastructure that might be important and a focus on the compensation of management which is often directly tied to short-term profits.

5. Lack of cost controls. In too many organizations, money is spent on the wrong things and not spent on the things it should be spent on. Far too often, budgets are prepared without good assumptions and justification leading to overruns and missed profit targets. This can obviously have an adverse impact on banking and investor relationships. The balance between cost control and maintaining a long-term mentality can be difficult for managers not well trained or well prepared to deal with these issues.

But That's The Way We've Always Done It

Change. This six letter word can strike fear in the hearts of many an employee. The thought of changing anything can be anxiety producing in some people. But businesses are dynamic. And for businesses to survive, they have to be flexible and they need to have the ability to react quickly. If an anti-change mentality exists within the company, the ability to remain flexible and react is reduced considerably.

Businesses and the people that inhabit them become creatures of habit and comfort. The thought of change in procedures and processes can be uncomfortable. But it is vitally important that a business remain open to change and adjust the way it goes about its business as changes in the market(s) occur and as inefficiencies creep into the operating environment.
Because people are reluctant to change, it is important to establish a standard of change. In other words, employees should be well aware that nothing is sacred. If a process is causing problems, it will be changed to make it work better. If a particular approach to doing business isn't working as well as it used to, it will be changed. The "because we've always done it that way" excuse is not acceptable in explaining why something shouldn't be altered.

Since employees are often protective of established ways of doing things, it is sometimes difficult for them to admit that there might be a better way of accomplishing the task at hand. There is also the fear of job loss when an employee feels there will be a reduction in the amount of work required to accomplish a particular task.

To avoid an ant-change mentality, set expectations about change. Those expectations include eliminating the notion of sacred cows. Sacred cows in business can be, at best, limiting and, at worst, crippling. Sacred cows can be employees, processes, procedures, products or services, promotional approaches, office or store front location or a host of other things held near and dear to the heart of someone in the organization.

Look at current business practices with a critical eye. Ask yourself if those practices really are the best way to go about meeting your goals. If they aren't, initiate changing them. Employees will feel more comfortable about change when it is a part of the culture. When change is not feared because it is known that the business will keep up with market changes and with the times, employees will buy into the idea of change more readily and help facilitate the change process.

Don't allow employees to dictate the rate of change. Many employees will tend to slow that rate. Your job as a manager or owner is to encourage employees to identify things that need to change or to assist the employees in identifying what needs to be changed.

It's widely recognized that businesses that are adaptable and flexible stand a better chance of thriving. They can react quickly and prudently. In a culture where change is uncommon and feared, the ability to change rapidly is diminished significantly because the organization isn't accustomed to making changes as needed. In a slow-to-react culture, the business often finds itself on the outside looking in, so to speak, when it comes to taking advantage of new opportunities in the market or upticks and downturns in the economy.

Change is inherent in business. Unfortunately too many businesses are not good at recognizing when to change. And in many other cases, the people within the organization hold the business back by not wanting to change. Cast a critical eye on all facets of your business and constantly ask yourself if any of them should be changed. Ask your employees to do the same and encourage them to come forward with their ideas for change.

One word of caution, however. Sometimes an owner or manager will want to change things simply for the sake of change. Adhere the old adage, "if it ain't broken, don't fix it". Certainly something that appears to be working well can often be enhanced by making some minor modifications. Evaluate whether radical change is necessary or just some simple enhancement is in order.

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