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Leadership thoughts from PeopleFirst HR


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Leaders should be willing to hear

For company leaders to make the right decisions about strategy, people, execution, and money, they need to understand what their customers and employees really think.  Asking the right questions … and fostering a candid conversation about where the company stands today is paramount to a company’s ability to reach and exceed their revenue and profitability objectives.

Customers see the company for who it is today, and that is not always where the company wants to be. Hearing customer perspectives on the sales experience, the on boarding process, use of products or services, support, and even billing can be an eye-opening experience for some leaders. Gathering in-depth feedback on all aspects of each customer’s experience is essential to executive leadership as it can highlight where you need to really focus or make changes to achieve the company’s growth objectives.  Companies who embrace the concept of truly understanding market perception always win.  My recommendation is to use a third-party to conduct a survey.  They know what questions to ask and how to ask them to get you the information you really need to make the right decisions.  Last but not least is what you do with the outcome of your survey. Only collecting the data is not enough. If you are not willing to change your strategy, or any other thing that might be affecting the standard of your business, then don’t bother doing the survey. The only reason why you collect customer feedback is to ensure the customer loyalty to your brand or service and how you are viewed in the market. It’s done only when you realize the importance of feedback in order to improve your business.

Employees at every company can be the source of countless ideas that will effectively cut costs, streamline operations and/or grow revenue. From the corporate office, to the call center floor, to out in the field, each employee brings a unique perspective based on their role and responsibilities, and many great ideas can be uncovered just by asking.  Beyond the employee suggestion box, encouraging innovation can take the form of putting together small teams to brainstorm new ideas, allocating and encouraging a certain amount of time each month dedicated to idea creation, or implementing an online solution focused on sharing ideas, which often leads to further innovation.  Just as critical as creating an environment that encourages innovation, is having a plan in place to implement the most promising idea(s). This requires true support from management as it entails allocating resources and dollars that could be used elsewhere to further develop each idea and determine its long-term viability. While not every project will turn out as planned, they may turn out even better and have a substantial impact on the company.  But as with customer feedback, if you are not willing to change your strategy, or make suggested changes don’t bother asking.

Top performing CEOs aren’t afraid to ask the tough questions – they will provide critical data that can be leveraged to create a cohesive strategy involving people, execution, and money, all of which is essential to exceed revenue and profitability goals.


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While people drive the culture, the culture drives the brand…or is it that brand drives the culture? The truth is they are too intimately tied together to discern which comes first. Great companies leverage their culture to promote their brand. Companies such as Zappo’s, Dream Works and Google take pride in their culture and use it to promote who they are as an organization. Every interaction with an employee, a client, or a stakeholder is an opportunity to brand the organization. These very interactions are the ones that over time define and reinforce the organization and the culture that permeates it.

Culture has a tangible impact on employee engagement. Employee engagement is a measure of an employee’s commitment to his or her job, team, manager and organization, which results in increased discretionary effort or willingness to go “above and beyond” normal job responsibilities. This level of commitment is critical in the success of early stage companies and also results in the employee’s intent to stay with the organization. The primary factor that seems to separate an engaged employee from just a satisfied employee is that the engaged worker consciously puts forth additional effort in a manner that promotes the organization’s best interests. Not only does engagement have the potential to significantly affect employee retention, productivity and loyalty, it is also a key link to customer satisfaction, company reputation and overall stakeholder value. Employee engagement drives workforce productivity.  Multiple studies demonstrate how a strong and thriving culture with high employee engagement leads to greater employee productivity. Innovation and creativity are often key to the growth of early stage companies. In a great culture where new ideas are respected, and mistakes are viewed as opportunities for learning, employees can actually enjoy their work and be energized by the environment around them. They are naturally more productive because they are eager to be part of a company where they feel valued and their contribution matters. It is a simple concept, but happy employees make for happy, successful companies.

Company culture is unique and provides arguably the most sustainable competitive advantage an organization can have in the marketplace for distinguishing itself against the competition.  Competitors may attempt to poach employees, steal customers and duplicate the product or service an organization has worked hard to develop. Culture, like the brand, becomes the fabric of an organization. The stronger the culture and the brand, the more difficult it is for competitors to pose a threat to the organization.


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Business Ethics – It’s not Rocket Science

“The truth of the matter is that you always know the right thing to do… the hard part is doing it!”

U.S. Army General H. Norman Schwarzkopf

Likewise, the answer to most business problems is usually obvious as well.

Consider this – when was the last time you were really stumped for a solution to a problem?  In most cases, the hardest things about solving the problem were the obstacles of personalities, politics, or cost.  Taken together, these obstacles usually make the obvious solution very hard if not impossible to implement.  These are failures of an organization’s values, guiding principles, and ethics.

Several years ago a friends of mine was moving her elderly mother closer to her home due to her declining health.  Her mom had sold her home and hired a moving company to move her furniture and transport her car via trailer from Boston to Florida (primarily to minimize the mileage).  When the moving van and car arrived, it was obvious that the car had not been transported but driven instead.  When questioned, the driver admitted that they had driven the car and not transported it as they had been contracted to do.

To help her out I called the moving company’s main office.   The representative asked what I wanted them to do about it.  My only reply was “What would you expect someone to do if it was your mother!” Shortly thereafter, the driver came back to tell us that they were refunding the cost of transporting the car.

When a customer calls about a problem with your product or service. You generally know right off-hand what the right thing to do is: either fix it, replace it, or refund their money.  But company management may complain that “if we fix every problem for every customer then how are we supposed to make a profit?”  Well, if your company’s product or service has so many customer problems that fixing them impacts profits, then fix the product or service!  It really isn’t rocket science!

If the only reason not to do it just like you would for your mother is the cost to the company, where do you think the savings to the company is coming from?  It’s coming from your customer’s wallet.  And if it’s not fair to your mother, what makes it fair to your customer?

The customer’s complaints (whether you like it or not) are a part of your company’s quality control process.  If you’re a proactive company, then you’ll have worked out all the bugs before they even became an issue with your customer.  Unfortunately in their rush for quick profits, many companies out there let their customer’s do all the beta testing for them.

One of the unintended consequences of making unethical or dishonest decisions in dealing with your customers is the message it sends to your employees: that you’ll mistreat them the same way whenever you think it’s in your best interest to do so.  If you don’t care about your customers, then how can you expect your employees to care about them or the company for that matter?

 

So here are some suggestions for creating an environment where people just do the right thing:

If a customer’s product or service failed the answer is simple and obvious; either fix it, replace it, or give them their money back.  If the customer broke it, then don’t!

Make sure your corporate policies, organizational politics, management personalities, and cost focus don’t interfere with the obvious solutions to most customer problems.

Generally speaking, if you have to ask yourself if what you are planning to do is the right thing, then it probably isn’t!

When deciding a course of action, the best question you can ask yourself is, “Would I do it this way if I were doing this for my mother?”

Obviously, no company or individual can live anywhere near perfection, but the real world test is how hard the company or individual decision maker is trying to do the right thing, and how quickly they’re trying to fairly resolve problems.  Remember, doing the right thing isn’t rocket science!


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Creating a Sustainable Competitive Advantage

To survive and prosper, small and midsize companies must establish a marketing presence based upon a sustainable competitive advantage.

I often speak with company owners and CEO’s that want to grow their organizations, but don’t know how to take the next step.  It’s difficult when you’ve worked so hard to build your current business to slow down enough to look what’s next.

So where do you start?

Examine your Marketing Presence.  This is the message your organization communicates to its prospect and customer base.  Is your message effective?  To be effective, the message should be clear and simple — and contain the key attributes you want associated with your business.

What is your Competitive advantageThe sum of those attributes that differentiate your business from its competitors. This is your core competence. You develop, build and enhance it through a clear understanding of your customers’ wants and needs. You implement it through a strategic plan (a directional compass) that can help you quickly adapt to changes in their wants and needs.

Is it Sustainable? Can it keep in existence, maintain and affirm the validity of, support the spirit, vitality and resolution of, encourage, endure and withstand. Only through your continuous understanding of what makes your business competitive can your business survive and prosper. GE’s former CEO, Jack Welch, once said, “If you don’t have a competitive advantage, don’t compete.”

Since it takes two — a buyer and a seller — to make a sale, the reason for establishing a viable marketing presence is for your business to be on the prospective buyer’s “short list” when the buyer is ready to buy. You want to be sure that your company is among those being evaluated when the prospect’s need arises.

When you think about your competitive advantage, consider that in your prospect’s mind your company “fits” into some category.  For example, you are either a “low-cost” or “value-added” supplier. A low-cost supplier is categorized as one who consistently provides a lower cost with acceptable quality. A value-added supplier provides a differentiated product or service that contains substantial attributes which command a premium price.

Likewise, you are either a “generalist” or a “specialist”. A generalist is categorized as having a broad scope — serving all types of customers in an industry or geographical area, offering a broad range of products or services.  A specialist focuses on specific products or services and dedicates all efforts to that one niche or market segment.

The key element in your thinking should be to make a difference. You must take the risk to create a recognizable choice from your rival companies.  Your worst error here would be to imitate rival companies or being all things to all people.

As you think strategically about establishing or re-establishing your market presence, consider this process:

Conceptualize your strategy — this is pure and analytical. Engineer general agreement to the strategy — here you are muddling over the practicality of what you want to do and sharing your ideas with others and getting their input.  You might also seek the help of a business coach during this period.

Prepare a mission statement and business plan — to discover and clarify what business you are in and how you plan to approach it.

Communicate the statement and plan — both internally and externally.

Live the plan — if all the steps feel right, start to implement the plan — but with the full expectation, knowledge and intent (this is really important) you will continuously adjust and adapt it to market changes.


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How do you value your customers

Paying customers are the lifeblood of any company. Yet I find that some business owners and company leaders think that a customer’s worth is only based on how much they buy from their company. This is a common shortsighted mistake. In reality, the entire “life time value of a customer” (LTV) is based on seven measurements which every company needs to utilize:

1. Revenue minus cost

For many companies, 20 percent of their customers produce 80 percent of their revenue. What small business owners often forget is the cost to service these top customers.

What is the gross profit margin on a customer?

There are always customers that take up more than their share of resources for the revenue they produce. In this case, the customer might need to be fired. It is important to understand how much revenue a customer produces, but also what it actually costs to service that customer. The business may actually be more profitable without them!

2. Revenue timing

If the company is a seasonal based business with a maximum capacity, a retail customer that buys in February may be more valuable to a business than one that buys in December. At
the holidays, the customer may not even be able to get the service that maximizes their LTV.

3. Referrals and “buzz”

A customer that provides ‘buzz” for your company multiplies the effect of their purchases. For example, if a customer refers two other customers—which the business didn’t pay
for to acquire—then they can be worth three times their original sale boosting their LTV.

This is why “The Ultimate Question” from Fred Reinhold is so important. How likely is it that you would recommend this company to a friend or colleague? If customers are
likely to recommend a friend or colleague, then that business has a high chance of succeeding long-term.

4. Retention – by far this is so important.

Getting new customers in a challenging economic environment is difficult. It is always cheaper to retain customers than to constantly find new ones—many business experts put this cost at 5-7 times higher. Having these types of customer revenue annuities is one of the best ways to build a stable and profitable business.

5. Add-on products or services

It is a lot easier to sell new products or services to existing customers than to new ones. These customers already know and trust the company. This strategy has made Amazon and
Zappos very successful as their great customer service and order process efficiency gets extended to any product they sell. For example, Amazon gains business when consumers find a product to buy, and then they see if Amazon sells it.

6. The customer’s brand

References are the most powerful selling tool that any company has. Even more important, if a company did business with a major brand, or someone well respected in the market place, town, city, etc., they can use that reference to get more business. Prospects think that if the company did a good job for …., then they can do business with me!

7. Feedback

Does the customer tell the business what they are doing well and what is going wrong? This is incredibly valuable feedback that can be applied across the entire business. Making these types of improvements can multiply the customer’s long term effect.

So think about your business.  How do you value your customer?


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Company Culture always affects the bottom line

Zappos Chief Executive Tony Hsieh spoke at the annual Society for Human Resource Management conference this year.  He explained that before joining Zappos, he dreaded coming to work at his own company. It wasn’t fun to work there anymore
because the company culture went completely down the drain.

When he began his work at Zappos, he decided to make a change. Eventually, their company mission evolved from having the greatest selection of shoes online, to providing the best customer service, to having a dynamic and fulfilling company culture. Along the way he learned lessons to share with other organizations trying to do right by shareholders and employees at the same time.

“Our number one priority is company culture,” he explained. “If we get the company culture right, then . . .delivering great customers service or building a long-term brand or business will follow.”

Their culture begins with the hiring process. Potential candidates participate in two sets of interviews and they need to pass both in order to be hired. Often, they pass on very talented individuals that do not fit with their company culture.

The first set of interviews may inquire into the person’s experience and skills that would make them a good employee, while the second set determines whether they would be a good fit within the team. The second set includes questions concerning each of their core values.

Hsieh said at first, the company,  resisted drafting core values because it seemed very corporate and often they read like a press release. But, they asked the employees for their suggestions and a year later released the values.

To ensure that these values are taken seriously and integral in the company’s culture they must be committable core values. The company can fire people for not following the values, even if they are executing their traditional roles correctly.

For example, when interviewing, in order to determine whether one person would be able to thrive under these values, the company will try to determine whether they value honest relationships, transparency, embrace opportunity and are humble, among others.

Humility, the last value, is very difficult to determine, but after the interviews, HR will circle back with the shuttle driver who brought the applicant to the company offices and ask how they were treated. If they did not treat the driver with kindness and respect, then they won’t be hired, no matter how well they did on the actual interviews.

They also ask on a scale of 1 to 10 how lucky the potential hire is. Obviously, they don’t hire those with bad luck, he jokes. However, basing this exercise on a research study, after their answer they have them scan a fake newspaper for the number of photos. Within the newspaper is a headline that gives them the answer. According to research, those that answered that they were luckier found the headline. Luck is about
being open to opportunity, said Hsieh, an important value for the company and their employees.

“It actually doesn’t matter what your values are, what matters is that you have them and that you align your organization around them.  You may disagree with the values established by Zappos, but purposefully establishing a company culture works successfully
for many companies.


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Manage company growth more effectively

It turns out the online promotion was not being honored at the store.  In talking to one of the sales people about my options he told me he could pull some strings and get me the same deal.  I took it home, plugged it in, and it worked great.  I was a happy customer.  That is until the bill came.  I noticed I was being charged an additional service fee for the store purchase.  What happened next was what really got me thinking about growing pains companies and their customers experience when they are not prepared for rapid growth or expansion.  I called customer service.

The support representative was nice enough, but after explaining the situation several times she could find only one solution.  I needed to take the device back to the store, return it. I would then need to go online, sign up for the deal and wait for exactly the same device to be mailed to me.  No way.  What an enormous waste of time and money for everyone involved.

I decided to prod a little so I could better understand the internal workings and maybe get a different resolution.  With a few questions, I found out she herself was frustrated with the sales person.  She was frustrated with the company software she was using as it physically wouldn’t let her apply the promotion to my account even if she wanted to.  She was even more frustrated that she had never heard of the online deal, before I called.  I sympathized with her and explained how I could definitely see how poor planning and communication, and not having the tools and autonomy needed to do her job could be stressful.

There are a few things I see here that are symptomatic of a company that has a widening gap between infrastructure and growth:

Poor communication – When companies grow quickly they undergo many changes in a short period of time.  Information becomes siloed and lines of communication between groups break down.

Poor planning – Strategic planning is a must in any change initiative and especially when dealing with plans for expansion.  It’s important to take a systematic approach and consider all of the aspect of the change (including customer experience) not just financial considerations.

Lack of clear job roles – As roles expand or are created, the situation turns to one in which people do what they want to do and say that the remaining tasks are “not my job.”  This was very evident in my encounter.  The support person said a number of times that “this is a store issue” or “I can’t help with store related problems.”  To me, the customer, the company has one face.  Internally that didn’t appear to be the case.

Lack of resources – Employees need to have the tools that will be required to support growth.  In this case the support person felt her “hands were tied.”

I wonder if senior leadership of this company are truly aware of the issues their employees and customers are facing.  In a press release, they describe their growth last year as “phenomenal,” reporting sales doubled in Q3.  They anticipated by the end of 2011 they would see double what they expected in terms of a customer base.  Surely, they have a lot on their plates.  How much better would the situation be if they were armed with feedback from their employees?

If I had to make one recommendation to this company, it would be to pay attention to what is happening on the front lines.  It’s so important to give employees a voice and support them in supporting your customers.  Employees have an understanding what is and is not working in day-to-day activities.  They want to know their opinions count and can shed light on things leaders can’t see.  In order to truly leverage employees’ experiences, leaders must listen, let employees know what they are hearing, and show employees how their feedback has created real and meaningful change.

By the way, in case you are wondering, I did get the support person to find a work-around to remove the fee, but the company could have had this one employee handle about 5 more calls in the hour she spent trying to find a solution for me without much support.