Anamcgary's Blog

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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Time Management Killers

One of the greatest challenges of leadership is managing time, a limited resource that has to be used with the utmost care and consideration. As the saying goes, there are “only so many hours in a day“, and as a leader you must be able to stay focused on those tasks and activities that truly matter.

That task is complicated by the daily presence of many distractions that a leader must avoid so as not to put themselves (and their company) at risk.

In my role as consultant and business partner, I find the three distractions that are particularly dangerous:

The “Fire Drill” –   Your boss calls you and is upset because he spoke with a customer who said they were unhappy with the service they received.  When you dig into it, it appears to be an isolated case that could be routinely handled by your customer service staff, since you had set up a protocol for cases exactly like this one.   Your boss looks at it differently – it’s a complete breakdown of customer service that needs an extensive review of processes and staff.   You then start the fire drill – two days of meetings, phone calls, and e-mails, involving many members of your team, devoted to that single customer complaint who by the way already forgot about it.

The “Black Hole” – The Company has committed a lot of money to a particular project and you are trying to guide it to a successful finish.  The trouble is, about 25% of the way in it becomes pretty clear that things aren’t going well (and you are going to be over budget also), and you face the decision – pull the plug now (with all the resulting hand wringing and blame), or, ask for more money and move on.  You choose the latter, and enter the black hole – pressing dangerously on in the hope that somehow, someway it will get pulled through in the end.

The “Something New” –   It’s a new product, service, client, a new venture, or a new partner that catches your attention.  It sounds really exciting and the possibilities are endless.  The problem is, it’s not really right for your company, or it’s a long shot for success, or maybe even the timing is off.  But it really is exciting!  So you devote a lot of time and energy on it, at the expense of other, more viable and profitable things.

These kinds of distractions CAN be avoided.    It’s all a matter of leadership perspective – that ability to take a step back, and “see” the bigger picture.   It also requires something else that is even more essential – Courage.

The courage to put down a bright shiny object in the face of all that “excitement”.

The courage to stop a black hole project dead in its tracks and take the heat.

And, the courage to tell your boss you will not conduct a fire drill because of a single and isolated incident.

Perspective and courage are your best tools for time management – use them well, and wisely.


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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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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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Delivering Bad News

Everyone in a leadership or management position has to deliver bad news from time to time. Human Resources professionals almost always are called upon to deliver the bad news. It just comes with the territory.

Trust me it is never easy, no matter how many times you do it. However, I have found that  it’s not always as scary as we make it out to be. We build it up in our minds and sometimes rush to get it over with is what often results in a negative outcome.

Below are some examples of news that we pray will disappear before we have to confront it.  Some fall into the Human Resources category while others are more management related.

  • Explaining to the world – and all your customers that a product has yet another major defect.
  • Telling a group of employees that you will no longer be offering medical insurance.
  • Telling a group of employees that they must take a pay cut.
  • Informing your boss that the company lost a key customer.
  • Telling your CEO that you have lost the presentation file he was to use in presenting to a huge prospect and he’s going to have to wing it.
  • Telling a group of employees that the Company will be having a major layoff.  For HR, telling an employee his/her job will be affected.

I can go on and on with examples and some really depressing stories, and while each one seems unique, there is, more or less, a single method for dealing with this most challenging of business situations.  By far the biggest mistake people make in delivering bad news is the emotional build up and the unnecessary rush to get it over with. They typically don’t take the time to:

  • Diffuse their own emotional state
  • Put themselves in the other person’s shoes
  • Do enough contingency planning to know what can be done to make things right and under what conditions to offer them.

Not surprisingly, the method incorporates elements of crisis management, customer service, effective communication, and even some psychology. And, if you do it with empathy and finesse, I’ve found that you can actually improve your relationship with the other party, rather than damage it.

Steve Tobak suggests these four Steps to help improve the process and maybe the outcome of delivering bad news

Step One: Be Genuine. Be honest with yourself about the role you personally played in the outcome. This is critical because, if you played a direct role, i.e. you screwed up, you need to be straight with yourself about that or you’ll end up feeling guilty and weird and that will come across negatively. In other words, you need to diffuse your own emotional state.

Step Two: Be Empathetic. Put yourself in the other person or people’s shoes. I really mean that; give it some time and really get in there. Try your best to understand what they stand to lose as a result of the bad news. Make sure you’re clear that, regardless of your personal role in causing the problem, you are, to the other party, responsible and accountable.

Step Three: Plan. Consider all the ways you can make the situation right. In the case of a major delivery issue to a customer, communicating a product bug, or equally significant event, that may require one or more internal pre-meetings. In any case, you need to have a clear picture of the options at your disposal and under exactly what conditions you and your company are willing to bring them to bear on the problem.

Step Four: The Delivery. Now, and only now, are you ready to deliver the bad news in real-time. If you did the first three steps right, your emotional state will be clear. That means you’ll be empathetic but not emotionally distraught, freeing your conscious mind to make clear-headed decisions in real-time. And depending on the reaction, you have an arsenal of possibilities to offer to help make things right.

Steve uses an example of when he was head of sales and had to tell a customer his company could not deliver a key component on time, resulting in a shut-down of his customer’s production line.

During the “bad news delivery” face-to-face meeting with the customer, he held a conference call with my company’s head of operations who, seemingly on the fly and under pressure from the customer, committed to an accelerated schedule that would minimize the customer’s pain.

That was a preplanned contingency to use if necessary. The result was a customer who felt that 1) I would do anything to go to bat for him, 2) my company would pull out all the stops to meet his needs, and 3) he helped to make all that happen by the way he handled the meeting. We all won and our relationship was stronger as a result.

I too could tell you many stories of tough conversations that ended on a positive and sometimes hopeful front because of the preparation steps taken.  If you follow these four steps, you’ll minimize the negative impact and, at times, even come out ahead.