Rough Waters in an Economy Calls for More Attention on Performance

You bet we're dealing with some rough waters in the U.S. economy. Organizations of all sizes are being affected by it and the importance of how they deal with performance of employees becomes magnified in tough times.

But what do most organizations do? They cut staff and cut programs designed to enhance performance. One could argue that the single most important thing that can be done when times are difficult is to focus even more intensely on hiring the very best people and on incrementally improving the performance of all employees.

How well employees perform during good and bad times is absolutely critical to the success of the business. And one could argue that there should be the same high level of intensity and urgency surrounding performance management regardless of how well things are going financially. Who in their right mind would argue that? Certainly no argument here.

Because one result of a slowdown in business can be cutbacks in personnel, that means that those who are left have to be that much more productive and that much more focused on performing overall at even higher levels than ever. Let's face it, when times are good, 'fat, dumb and happy syndrome' can set in and the level of accountability for performance at the highest possible level may not be in place.

Our founder likes to say "I don't care how good things look today, you had better prepare every day for the time when things go to ----." Sure I could fill in that last word for you, but you get the gist. His point is that nearly every business will face tough times at some point. And if there isn't a strong performance management culture in place that includes, at a minimum, employee development, goal alignment, accountability, excellent coaching and feedback, structured and well developed formal reviews, and a focus on developing a high morale, high engagement culture, the tough times will be even tougher when they come around.

Unfortunately, good times tend to breed contentment and lethargy and the commitment to truly advancing the skills and performance of all employees on an ongoing basis can slip. Then when things get tough, some level of panic can set in and irrational or knee jerk decisions can get made. Some of those decisions may include cutbacks related to employee development and performance management. Because employees are the key to advancing the organization in good and bad times, cutting back necessary activities and programs generally only serves to exacerbate the problems posed by a bad economy and faltering revenues.

Spending money on performance management is an investment. HR professionals understand that incremental improvement of employee performance serves to strengthen the position of the business thereby positioning it to take advantage of favorable conditions and to withstand a bad economy or a slowdown in the industry.

Don't fall victim to discounting the importance of a concentrated and comprehensive plan for continually moving employee performance forward. Doing so could put your company in a very unenviable position.

What To Do When There Is Nothing Positive To Say On A Performance Review

Once in a while, you start a performance review on an employee and realize you do not have anything good to say. When this happens, be honest on the review but do not tear down the employee for their poor performance. If you do they will leave your office looking like the guy in the picture. Remember, reviews are supposed to be a time to help employees improve, not create tension or put them down.

Keep in mind that an employee with serious performance issues should already know about those issues and the review shouldn't come as a surprise. If the employee is someone that you intend to coach and help to achieve higher levels of performance, the last thing you want to do is create an overly negative review meeting. That said, don't minimize issues that need attention.

With each negative comment, you should add in how they can improve and give them specifics on how to accomplish this. That way instead of being discouraged they can focus on what they need to do to make a change.

You should also make sure to include examples with each negative rating. That way the employee knows exactly what they are doing poorly. This is a great way to show an employee who may not agree with the review precisely what is going on.

The most important thing to remember is to stay positive and offer your guidance to the employee. This can be an awkward situation for everyone involved if it is handled the wrong way. Make sure to address the review as a learning tool and together discuss ways to improve this employee’s performance.

How To Be An Effective Leader In The Workplace

Being an effective leader to your employees is not a hard task to accomplish, but isn’t necessarily meant for everybody. To help you be an effective leader, keep these few rules in mind:

#1: Lead By Example


No one wants to be lead by someone who does not follow their own advice and rules. Make sure you act and perform exactly how you would tell your employees to perform. Even little things, such as breaking your own dress code, can cause you to lose great respect in your employees' eyes.

#2: Believe In Yourself and Display Confidence


If you don’t believe in yourself, how do you expect your employee’s to believe in you? Be sure to trust your judgment and show your employees that you are confident in your decisions.


#3: Listen to Your Employees


Everyone wants to be heard, so make sure you take the time to listen to your employees. Many of them see things from a different angle than you, so listen and see what their ideas are. Many of them are well worth hearing and perhaps acting on.

#4: Communicate Clearly


It is important that you can communicate with your employees. Do not make them feel intimidated to talk with you. Make sure to clearly tell them your expectations as well.

#5: Give Credit to The Right People


Remember to always give credit where it is needed. Never take the credit for something your employee has done. Instead praise them for the outstanding job.

#6: Delegate Responsibilities


Don’t be the person who never trusts others with tasks. By doing everything yourself, you are showing your employees that you have no faith in their work.

#7: Better Yourself


Professional development is not only for your employees. Make sure to keep bettering yourself so employees will see that you are trying to improve your skills as well.

#8: Keep Your Employees Informed


Don’t keep your employees in the dark on important information. Be sure to communicate information to everyone. That way no one feels left out and or are given the impression they are unimportant.

#9: Network Yourself


It is easy to stress the importance of networking to your employees, but be sure you are keeping your own network up-to-date. Networks can also be great support systems to have on your side.

#10: Motivate Your Employees


Motivation is a great way to enhance the performance and quality of work from your employees. Be sure to offer incentives and make sure to recognize outstanding work. Recognition will increase productivity and stabilize their quality of work.

Do Your Core Business Well

When a business is initially successful, it is generally in one type of business. That success often leads owners and managers to begin thinking they can make any business successful. They start thinking about diversifying into other types of businesses. The reverse of this is when a business is struggling and the owner or manager believes that the only way to achieve success is to diversify.

In both cases, the core business probably represents an opportunity for additional success if properly managed. But there seems to be something about human nature that draws people away from what they do best and toward something that appears to be more glamorous or more intriguing.

We believe it is important to pay special attention to the core business...what it is you do best...and grow that business to higher levels of success. Business newspapers and journals are full of stories about companies that get outside their core business and fail miserably. And in many cases the core business suffers because resources are drawn away from it.
We think that too many decisions to diversify outside of the core business or strategic outgrowth of the core business are ego-driven. Making diversification decisions to feed someone's ego is simply irresponsible.

Before thinking about moving beyond the core business, ask yourself why you are even considering such a move. Can you grow your core business in a profitable, significant manner? Are you doing a good job with your core business in terms of operating efficiency, customer service, margins, promotion and quality of personnel? If there is room for improvement, concentrate and focus on making those improvements. Your objective should be to maximize the value of the business. Making the core business strong in terms of operations and customer satisfaction and loyalty will enhance value significantly. If you divert resources away from the core business by buying another business or diversifying through product or service development, the core business will not get the attention needed to enhance its value.

In short, focus on doing what you do best. And then try to do it better. However, none of this is to say that diversification is necessarily bad. It can be a very positive step for a business. But the point of this brief is to point out that the core business, assuming it has adequate potential, must have a lot of attention paid to it. A new venture can be undertaken as long as adequate resources and expertise are available for both the core business and the new one.

Communicate Often To Your Employees

In the absence of clear and frequent communication, employees can dream up all sorts of distorted ideas about what is going on within the organization. Managers are responsible for conveying to employees many things. Employees must know which direction the company and their immediate work units are headed. Providing clear feedback to them helps them stay focused and helps to avert a rampant rumor mill. Managers should make it a point to take time on a regular and frequent basis to communicate with employees.

Employees Are Your Best Consultants

The best consultants for your business are your employees. They can help you with a wide variety of issues because they deal with them every day. Many times employees have great ideas, but are reluctant to come forward out of fear or simply because they feel their ideas won't be taken seriously. Develop a system that requires and allows all employees to be active "internal consultants". Suggestion boxes and anonymous systems tend to not work because employees don't feel compelled to submit ideas. Or they have in the past and their ideas have been ignored or someone else took credit for them. Setting up profit teams that submit and refine suggestions works in some organizations. Requiring work units to submit suggestions for their own areas on a defined, regular interval has worked well in others. In both cases, making suggestions and developing ways to enhance profits become a part of every employee's job.

Create a reward system that pays all employees for enhanced profitability. Make the rewards significant enough to incent the employees. Profit sharing is most common, but you can also pay on cost savings, productivity gains or any other unit of measure that makes sense for your company.

Low Employee Morale

Employee morale is a fuzzy issue at best. Measuring morale can be difficult and inconclusive since employees will often not reveal their true feelings. But make no mistake about it. Employee morale has a major impact on productivity and ultimately profitability.

Most of the time, we will have a sense about the level of morale within a work unit or company as a whole. It is not hard to see when morale is generally high or when it is generally low. Employee groups that work hard, smile and have a little bounce in their step when they come to work would seem to have a high level of morale. Those that seem unhappy, don't interact much and generally seem disinterested in their work are probably suffering from morale problems.

It is not uncommon for a particular employee to suffer from low morale and this can be attributed to a number of factors including poor job fit, a personality conflict with a co-worker, personal problems or difficulty fitting in. While this is an issue of importance, this Quick Tip will focus on widespread work unit and company morale issues.

When a work unit or the company as a whole is affected by low or insufficient morale, the root cause can very often be traced back to the person in charge. Ultimately the manager of a work unit brings a certain philosophy and style to work that directly impacts his/her employees. Unfortunately there are a number of unenlightened managers and supervisors in the business world who don't understand the impact they have on their employees. As a manager or supervisor, look closely at your style and approach. It is the single most important factor in morale issues. See An Introduction to Team Building and High Employee Turnover for more insight into this issue.

In order to get a better feel for the level of morale in your work unit or organization, pay close attention to your employees' behavior. Do they appear to enjoy their work and those around them? Does there seem to be a problem employee in terms of being "poisonous" to the environment by making life difficult for those around them? How do employees seem to react to you? Do they seem fearful or tentative around you or are they open and willing to discuss issues?

If there is an employee who seems to cause problems for those around them, they must be dealt with. This is when the coaching and counseling skills of a good manager come to bear. That problem employee needs to be coached and counseled to change his/her behavior to better blend with co-workers. If the employee simply can't change, the company is usually better off without that employee. If nothing is done, the message that gets sent to employees is that one problem employee is going to be put ahead of the welfare and morale of all other employees. This is a very damaging message to send.

Morale is something that needs to be managed. Take these steps to better manage the morale of your employees:
-Create an environment that is fun and lively.
-Carefully evaluate your management style. Is it facilitating in nature or is it dictatorial or overly assertive and direct.
-Encourage employees to come forward with problems, suggestions and issues. Listen carefully and acknowledge their concerns. Follow up on them and communicate results of your findings back to them. Don't leave them hanging.
-Address compensation and benefits to make certain that you are competitive with the market.
-Be consistent in how you administer rules and policies.
-Be fair and reasonable.
-Set expectations for all employees about team work and working cooperatively. Let it be known that you expect employees to get along while on the job.
-Be clear in your expectations and follow up when they aren't met. Don't ignore low performers. -If they can't become good employees, terminate them. Bad employees affect those around them.
-Don't allow double standards. What's good for one employee is good for all of them.
-Eliminate a punitive mentality. Don't make employees feel that they will be punished if they make mistakes.
-Encourage innovation and creativity.
-Show employees that you care about them.
-Communicate as much as possible to all employees. Keep them well informed about what's going on in the business.
-Look at the work environment. Is it light and airy or is it dark, dreary and counterproductive?

Don't ignore morale issues within your work unit or company. They can be extremely detrimental to your success. Remember that high morale usually equals high productivity.

Turning Satisfied Customers Into Loyal Customers

While building a customer base, businesses sometimes move too quickly and focus on quantity rather than quality. Just as organizations experience turnover in their employee ranks, turnover occurs in the customer base as well. The extent to which both occur has a significant influence on your bottom line.

There is a lot of emphasis these days on creating satisfied customers. But is having satisfied customers enough? In our research we found several sources that conducted surveys addressing the impact of customer satisfaction on loyalty to a particular vendor. Depending on the survey source, between 60 and 85 percent of customers who chose a new vendor indicated they were satisfied or very satisfied with their former vendor.

What these results say is that having satisfied customers is not always enough. Certainly the first step in a vendor - customer relationship is working hard to keep customers satisfied. If your customers aren't satisfied with the level of service you deliver, you can rest assured that there will be a high level of turnover within your customer base.

An important transformation needs to take place in the way businesses view their relationships with customers. The transformation involves moving customers from being satisfied to being loyal. It's important to keep in mind the fact that a satisfied customer isn't necessarily a loyal customer. Moving a customer from satsfied to loyal requires hard work, constant attention to the customer and diligence in delivering outstanding service consistently.

Any given customer can be satisfied with multiple suppliers of the same product or service. Does the level of satisfaction factor in? Possibly, but not likely. The more likely scenario that gets played out is that as long as a threshold level of satisfaction is achieved the customer will tend to buy from supplier(s) offering the best price. Clearly, price will always be a factor to some extent in terms of which supplier gets the business. But what happens when a supplier is able to differentiate itself in terms of building some degree of customer loyalty? Chances are good that price becomes less of an issue as loyalty increases.

Satisfaction allows you to be in the game, so to speak. Loyalty translates into repeat pruchases. When a company is able to achieve some degree of customer loyalty among its customer base, the rate of customer leakage drops and the share of a given customer's business increases. Bear in mind that not every customer will feel the same sense of loyalty even with the same level of effort applied. But, this point notwithstanding, customer loyalty can clearly correlate with increased sales and increase profits.

So how do you build customer loyalty? First, we need to briefly address loyalty as it relates to the product or service itself. Let's look at what we'll refer to as a commodity product. A commodity product (or service) is one that looks and functions identically or nearly identically to the competitions' product or service. In this case, there is little to differentiate on other than price or level of service. In the case of differentiated products or services, the various suppliers can point to subtle or not so subtle differences in the product or service in making their case for buying one over another. If a differentiated product or service clearly has a functional or benefit advantage over those of its competitors, short-term loyalty can be achieved based on that advantage alone. But in most cases competition simply upgrades their own product or service to deliver the same functionality or benefit as the superior product/service so over the long-haul the level of product/service-specific loyalty diminishes.

We address the issue of commodity versus differentiated products and services only to point out that in many ways and in most cases, there is really very little sustained product differentiation. The implication then is that we have to build loyalty in other ways. Here are some things to keep in mind when attempting to build customer loyalty:

• Let customers know that you are interested in them as a long-term customer. This implies that your people are very much geared to being problem solvers for the customers. They must understand that their jobs exist to solve customers' problems and to assist the customer on demand.
• Think in terms of developing relationships with the customer. This doesn't mean a vendor customer relationship. This means attempting to cultivate as many personal relationships as possible within the customer's organization. While this is often disputed, we firmly subscribe to the notion that people buy from people they like. And they buy from people they can trust. Perhaps the key differentiating variable in the business world today is people. The quality of people you put in front of your customers will clearly help separate you from your competition. Your sales force must have very high expectations established for them in terms of relationship development.
• Make every attempt to differentiate your product or service from the competition. Try to stay out in front in making your product or service more functional or beneficial to the customer. The essential ingredient here is value. Does the customer perceive that your product or service is worth more to them than your competitors' products or services?
• Serve the customer at extremely high levels. This means that your processes must be efficient, your people who have any interaction with customers must be highly trained in customer service skills and you must establish a culture with high expectations for serving the customers at very high levels. Nothing short of outstanding customer service can be expected with no exceptions granted.
• Think long-term. Your business needs to establish a stable customer base. Companies that have a short-term mentality rarely, if ever, build much customer loyalty. Don't go for the quick sale just to generate revenue. Build a strong relationship with the customer and sales will follow.
• Allow customers to provide you feedback easily and whenever they feel they need to do it. Encourage your customers to contact you with ideas, problems, concerns or with a pat on the back that can be passed on to employees for a job well done.
• Create an environment of high accountability, high performance, high morale and high productivity. Happy and productive employees will do a lot to build customer loyalty.
  

In summary, customer loyalty can be accomplished. But it does take hard work and constant management attention. Your sales force is an integral part of building customer loyalty. They need to fully understand their roles in building strong, long-term relationships with the customer.

Establish Productivity Standards

Because productivity has such a profound impact on profits, there must be some way of measuring performance. Setting productivity standards for a particular job is important. Whether it be processing payables or picking orders in the warehouse or some other job, it is possible to establish minimum standards in terms of output. These standards become expectations for your employees. Also, incentives can be established for performance above the minimum performance level. In order to establish standards it is essential that you understand what it takes to do the job and what a reasonable work pace is. Setting unrealistically high or low standards can be detrimental to productivity and/or morale. It is also imperative that employees are held accountable on meeting these productivity standards which can be done through performance reviews.

The Cost of Turnover

Some turnover of employees is normal and expected. When it becomes excessive, it costs a business a significant amount of money. There are tangible and intangible costs associated with employee turnover. As a general rule of thumb, we believe that the cost of turning over one employee is roughly 25% of that employee's annual wages and benefits. For an employee earning $30,000 (includes benefits), this would amount to $7,500 of "cost" associated with that employee leaving the company. For example, suppose a company employing 100 people turns over 25% of its work force annually. In this case 25 employees leave the company every year. Assuming all 25 employees were earning $30,000/year, the total approximate cost of these employees departing is $187,500. If the turnover rate is reduced to 10%, the total approximate cost would fall to $75,000. Obviously it is important to take steps to control employee turnover. Are you taking those steps?

Awareness Can Be Important To Your Credibility

Competing in today's markets can be difficult. It is made even more difficult by a lack of awareness of your business, product or service on the part of prospective customers. Positioning your company properly in the minds of potential customers is a critical, yet often overlooked part of promotional strategy.

When you are faced with several competitors in a market, it is likely that the firm with the highest level of market awareness will have some level of credibility established unless it has somehow deteriorated its reputation. If that firm has credibility through a higher level of awareness in the market, it will generally have a competitive advantage. But why?

It is well known that people are swayed by awareness of a particular company. They might know very little about that organization, but a company that has done a good job of frequently putting its name out in front of the market with a subtle message about the quality of its products or services or by presenting a highly professional look and image will entrench itself in the subconscious of the prospective buyers. When the buyer is ready to buy, the fact that they already have a positive image of the company and/or its products and services will serve as a compelling reason to at least consider that company and its products or services heavily.

A well planned and executed awareness campaign can establish a real sense of quality in the minds of those who represent your market. Suppose your sales people are making calls and competing with firms that have established themselves in the minds of the prospective buyer. Your firm is a relative unknown and people know virtually nothing about you. The dilemma that the buyer faces has to do with risk. Are they willing to take a risk and purchase something from you when they can buy the same type of product or service from a company that has credibility with them. That credibility might have been established simply by using institutional ads to attack the subconscious of the buyer by putting the name and some subtle message about quality or image in front of the market on a frequent basis.

Think about many of the ads you see or hear. They could appear on television, in a newspaper or magazine or on a billboard. You might hear them on the radio. A majority of those ads are insitutional in nature by virtue of the fact that they are not selling something specific. They are positioning the product or company in the minds of the prospective buyers and creating high levels of awareness. When the buyer is approached to buy one or more of its products or services, the fact that they have awareness of the company reduces the risk of doing business with that firm.

A very bad argument against this type of campaign is that they are expensive and don't sell product. While such a campaign might be expensive, they certainly don't have to be. And the argument that they don't sell product is pure nonsense. That argument is usually used by the unenlightened as a way of covering up the, "I'm too cheap to do things right" syndrome. Awareness and image campaigns are designed to instill credibility. Therefore, they take time to work. Most business people don't have the necessary patience to see such a campaign through. And institutional campaigns are more difficult to measure in terms of direct impact on sales. But the impact of the campaigns can be measured through pre and post campaign market research efforts designed to measure awareness and credibility levels.

Budget for some sort of campaign that is designed to position your product, service or business properly in the mind of your prospective buyer. It doesn't necessarily have to be a media advertising campaign. Newsletters and direct mail can often be used effectively. But keep in mind that the best campaigns generally use a combination of mediums and methods in positioning the company. Using an advertising agency for any sort of significant promotional campaign is recommended.

Attributes Of Successful Long-Term Businesses

We believe there are attributes that are common to successful businesses. While there are probably others, we feel that the twelve attributes below represent the most important:

1. They are focused on the customer and gather feedback and input from the customer on a regular and consistent basis.

2. They understand the concept of relationship development, both internally and externally and they work hard at forming new relationships and strengthening old ones.

3. They are externally-driven (customer) rather than internally- driven (operations).

4. They have a high percentage of talented and high performing employees.

5. They understand how to apply their resources in a manner that maximizes their opportunity for success.

6. They have a high level of morale and teamwork and foster that kind of environment.

7. They do not constantly shift and change priorities.

8. They have well defined and simple, efficient processes.

9. They have a long-term mentality.

10. They have a long-range plan with goals that all employees understand.

11. They spend money wisely and are not afraid to spend money to the benefit of the organization.

12. They have strong and effective communication taking place consistently and regularly.

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.

Don't Rationalize Poor Performance

Some managers and owners make excuses when their businesses or operating units don't perform as expected. While there are extenuating circumstances that can affect bottom line results, the reasons for underperforming generally lie in ineffective management. Too often we hear managers rationalizing poor decisions or inaction. In cases where the expectations were unreasonable or a crucual and unforeseen event occurred, a manager has a valid argument as to why performance fell short of expectations. However, in cases where expectations were reasonable and no significant events impacted the ability to perform, a manager is in no position to make excuses for underperforming. Look at your own organization. Are there managers that consistently or even occasionally make excuses for not meeting expectations?

Don't Let Customer Service Be Your Downfall

Customer service is a broad term generally used to define how well customers are served by the organizations they do business with. Our experience and observations indicate that there has been a deterioration of customer service levels in many businesses in recent years. This stems primarily from poor attention to detail and a lack of a customer-orientation throughout the business. Bear in mind that your business should be striving to provide nothing short of outstanding customer service.

It is a well known fact that customer service is one of the primary factors in a customer's decision to purchase again from a particular business. When customer service falls below the expectations of the customer, the likelihood of that customer buying again from that business diminishes. Every contact that a customer has with a business should be considered an opportunity by the business to cement a relationship with the customer.

We believe there are three key components to providing outstanding customer service:
1) hiring,
2) discipline and
3) consistency.

Let's look at each of them in more detail:

Hiring. The ability to deliver outstanding customer service is, without question, dependent upon the quality of employees hired. Employees who are not able to deal with customers effectively can have a devastating effect on perceptions of the business. And employees who cannot execute according to well-defined procedures will cause mistakes, delays and frustration. Laziness and lack of a thorough screening process are key reasons why marginal employees are hired.

Discipline. This term refers to doing things right on a highly consistent basis. A key assumption is that your business has well-defined procedures and processes that are customer-oriented and efficient. Once those are established it is essential that there be a very clear expectation of all employees involved that they execute their tasks exactly as defined. Managers must be able to hold employees accountable for meeting that expectation! When employees are allowed to deviate from the process/procedure or not follow rules, there is a lack of discipline.

Consistency. Customers cannot be served well one time and poorly the next. Unfortunately, the vast majority of businesses do not consistently serve their customers at a high level. Think about your own experiences with the businesses you buy from. How many truly deliver outstanding customer service every time you deal with them? We suspect the answer is not many, if any at all.

The inability to deliver outstanding customer service consistently can be the downfall of a business. In simple terms, it can put you out of business. There exists an opportunity for the business that can figure out how to deal with the three components discussed above. Because few, if any, businesses concentrate enough on delivering outstanding customer service, a business that understands how to do it will gain a significant competitive advantage over its competition.

Take the time to evaluate your own business in terms of the three components identified above. Does your business honestly deliver outstanding customer service at a highly consistent level? If the answer is "yes", are you absolutely certain of your answer? We have found that many businesses that thought they were doing an excellent job of serving their customers were actually falling well short of customer expectations. Don't allow your business to fool itself into thinking customers are receiving outstanding service every time they have contact with your company.

Stay In Touch With Your 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.

Do Your Core Business Well

When a business is initially successful, it is generally in one type of business. That success often leads owners and managers to begin thinking they can make any business successful. They start thinking about diversifying into other types of businesses. The reverse of this is when a business is struggling and the owner or manager believes that the only way to achieve success is to diversify.

In both cases, the core business probably represents an opportunity for additional success if properly managed. But there seems to be something about human nature that draws people away from what they do best and toward something that appears to be more glamorous or more intriguing.

We believe it is important to pay special attention to the core business...what it is you do best...and grow that business to higher levels of success. Business newspapers and journals are full of stories about companies that get outside their core business and fail miserably. And in many cases the core business suffers because resources are drawn away from it.

We think that too many decisions to diversify outside of the core business or strategic outgrowth of the core business are ego-driven. Making diversification decisions to feed someone's ego is simply irresponsible.

Before thinking about moving beyond the core business, ask yourself why you are even considering such a move. Can you grow your core business in a profitable, significant manner? Are you doing a good job with your core business in terms of operating efficiency, customer service, margins, promotion and quality of personnel? If there is room for improvement, concentrate and focus on making those improvements. Your objective should be to maximize the value of the business. Making the core business strong in terms of operations and customer satisfaction and loyalty will enhance value significantly. If you divert resources away from the core business by buying another business or diversifying through product or service development, the core business will not get the attention needed to enhance its value.

In short, focus on doing what you do best. And then try to do it better. However, none of this is to say that diversification is necessarily bad. It can be a very positive step for a business. But the point of this brief is to point out that the core business, assuming it has adequate potential, must have a lot of attention paid to it. A new venture can be undertaken as long as adequate resources and expertise are available for both the core business and the new one.

Employees and Profits

Success in business is almost entirely dependent upon the quality of the people a business employs. Those that hire and promote people who fit their jobs well and are considered high performers tend to do well. Those that have a casual attitude about hiring, training, retaining and promoting high performers tend to struggle. While product/service offered, the economy and a little luck often play into the success of the business, it is people that determine its long-term success. Far too many businesses do not do a good job of hiring the right people for the job. They then compound that problem by retaining employees who have little or no chance of being productive. We cannot stress enough the importance of taking enough time and working hard to hire the best people possible.

Sales and Wasting Time

The way that sales people utilize their time is critical to their success. Many sales people are simply ineffective time managers. Every minute of every day is essential to a sales person. Sales managers need to stress the importance of time and help their sales people understand how wasted time translates into lost sales.

Let's look at an example to clarify our point. Suppose the average face-to-face call lasts 15 minutes. And the average travel time between accounts is 30 minutes. We'll use an 8 hour day even though we believe an 8 hour day falls far short of acceptable in the sales game. Let's assume that on this day the full 8 hours is devoted to either travel or actual sales calls. We'll further assume that the rep is at the first prospect's doorstep at the beginning of the 8 hour period. In this 8 hour day, the rep would be able to make roughly 16 sales calls.

We know that sales is an imperfect art form and making 16 calls in this example is undoubtedly a stretch. We know that the rep will need to return phone calls and follow up on and resolve problems that might occur. These will consume some of the day which will further reduce the actual number of calls that get made. So let's say that on a good day the rep can make 10 calls.
Now let's complicate this scenario by introducing events or activities that tend to waste a sales person's time. Here's a list of our top ten time killers:

1. Poor routing through a territory increasing the average travel time between accounts.
2. Making a face-to-face contact to answer a question or resolve a minor customer issue when a phone call would have sufficed.
3. Doing administrative (non-selling) tasks such as paperwork during prime selling time.
4. Calling on non-decison makers.
5. Calling on prospects who will never buy anything or simply can't afford to buy from you.
6. Making too many calls to the same account or prospect.
7. Finding every reason possible not to make sales calls by doing make-work activities that yield no real return.
8. Leaving at the start of normal business hours from home or the office to drive to the first call and/or driving home or back to the office before putting in a full day in the field.
9. Preparing proposals during prime selling time.
10. Spending too much time with any given customer or prospect.

If a sales person engages in any or all of these activities, the number of calls that can be made is further reduced. In extreme cases, the sales person is doing more of these activities than actual selling activities. In many cases, a sales person is often not even aware they are doing one or more of these things and are chewing up significant chunks of time in non-selling activities.

The sales manager must act as a role model and mentor to help the sales person more effectively manage his/her time. Sales people need to understand clearly that time really is money and that selling is, in most cases, a matter of relationship development and maximizing the number of quality contacts made. Without enough time devoted to actual sales activities, it is difficult to achieve either.

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.