Dirk Dieters invited to speak at Aurora Chamber of Commerce

Dirk Dieters, Executive Director of The Fremont Group and author of “Minding My Own Business” will be the speaker for three consecutive weeks at the Lunch and Learn seminars sponsored by the Aurora Chamber of Commerce.  The three sessions will be broken out of the full “Minding My Own Workshops” that are offered through The Fremont Group.  On September 8, 2011 the session title is, “Show Me The Money.”  This session will cover small business budgets, cash flow forecasting and basic financial control of your small business.  On September 15, 2011 the session title is, “Are You Getting Bang For Your Payroll Buck?”  This session will examine organizational structure, accountability and incentives, and motivation of “climber, camper and quitter” employees.  Finally on September 22, 2011 the session examines sales—‘Selling—Internal and External—in a Recession.”  Attendees will examine their own sales system, identify their sales assets and learn to leverage their sales effort.

Like the full “Minding My Own Business Workshops” these sessions are personally tailored to the attendees—they are not general theory, rather they are designed to provide the attendee with something that can immediately be implemented into their operations.  Announcement will be forthcoming regarding the opening of these sessions as webinars on line.

Business Owner magazine retains Fremont Executive Director

Dirk Dieters, the founder and Executive Director of The Fremont Group has been retained by Business Owner magazine as a contributing author of business articles.  Dieters, author of “Minding My Own Business” (available on this site or Amazon.com) is nationally renown for his work with small business owners.  Business Owner magazine is published quarterly by GPS, GR, CBS or STA—major firms in the small business management consulting field.

I JUST DON’T HAVE THE TIME/MONEY …

Everyone has one-hundred sixty-eight hours in a week—how come some people find the time for family, some people find the time to attend workshops, and some people find the time to run more than one business yet others work excessive hours, don’t get out and seem to just live with results that never change?

In “Minding My Own Business,” author Dirk Dieters examines the six responsibilities of a small business owner. The business climate is difficult and there is only one guarantee—that the rate of change will accelerate. You have a responsibility to keep your company ahead of that curve. Are you investing the time required in this responsibility? The Fremont Group focuses you by teaching you that there is only one reason for your business to exist—to make your life better. When was the last time you made the effort to look at your business? How is your business making your life better? How is your business making your life worse? As a business owner decisions are actually very simple—we build upon the things that are making your life better and rid ourselves of the things that are making your life worse. Like other authors and experts, Dieters does not list as one of those responsibilities the requirement that the owner invest all of their efforts and time in the performance of the technical tasks in the business. Your responsibility as an owner is not to do other people’s jobs but rather to lead the company.

There are resources that make you company better. They range in cost from the nominal fee for a “Minding My Own Business”™ workshops to more intensive mentoring/coaching relationships yet we still hear the objection, “I don’t have the time” or “I don’t have the money.”

Everyone has one-hundred percent of their money—how come some people find the money to sharpen their skills and create change in their business how come some people live with results that never change?

Irrational decisions are most often the product of either fear or denial. Fear causes poor decisions; poor decisions lead to poor results. We can be afraid of many things—we can be afraid of being wrong. What if the workshop does not provide me with anything that builds upon the positives or rids us of a negative? We can be afraid of repeating a previous mistake. What will people (employees, family, etc.) think if it turns out to be another expensive venture that doesn’t really help? We can be afraid of being weak and at risk of being “talked into things.” People are already questioning my decision-making—what if this is a mistake? And we can be afraid of showing weakness. I am not going to admit that I might benefit from outside help. Companies go where the owner leads it. If it is led by fear it probably will never go where you want it to.

Some may classify denial as a form of fear, however I think that it deserves a classification of its’ own. It is a natural human trait to postpone difficult actions as long as possible. We hope that if we ignore a problem that it will go away. This is the equivalent of being hooked on drugs—we call it “hopium.” Unfortunately it sometimes works—and this just hooks us more. Hopium can paralyze. Just “hoping” that things will change can create a death spiral in a business. Rarely is the confrontation as painful as the problem itself. Things happen when we make them happen. Change takes place when issues are addressed, confronted and solved in a systematic method. If we wait and “hope” for change, we are allowing hopium to control our fate. Denial doesn’t solve problems and your employees know it. They expect to receive training and respect the fact that you seek continuous training in your job of leadership.

We all have the time—it is an allocation issue. Allocation of time and money. Would attendance at the workshop help you build upon the things that are making your life better? Would getting help improve the performance of your business? Would either help you rid yourself of things that are making your life worse? If any of the answers is yes then choosing to do nothing is not a rational decision. Allocating time to anything other less important things is not going to move either your business or your life forward. So why make an irrational decision? What else are you really going to do that could change your business and your life? Oh, I forgot—you don’t have the time/money.

WHY YOUR INCENTIVE PLAN DOESN’T WORK AND WHAT YOU HAVE TO DO ABOUT IT

An incentive is an action taken to change the short-term behavior to match a pre-determined objective.

In dealing with employees we are constantly dealing with the issue of “alignment.” Alignment is matching the best interests of the company with the individual best interests of the employee. The theory is that each person acts in their own best interests and therefore by rewarding certain activities with a reward that is desired by the employee; their actions will change to obtain that reward. In the development of an incentive program one has to determine what changes in the behavior of employees would benefit the company, the amount of benefit that it would generate, and how to deliver to the employee some percentage of that amount for the desired change in behavior. In other words, if an employee changes their behavior and now does “X” and that as a result of this new performance the company will benefit by “Y” dollars, what percentage of Y should we pay to the employee and in what manner.

Often overlooked in this analysis is the issue of what behavior we are already paying for in the base pay of the employee. If a sales person receives a base salary, then there is a certain minimum amount of sales that they must produce in order to cover that salary. Therefore if we are going to also pay a commission on the sales that they generate, those commissions should only start after that minimum production has been generated to cover their base salary.[1] This issue gives rise to the axiom that “you cannot create a rational incentive plan until you have first defined the results that you are already paying for in their base pay.” The violation of this rule dooms most employers in their attempts to develop an incentive plan without professional help. As a consultant all you have to do is look at a company’s job descriptions to see if they have identified results that are required for each position rather than tasks and if you only see tasks, you can be assured that any incentive program that they have is fundamentally flawed.

These are the basics of incentives. More recent analysis has brought criticism to the “stick” and “carrot” approach to behavior modification. In Coaching for Performance, by John Whitmore,[2] you will find an analysis of Maslow’s Hierarchy of Needs as applied to the workplace. He advances the theory that standard incentive programs treat people like “donkeys” rather than “humans.” He applies Maslow’s Hierarchy of Needs to show that incentives should instead be directed to moving people up this scale—from “Belonging” to “Esteem from others” to “Self-Esteem” to, finally, “Self-Actualization.” He also provides an excellent analysis of the stages of team building.

In my experience, no new theory is ever completely right, and no old theory is ever completely wrong. The truth is generally in the middle—which leads us to management development.

In Minding My Own Business,[3] I have divided employees into three categories—climbers, campers and quitters. A climber is any employee who is self-motivated and wants to perform. A camper is any employee who is merely there for a paycheck and receives their self-fulfillment from activities other than their work or career. A quitter is someone who is actually detrimental to the organization and probably will not change. All three types of employees can be found at all levels of the company—there are field level climbers and there are high management level campers and quitters. Often our comfort zone will actually create campers out of the climbers that we promote to high level management. The critical purpose of these classifications is this: although your climbers only account for about 20% of your workforce, they produce about 80% of your profit; your campers account for about 75% of your workforce and produce about 30% of your profit and your quitters actually cost you about 10% of your profit. So where do we want our turnover? In the campers and quitters of course. But to avoid having turnover of your climbers you have to give them a ladder—climbers want to climb and if we don’t provide the ladder, a competitor will.

In the past we have structured incentive programs to merely provide bigger carrots to the climbers, however the application of newer theory would be more effective. Climbers want more money, but also want the opportunity to progress up the Maslow Hierarchy. Campers are not necessarily seeking their fulfillment from their employment and therefore are not going to respond as well to these incentives as is a climber. Campers can be safely treated as “donkeys” and enough reinforced behavior will result to justify the incentive. Quitters on the other hand are another matter. They are not yet to “donkey” status and therefore must be identified and treated with parental directives—your performance is unacceptable, here is how it must change, if it does not change within a given period you will be terminated.

Left out of the analysis by Whitmore is the role of the “team” in the development incentives. Although he discusses team building at length, the tie is never made to the Maslow Hierarchy. In a workplace, it is only through the creation of a “team” that the progression from belonging, to esteem from others, to self-esteem to self-actualization makes sense. Therefore after an organization has created an effective and rational incentive program next the “climbers” should be identified and “teams” should be created to implement a second level of motivational incentives. This has numerous ancillary benefits. First it provides a “ladder” for those climbers to climb which reduces their turnover and increases their bond to the company. Second it allows the owner to tap into their most important resource and delegate to this team (or teams) responsibility for management issues that is currently taking up their time and energy. This frees the owner to be better at doing his or her job of running the company.[4] In the development of this “management team”[5] the owner is actually building a company—a company with value that exceeds their own input. This is critical if the owner ever intends to leave the company (sell). For a company to have any real value the cash flow must be produced by systems, procedures and controls rather than by the individual efforts of the owner; otherwise when the owner leaves, there is no company.

To summarize, the owner must:

  1. Identify what results the company is currently paying for in each position’s base pay.
  2. Identify the climbers, campers and quitters.
  3. Assume that the quitters are leaving and recruit for these positions so that no quitter can hold the company hostage. Turnover should occur on your time table, not theirs.
  4. Identify the changes in behavior that the company desires.
  5. Determine the benefit that would be derived to the company from this change in behavior.
  6. Develop and implement an incentive program to align the new behavior of employees with the desired result.
  7. Determine the size and structure of a “management team” to be comprised of climbers.
  8. Perform team building activities within this group.
  9. Assign to this team management issues and tasks that will free the owner to do a better job of “running the company.”
  10. Continually reinforce the decisions of the “management team” and create opportunities for “new climbers” to join.

[1] Note that taking this into account by providing a reduced commission rate is actually counter-productive as it penalizes your high producers who greatly exceed the amount required to cover their base. Any compensation plan that over-compensates the lower performers and under-compensates the higher performers is fundamentally flawed.

[2] Coaching for Performance, Third Edition 2002, John Whitmore, Nicholas Brealey Publishing, London.

[3] Minding My Own Business, Dirk Dieters, Author House 2005.

[4]Ibid. See MMOB for an analysis of the six responsibilities of the business owner.

[5] Note that the “management team” consists of all climbers, not just those climbers who are in management. Field workers and staff level employees may also be climbers and those people need to be included in this “management team.” The Fremont Group has developed a formula for the rating of employees upon this scale and for the identification of persons in non-management positions who are equally critical to the long-term success of the company and whom must be included in this program.

The Fremont Business Operating System

Attendees at a “Minding My Own Business” Workshop have been exposed to the Fremont Business Operating System.  This system is the baseline for all management consulting performed by affiliates of The Fremont Group.  It starts with a clear identification of your goals—and the goals of your spouse.  What is it that you really want from your business.  Once the reason for your business to exist is identified, a financial model of your business must be created.  What results are required in order for you to obtain your goals?  Many small business owners operate like the football coach with a game plan that reads, “if everything goes right we will only lose by a touchdown!”  That coach won’t keep his job for long and the business owner who doesn’t have a game plan designed to win the game won’t survive long either.  From the development of the financial model it can be identified (1) if the goals are obtainable; and (2) the results that must be accomplished in order to obtain the goals.  This model then becomes the cornerstone of the company.  It is the basis for organizational structure—what results are required from each position, the communication and evaluation of those results, accountability, and incentives.  It creates the profit plan and the sales plan.  It is the basis for pricing—the use of break even pricing and the establishment of pricing models.  The financial model is a road map that you modify as you make wrong turns—after all, man plans and God laughs.

Put together, FBOS is your strategic plan.  Owners who operate without it can be successful—particularly if they are lucky—but those who operate with it and diminishing their reliance upon luck.

Note–Fremont Business Operating System, FBOS and Minding My Own Business are registered trademarks of The Fremont Group

Fremont Offers Extraordinary, One-Time Discount On “Minding My Own Business Workshops”™

The Fremont Group, a non-profit corporation dedicated to bringing quality and affordable management consulting services to small business owners, is using a substantial grant to subsidize workshops for small business owners. The workshops are based upon the book, “Minding My Own Business” written by Dirk Dieters specifically for small business owners. Regularly $875.00 the workshops are being offered from July 15th through Labor Day for a Summer-Recession discounted priced of $150.00! The workshops are one-on-one sessions—just you and the professional for 2-3 hours where each aspect of your business is examined. You learn the six responsibilities of a small business owner and are able to rate yourself in each category. Additional follow-up work is also offered on a sliding scale according to ability to pay.

“Minding My Own Business Workshops”™ have been successfully presented in nearly every state. Success is defined as the owner agreeing that they are leaving with something that they can immediately use to make a difference in their business. If that standard is not met, your fee is refunded. An $875.00 fee has never been refunded.

Take some time to examine:

  1. What is the minimum, mandatory percentage of profit that your business must make? Do you have a plan in place to produce it? What is your planning process? How do you hold yourself accountable?
  2. Do you have cost controls in place that will produce that minimum, mandatory percentage of profit? How do you use your budget? (Do you even have a functional, variable budget?) How do you project your cash flow? (Or do you run your company by mailbox management?) Is there a real AR/AP policy and procedure?
  3. Are your employees responsible for the enforcement of those cost controls? How do you hold people accountable? Do you have rational incentives in place? How do you control turnover? Recruitment? Development? Training? Retention? How do you use your job descriptions?
  4. Is your sales system really working? Are sales produced by people or by a system? How do you sell internally? Do you have a sales plan in place that is designed to really win the game?
  5. Are you keeping all of the money that you make? Do you have a tax plan in place? How do you review risk management?
  6. Are you having fun? Are you the highest paid employee? Can you take time off? Does your business make your life better or worse?

All owners can benefit from this workshop. Only those who are ready to change should attend.

Looking For Employees? So Is the Competition

Almost regardless of the economy, everyone who you would want to hire is working. You can no longer take the same approach to staffing that you could in a slow economy. Your next employees are currently working for someone else—and your employees are looked at as someone else’s next employees.

Turnover is one of the most expensive events in a company. When turnover occurs the costs include: the lost production when the person leaves, the cost of outplacement, the risk of legal claims by the departing employee, the cost of the time spent placing ads and interviewing, the cost of the lost productivity during the new employees first weeks, and the cost of the lost productivity from the person training the new person. Turnover is inevitable, but we want to be sure that turnover occurs in our quitters and not in our climbers.  There are four things we do with employees—we recruit them, we train them, we develop them and we retain them.  Do you have a plan for each?

Recruitment—the company needs to convey during the recruitment process the company’s mission. The incoming employee needs to understand what the corporate culture is in the business and be “sold” on being a part of that team.[1] Since the labor market is so tight, we cannot merely recruit the unemployed. The fact is we are going to be taking someone else’s employees—and they are going to be trying to take ours. The recruitment process must be designed to address this issue and get quality employees who are going to stick with the company.  First you have to determine your staffing requirements—how many people will you need to have one year from now?  Then factor in employee attrition—how many of your current employees were here two years ago?  That tells you how many successful hires you will require over the next year.  Rule number one—don’t wait for an opening to come about and then hire under duress.  Recruiting is an on-going process.  If you need 12 people over the next year you should be hiring the best one you can find each month.

Training—one of small businesses weakest areas.  Training is not only the technical aspect of the job—if they didn’t have some of those skills you wouldn’t hire!  Training is also teaching “your system.”  How you want things done in your company.  You own the company.  You will succeed or fail based upon your system.  Never let an employee create your system—teach them to use yours!

Development–a company must offer their people the opportunity to “move up.” This is why growth in a company is required. You may not want to grow, but if you don’t you will die. Failure to grow eliminates the development opportunities of you best employees and causes them to leave for better opportunities. Not all employees want to develop, but your best ones do. Therefore it is crucial that the opportunities within a company be identified and communicated to each employee.

Retention–what keeps your employees working here if someone across the street offers them $1 per hour more? This is where benefits, working conditions, and morale come into play. It can even be argued that development opportunities are really retention devices. There needs to be a plan for retention or you end up with turnover.

I highly recommend “Minding My Own Business” available for sale from this site.  The coverage of these topics is excellent.

[1] One of the first elements of team building in an organization is to clearly define how the team should function and then “sell” that attitude to each incoming employee. For example, “As an employee here we expect three things—that you at all times exhibit a positive attitude, that you at all times work as a team and that at all times you use our system. These are conditions of working here. If you decide that you cannot comply with these conditions, please do not submit your application for employment.”

Summer Reading List

Some books to make your summer reading list. Sometimes you can get the most from books that are a little “outside the box.” The first two books that are recommended by our Executive Director, Dirk Dieters, won’t be found in the business section yet anyone who is involved in any type of sales (and just who isn’t?) are really studies of the decision-making process. Since they were not written as business books you have to figure out how to apply the principles to your own situation but that very fact is part of what makes them such important reads. First is a best-seller from last year that is now easily available in paperback. Blink, by Malcom Gladwell is an excellent examination of the power of first impressions. I promise you that after reading this book you will be thinking about where your customer’s first impressions come from and how to control that first impression. The second book is Predictably Irrational, by Dan Ariely. Anyone who doesn’t take away numbers of ideas for adjusting their sales approach is brain dead. Both are relatively easy reads and are packed with ideas.

Back in the business genre, click on the side of this page and pick up your copy of Minding My Own Business, by Dirk Dieters or go back to the classics, The E-Myth, by Michael Gerber and The Goal, by Eliyahu Goldratt. These are very practical books that present well the essence of how to run a business. Enjoy.