So often you can find out everything you need to know about a company by attending one of their internal meetings held by the owner. Is there a sense of urgency? Is the meeting organized? Does it start and end on time? Are employees attentive? Does the owner “sell” the employees? The answers are always reflective of the way the company is run and the way your customers/clients perceive your company. Change can begin with changing the tone of your meetings. As a sage professional once said, “a meeting over 15 minutes long is a therapy session and you don’t have a license for that.”
Systems and structure works. People live in chaos. Their personal lives are a mess. We want to provide for them a place where there is a predictable system. Where they know what is expected of them. Where for 8 hours a day they have structure. Young children will play the same videotape over and over again to fill the psychological need for predictability. When tied to a system of development or promotion for employees you significantly reduce turnover. But you must be willing to constantly work on your system and you must be disciplined enough to consistently enforce it. If you cannot respect your system then you cannot expect your employees to respect it.
In order to have an effective “system” of operations it must be documented. Each function must be documented so that consistency is achieved. The importance of the documentation becomes evident when there is turnover. The new person must have something that they can pick up and say, “this is how I do my job.” This is critical if the business is going to become systems dependent rather than people dependent. Every football team has a playbook yet the owner doesn’t.
The Operations Manual describes how the company would work if it were 1000 miles away and you could never visit. It describes how each job is done and what each person has to do so that their boss has a comfort level of knowing that the job has been done. Remember that it is a constant work-in-progress.
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 with the attendee the six responsibilities of a small business owner and applies those principles to the attendee’s business. 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. 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. To make you a better business owner, The Fremont Group presents the acclaimed “Minding My Own Business”™ workshops. These are customized sessions for business owners only. Attendees universally agree that they leave with not only a better understanding of their business but also with specific actions that will make an immediate difference in their company. Yet the Fremont Group salespersons often hear the objection, “I don’t have the time.”
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. Would attendance at the workshop help you build upon the things that are making your life better? Would it help you rid yourself of things that are making your life worse? If the answer is yes to either then choosing not to attend is not a rational decision. Allocating time to anything other than these two objectives is not going to move either your business or your life forward. So why make an irrational decision? In less than three hours you can do something that can make a difference—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.
Dirk Dieters is the owner of The Fremont Group, a small-business management coaching firm in Aurora, Colorado. Mr. Dieters has an undergraduate degree in Business Education from Michigan State University and his law degree from Detroit College of Law. He has worked in management consulting since 1995. The Mission Statement of The Fremont Group clearly states his objectives: “The job of The Fremont Group is to make the lives of our clients better through a knowledgeable, trustworthy, truthful, empathetic, forward-looking and focused relationship.”
Mr. Dieters played baseball at Michigan State; coached baseball at Oakland University in Rochester, Michigan; has owned his own small businesses; and at various times has held real estate and series seven licenses. He is married with five children and is the author of the book “Minding My Own Business” published in 2005. He also hosts “Minding My Own Business” Workshops designed for small-business owners nation-wide. He has published articles for the Institute of Management Consultants. Visit their web site at www.the-fremont-group.com.
© The Fremont Group 2007
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:
- 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?
- 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?
- 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?
- 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?
- Are you keeping all of the money that you make? Do you have a tax plan in place? How do you review risk management?
- 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.
Here is how one company has managed to not just survive but also thrive in the recession. Slate Magazine just posted this article by Daniel Gross. Here are some excerpts:
“But at least one comparatively pricey restaurant chain is turning in the equivalent of a Michelin-starred performance. P.F. Chang’s China Bistro, whose two restaurant chains—P.F. Chang’s and Pei Wei Asian Diner—are staples of upscale malls and mixed-use developments, said that same-store sales fell a bit but profits produced at its 350 outlets rose 38 percent from the first quarter of 2008. Operating margins—the holy grail of any business—at P.F. Chang’s 190 stores rose from 12.8 percent to 14 percent, largely because of “incremental operational improvement opportunities.” The stock has doubled since November.
What accounts for the sizzle in P.F. Chang’s wok? Probably not the food. Just as saxophonist Kenny G provides jazz for people who don’t really like authentic jazz, P.F. Chang’s peddles Chinese food to diners who might not cotton to authentic Sichuan fare. Waiters don’t wheel around carts laden with steamed chicken feet as they do at dim sum parlors in New York and San Francisco. In the comfy confines of Boston’s Prudential Center, I was presented with a raft of desserts as American as, well, apple pie, including the Great Wall of Chocolate. “It’s like The Cheesecake Factory, only ethnic,” says Jennifer 8. Lee, author of The Fortune Cookie Chronicles: Adventures in the World of Chinese Food. “It’s very consciously designed to cultivate an appeal to mainstream America.” The “P.F.” stands for company founder Paul Fleming, and the kitchen features ingredients that wouldn’t be found in Chinese restaurants, such as chocolate, cheese, and melon balls. (Try picking up fruity spheroids with chopsticks.)
P.F. Chang’s made it to $1 billion in sales by taking cues from successful Asian businesses. Now by focusing on process improvement rather than helter-skelter growth, it seems to be doing so again. Continuous improvement, the philosophy pioneered by Japanese companies such as Toyota in which managers and workers relentlessly seek out small modifications that add up to big profits, seems to be the recipe for success in 2009.”
Businesses must focus on themselves—internal process improvement—rather than just continuing their old tactics. Doing the same thing over and over again and expecting a different result is the definition of insanity—Einstein.
Communications is the process in which a person responsible for making a decision receives the knowledge that they need to effectively make that decision.
More money is lost in businesses through ineffective communications than in any other area.We all know that communications are vital.A survey of employees in any business always generates frustration regarding communications.Sometimes that frustration is having a critical effect upon the company’s bottom line and sometimes it is merely an employee’s way of “pointing the finger” so that they are not responsible.How do we separate the “excuses” from the problems?Let’s start by examining the “communications” process in your business.
Your business is constantly deluged with “data.”Phone messages come in, letters are received, emails are read, customer payments are received, customer comments, feedback and complaints are made—all of this is data.How do your employees decide what to do with that data?If this decision is merely being left to the employee without direction you are immediately losing whatever data they decide not to record.This is an unacceptable event that occurs daily in almost every business.How often have you heard someone say, “I didn’t know about that?” or “Why didn’t someone tell me about that?”To your customers it can often appear that your company simply “doesn’t listen” to them—and we all know what follows that feeling.The “integrity” of the data is also critical.Sales people making up phony records of sales calls, people posting hours worked to job numbers a week later are examples of poor data.Remember, “Garbage in; garbage out.”
But of course most data is recorded.The next issue is the processing of that data.Since we are businesses and not computers, the processing of data is the conversion of the data into “information.”Information takes the form of reports and compilations delivered in writing or verbally to a recipient.How do your employees decide how to “process” the data?Most companies have written reports they want generated and request verbal reports at meetings, but has this structure ever been defined?Do employees ever create their own reports?What happens in your business when a report goes “uncreated?”Do you often hear someone say, “I’m waiting for the report?”Are poor (no decisions are decisions) decisions made because of a lack of information?
After data is processed into information, it must be delivered to someone who gains “knowledge” as a result.Data might come in to your company in the form of a client payment.It is then converted into information by accounting by entering it on your books and producing a month-end Profit and Loss Statement.This report is then delivered to you, the owner who now has the “knowledge” that the payment has been made.Or do you?You might know that money has come in but you might not know its’ source.Or you might not know that the payment has been made until a month later when the P&L is delivered.Therefore we have developed four criteria for the evaluation of information.For information to really create the type of knowledge that we need it must meet four criteria: It must be (1) timely; (2) accurate; (3) usable; and (4) delivered at a reasonable cost.Without meeting these criteria, your information does not produce the “knowledge” that is required for your business.
For information to be timely means that it must be produced, delivered and assimilated in a timely fashion—at a point where acting upon the information can still produce a meaningful change.Finding out in February that your company lost money last year is nice historical information but it lacks the timeliness element that is required to make it meaningful knowledge.How much of your information is truly timely?Are you operating like the football coach with no scoreboard?Or the pilot with no instruments?Accuracy is a commonly misunderstood element.Most financial reports are generated by accounting.Accounting is staffed with people who worry about everything balancing to the last nickel—and rightly so.Unfortunately this attitude often interferes with them delivering timely information for managerial purposes.Most managerial information does not require the same degree of accuracy as does your tax return.It is often more important to receive timely information with a greater margin of error which is counter to the accounting culture.Who decides how “accurate” various reports must be in your company?What matters is that it is as accurate as necessary for the purposes of the user.
For information to be converted into knowledge it must also be usable.Usable means that the person receiving the information must understand it.A technically perfect report that the recipient doesn’t understand does not produce knowledge.Do you see reports go unread?Do you see people lost during meetings?Is the issue training of the recipients or the format of the information?Lastly information must be produced at a minimum cost.Although this technically is not an element of the communication process, it is critical to the success of the business.It makes no sense to produce a report that saves $100 and costs $500.It makes no sense to hold a meeting that costs $1000 to produce a savings of $200.Who determines the cost-benefit of your forms of communication?What is the real cost of an hour meeting of six managers?
After knowledge is actually received, the recipient must apply “thought.”Thought is the responsibility for acting upon the knowledge.What is critical is that the actions taken be in alignment with the best interests of your company, which is not necessarily in the “best interests” of the person making the decision.“I see from this that a change order should be generated, but I don’t want to bother to do all the paperwork.”“I see that this customer is unhappy, but I don’t want to face him so just forget it.”Many owners do not try to control this part of the process and instead rely upon their employees
”experience” and “common sense” to make good decisions.These same owners get frustrated when these employees make “bad decisions” and yet they have no incentives for the employee to make the “right” decision.The fact is, they are making the right decision—the right one for them but not the right one for you.
The pinnacle of the communications process is “wisdom.”Wisdom results from a repetition of and effective communications process.It results from the right people making the right decisions based upon the right information.Does this happen in your company?It is reflected in your bottom line and in the morale of your employees.Wisdom is the objective of your company.
How does your company accomplish “wisdom?”First you must understand that this is a “journey” and not a “destination.”Since your people and your company and the business environment are constantly changing, the systems, procedures and controls that are required are constantly changing.Albert Einstein said, “Tomorrow’s problems will not be solved with today’s solutions.”It doesn’t take Einstein for us to realize that your communications process can always be improved.So where do we start?One way is for management to complete a comprehensive analysis of the flow of all data, codify the system and then train the employees to use it.This will work but it is rarely cost effective and rarely sustains long-term implementation.It also tends to “etch in granite” systems that as we have already determined must constantly change.Comprehensive “fixes” that truly address the cause of the problem rather than the “symptom” of the problem as a rule are the better way to go, but in the case of communications, so much of your corporate culture must be addressed that a complete change becomes impossible.Rather, start by fixing the squeaky wheel.
First assume that almost every issue in your company is a “communications” issue.When a mistake is made, a frustration is expressed, or an excuse for non-performance is offered, start with the responsible person.
- Identify the problem in objective terms without placing blame.
- Cause the responsible person to “buy-in” by making them commit to what could have happened that would have allowed them to produce the correct result.
- Examine if this is the proper person to be responsible for the decision and if the employee in that position is the proper person.
- Work back down the communications hierarchy from the problem—what knowledge did the person have?What information was generated?Was the information produced in compliance with the four criteria for information?What data was the information based upon?How was it collected?
- The responsible person should then be “teamed” with the “lower level” persons required to feed the “higher level” person the knowledge that they have agreed is required.Together they produce the solution (facilitated and if necessary, mediated, by you).
- Once the solution is identified, it must be codified.The codification must be a writing that is distributed and maintained in the operations manual for each position.
- For the change to really become implemented it must not only be written, it must be reinforced by the leader within the first week, and reinforced by the leader again in the next two to four weeks.
- Depending upon the benefit the company derives from the change, incentives can be created to execute the reinforcement.
Does this seem like a bother?Weigh this course of action against the problem being repeated.Our office has a saying, “smart men make mistakes; dumb men repeat them.”Reprimanding a person for a “poor decision” doesn’t solve the problem—it generally creates another one.Fixing the root of the problem takes more effort in the short term, but it actually saves effort in the long term.Your job as the owner is leadership.Leadership is having a plan and then getting people to produce the results by performing their part of the plan.If we don’t have an effective communications system we are setting them up for failure and in so doing, limiting the ability of our company to succeed.Success is the accomplishment of your plan; failure is not accomplishing your plan.
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The Fremont Group