Small Business Buying, Building and Selling

A friend of mine just emailed me today to let me know he’s just been promoted, is now taking on a much larger leadership role where he works, and sales are doing well BUT he’s having ‘people’ issues.

Well who isn’t, right? All businesses have issues with unproductive, combative, and poor-communicating employees. But before you can address how to fix those problems, you need to know why people are that way. It’s my firm belief that the vast majority of people don’t want to suck at their job. If that’s the case, why do so many businesses have so many personnel issues?

Here’s a quick litmus test to see if your business is creating personnel issues or you just happen to have a few bad eggs.

Personally I’m not a big fan of the term “managers” as “managers manage resources and leaders lead people”. A hundred little things, like your titles, added together form a culture for your team and team members (not employees) that can affect everything about your culture, including financial results. I’m getting a bit ahead of myself, so I’ll get more into what’s required of a leader in number 4.

1. The first step is defining the culture you want… Mine is literally called our “14 Points of Culture” that set the ground work for our team expectations. While you’re laying the ground work for your team and culture, you may already have a Vision and Mission statement, but if not, that’s foundational so create that as well.
2. From there you need to develop a Team Organizational Structure chart with the hierarchy of the leaders in your business. Keep in mind that the 3 points on a successful business triangle are made up of Sales/Marketing, Finance/Administration, and Service/Operations so your Team Structure should make sure someone is excellent at each of those things and has the supporting team to get better. At it’s most basic level, your Organizational Chart would include a Team Leader (CEO) above the Sales/Marketing Leader, Finance/Administration Leader, and Service/Operations Leader who all report to the Team Leader. Underneath each of those leaders will be their supporting teams. Keep in mind that the Team Leader should always dedicate half of his time to sales/marketing and the other half of his time to everything else!
3. Create job descriptions for every position in your Team Organizational Structure. The descriptions should include expectations, benefits, Key Performance Indicators and benchmarks tied to incentives. No one on your team should ever be able to say “I don’t know what’s expected of me or how to do my job well.” More importantly, you must fit each team member’s skill-sets and passions into the position that will best allow her to express those passions.
4. Now you start changing the culture by actively leading your team. You provide opportunities for open communication like regular team meetings (even going to the point of picking fights between people and departments). You provide regular and consistent feedback with quarterly performance reviews based on the 12 Questions Marcus Buckingham outlined in First, Break All the Rules. You rearrange your offices according to the rules of proximity. Make sure each of your leaders knows how to use NLP and then train your people. When you come up with new products, ideas, promotions, etc. you work hard to provide systems, procedures, scripts and all the pieces your people need to be successful at implementing new programs. You develop a culture of innovation by requiring people to come up with new ideas without fear of reprisal for “bad” ideas that don’t materialize… And rewards for the ideas that do yield results. You ensure that your leaders all develop relationships with their team members because the most important factor in employee satisfaction is an employee’s relationship with his direct superior.
5. The fifth piece is probably the hardest, yet most important. You fire, let go, or force out the people who don’t fit into your culture, vision, structure, or job descriptions. You get rid of the people who aren’t contributing to the team and culture immediately. The lost time and energy in trying to “fix” them can almost never be recouped. However, if you haven’t provided for them an environment to succeed (with all of the 5 pieces), you’ll really have no idea if they’re good or not because you haven’t defined the rules of the game, yet. If you’re the leader or manager, this is your responsibility. If your leader or manager isn’t providing this type of atmosphere, maybe you should read my last blog on moving on.

Obviously I just presented a whole lot of ideas and pieces that make up a complex problem in a rather succinct manner. The myriad links throughout this blog will provide additional details on certain topics, however don’t try to make this TOO complex. Problems that are TOO complex get pushed to the back-burner, avoided, and ultimately never solved. Take these 5 pieces at relative face value, work on each of them, and enjoy the results.

For further resources, I recommend the following 3 books to help you change your culture:

1. First, Break All the Rules: What the World’s Greatest Managers Do Differently by Marcus Buckingham
2. The Five Dysfunctions of a Team: A Leadership Fable by Patrick Lencioni
3. Instant Team Building by Brad Sugars

To your culture-creating success, Bryan

P.S. Though it should go without saying, before you do anything else you should foster a highly ethical business environment. Without an ethical foundation, everything else will be overshadowed.

In our team meeting 2 weeks ago I introduced our company Vision, Mission, 13 Points of Culture and Company Philosophy. I hadn’t intended to review it with the team as quickly as I did (our 4th team meeting) however we had some issues that required me to be much more specific than “lying is never an option” as I had emphasized at our first team meeting. The details of the incident really aren’t important – basically we just told a customer one thing and did something else. Obviously we corrected that and so it is my responsibility as the Team Leader to lay out for them in black and white EXACTLY what is expected from the team.

You may reference my previous Blog “Your company has a culture, did you choose it?” for the first 12 points of culture and I recently added another point emphasizing safety.

The first week I just handed out a copy of the Vision, Mission, Culture and Company Philosophy to present the concept of each and then allow them a week to “mull it over.” My teammates ensured me that while they had down-time they were reviewing the points and a few questions came up that hopefully I clarified to their satisfaction.

At the next team meeting, a week later, I reviewed each point with a quick synopsis. At this point my goal was to ensure everyone was familiar with the points and knew exactly what our team was about. The 2 things that amazed me most about what happened after revealing the points of culture were:

1. The number of times I referenced a point of culture with a teammate. – In the first meeting when I was explaining the concept of “Points of Culture”, our most senior technician spoke up and said he’s had an issue at times with pride that prevented him from asking for help when he really needed it.  I immediately got a big smile and said – take a look at #7 on the list “We understand that every person we encounter has something to teach us and so will learn from everyone around us.” He just laughed and whole-heartedly agreed. Throughout the week, I was working on reviewing our “12 Questions” employee review surveys courtesy of First, Break All the Rules and in every single performance review meeting I referenced at least 2 points of culture. I never planned to bring up the points in our meetings, they just happened to explain something that my teammate and I were discussing.
2. The enthusiasm with which everyone embraced them. When I reviewed all of the points of culture one-by-one, I made it clear to the team that in companies where a culture as specific as this is created, not everyone fits. I went as far as to say that I hope this doesn’t happen, but I’m prepared for people who just don’t agree to move on. For me it is extremely important to let them know that this isn’t a game or some feel-good lovey, dovey BS. Everyone on our team has a job to do and the result of that job can be boiled down to black and white. For me, my responsibility is to make the business more profitable. If the bottom line doesn’t improve, then everything I’m doing is a waste. With that being said, of the 4 people I sat down with to have performance reviews all 4 of them said “Bryan, I agree 100% with what you’re doing and I think it’s great for the company.” And I believe that they were all very sincere and excited about what’s to come.

So how does the bottom line look after only 2 weeks of improved culture and a dedicated focus on our service department? Well the “black and white” performance measurement that I use in our service department is the average revenue each technician brings in each day. I know what my daily break-even is for each technician and so I have a target reasonably higher then that. On average, in January thru April 2008 we were losing money each day in our service department. The first 2 weeks in May represent a 60% increase in Revenue/Tech/Day over the average for the first 4 months in 2008.   Now, in the interest of full disclosure, I do still have to figure in the alotted revenue the service department receives for each new install since my numbers only reflect revenue generated from service. Nonetheless, with a 60% increase, I think we’re on the right track!

Additionally, 2 of my technicians are moving on to greener pastures. One to make 3-4 times more money then I can offer (though he did admit he wishes my programs were in place for longer since he knows they would have helped him do better at his job. He also went on to say that if he could choose his boss, he’d be exactly like me. lol I just had to throw that in.).  The other stopped showing up for work before I ever had a chance to review our Vision, Mission, Culture. There seems to be some bad blood between him and my partner that I really don’t plan to get involved with.

One of my main goals with developing a company culture is to polarize it. Nordstrom’s is famous for creating a culture where you either love it or hate it. According to one of Jim Collins’ books, people who are hired are there either less than 6 months or more than 10 years. There is no middle road. There is no luke warm. You’re either a part of the team or you’re not. That’s the kind of culture I want for our team!

Have you or can you develop that for your team?

To your success, Bryan

In my last blog I mentioned that if you’re an Ethical Business Builder, but none of your employees are aware of that, who cares? It’s important that you make your whole team aware of the importance of ethics in business.

Obviously your actions are the most important part of being an ethical leader. If you have an “open-door policy” but you’re never around – or you claim that its important that you treat all people with respect, but your team members can hear you flipping out on your vendors on a regular basis as a means of “getting the best deal”, then it doesn’t matter what you write in your ethical policies. The only things important to your team members are the things that you do – not what you say. I’ve read in numerous articles and books that most businesses take on the traits of their founders. Microsoft is like Bill, Apple like Steve, Facebook like Mark, and Google is like its 2 founders…

ALL businesses have a culture. Some are high-energy and highly-competitive like Nordstrom’s and some are more laid-back like your typical start-work-at-noon-and-sit-on-your-bean-bag silicon valley software company. In both of those instances the companies “culture” was deliberately structured to be a certain way. The founders of those companies apparently determined (or it just happened by accident) that the most productive way to deal with their employees was to develop a culture to cater to the type of employee they wanted. This is important because not every person can excel in every environment and company culture. It’s well-known that Nordstrom’s employees either love it there or hate it. The ones who hate it rarely last more than 6 months. That’s the way management likes it. If you’re not going to thrive in the culture they’ve created, then they don’t want you. Does the culture that you’ve developed in your company attract the employees who will excel in your business?

The examples above, however, don’t talk at all about the ethical underpinnings of those cultures. Just like other aspects of culture, if you don’t express your culture, including the ethics that you expect, in writing and then demonstrate through your own actions that you believe in them 100%, then the culture will create itself. Generally that “self-created” culture will come partially from the founder and partially from whatever the other employees think is appropriate. My first encounter with a defined set of “Culture Statements” came from Brad Sugars in his book Instant Team Building and from his entrepreneur masters class. Actually, I can’t think of one other business book or article that has emphasized the importance of defined culture statements.

Culture statements are a series of statements that simply tell your employees and company stakeholders what values and culture your company employs. It’ll probably make more sense if you just read the 12 Points of Culture that I developed for a business I co-founded, cribME!.

12 Points of Culture

• We treat our customers, colleagues, partners, vendors, and shareholders with respect. In unsettling situations we do our best to empathize with the other side and view the situation from their perspective.

• We maintain integrity in all interactions. The end never justifies the means. Deliberate lying is never an option. If ever we make a mistake and accidentally make an inaccurate statement we will correct that statement as soon as reasonable.

• We work diligently to make effective and open communication a high priority by avoiding gossip, harmful sarcasm, and verbal attacks. If we have a question or concern about someone, we strive to ask them directly instead of listening solely to those around them.

• We are never satisfied with “good enough” and continually strive to improve ourselves, facilities, products, and services to best serve the company stakeholders.

• The team leaders do their best to provide a healthy and productive environment for their team members to excel at their jobs every day.

• We are positive toward each other, focusing on exceptional work and constructively critiquing when warranted. We are open to others positive suggestions for improvement.

• We understand that everyperson we encounter has something to teach us and so will learn from everyone around us.

• We appreciate that profit is the life-blood of every business and a profitable business benefits everyone in the organization as well as in the communities we serve. We work together to minimize unnecessary expenses and waste to ensure a lasting, profitable business.

• We strive to be on time and meet deadlines. If we say we are going to do something by a certain time, we do it. If for some reason that is impossible, we communicate another solution as soon as we are aware that we will be late.

• We recognize that the customer is not always right, however, whether he is or not, its our responsibility to make him feel that way.

• We hold ourselves accountable for our own actions and responsibilities. We admit to making mistakes and continually learn from them. When we learn from mistakes, they are not failures.

• We take calculated risks to improve our areas of responsibility. We try new and innovative solutions to daily problems. We quickly discard the solutions that do not work and continually improve those that do.

One of the benefits of developing culture statements for one business is how easily they can be amended to apply to almost any business. Statements I wrote for another business included a point of culture emphasizing the importance of safety. There aren’t a whole lot of dangerous situations in the software business so I didn’t feel that was necessary to emphasize for cribME!.

It’s important to make use of and review all of the points of culture, along with your vision and mission, BEFORE you hire someone. The potential hire needs to be aware of what makes your company unique and it gives you an opportunity to measure her reaction to your emphasis on ethics.

This blog is just barely touching the surface of the importance of dictating your culture to shaping your business. One of the primary findings in, Built to Last: Successful Habits of Visionary Companies, that contradicted the teachings of almost every MBA program on the planet, is that the businesses that survived and excelled over time were often the ones that were centered around a core business concept, not a great product.

We’ll get more in depth into the Vision and Mission in another blog, however, for now, start reviewing your business’ current culture and compare that with the culture you’d like it to have. In the next few months I’ll be working to define the culture of a few startups, as well as potentially revamp the culture of a business that’s been around for over 10 years. I look forward to recording the lessons learned from both of those processes.

To your success, Bryan