No quote this week. I want to offer a tip you will find useful, but I didn’t have a quote that would complement it.
One of my favorite management tools is a trailing 12-month average. If you’re familiar with this tool, stop here. You already know what I want to tell you. But if not, please read on.
Have you ever seen a chart that looks like the scribble of a 2-year old? You can’t tell if the trend is up, down, or flat? A trailing 12-month average overcomes that problem with a smooth trend line that doesn’t lie. And it works for any data you want to track . . . sales, gross profit, expenses, net profit, or any other statistical information. Here’s how.
Let’s say you want to track sales. Imagine a chart where the vertical axis is dollars or units, and the horizontal axis is months of the year. We can start in any month we like, but for this example, we’ll start in January 2007. The first point of our graph will be the sales results for January 2007 plus the preceding eleven months, totaled and divided by 12. So the sum of sales, February 2006 – January 2007 divided by 12. The next point on our graph will be February 2007 plus the preceding eleven months . . . March 2006 – February 2007, divided by 12, and so on. Each point on the graph represents the current month plus the preceding eleven months, divided by 12. You don’t really have to divide by 12 . . . the trend line will be the same whether you chart the monthly average or the entire 12-month total. But dividing by 12 gives you a monthly average that you can then compare to your actual month’s result.
Since each point on the chart represents an entire year’s worth of activity, seasonal ups and downs get leveled out as do one-time sales spikes (as for instance, a large sale that you don’t expect to repeat). As a result, you get a nice, smooth trend line that tells you clearly and honestly whether the data you’re tracking is going up, down, or flat. It’s a terrific tool to quickly and accurately identify trends that need corrective action. It’s also a tool that can be used as a budgeting or forecasting aid.
For more on this and many other management tools, I recommend “CEO Tools” by Kraig Kramers . . . it’s crammed full of useful ideas to help you improve productivity, results, and profits.
For more small business blogs, visit my website at www.rocksolidbizdevelopment.com.
Monday, October 26, 2009
Monday, October 19, 2009
What Do You Tolerate?
“A company’s culture is defined by what it tolerates.”
All companies have a culture. In some cases, the culture is one that has been carefully constructed and nurtured, in others, the culture has evolved haphazardly over time, but either way, a culture is present, and it is defined by what it tolerates.
Think of IBM in the early days. They wanted a culture of professionalism. Employees were expected to show up for work well-groomed and in conservative business attire. Showing up for work with unkempt hair and wearing a Bud Lite tee shirt was not tolerated.
Ritz Hotels are legendary for customer service. Employees who don’t understand and practice world-class service are not tolerated.
At a manufacturing plant, employees on the assembly line are empowered to shut down the line if they spot something wrong. In that culture, high quality is expected and nothing short of that is tolerated.
Every culture is different. For IBM, conservative dress was an important part of the culture. For a general contractor, having carpenters, electricians, and plumbers trying to put up a building in 3-piece suits would be crazy. Nursing homes don’t tolerate violence. The Marine Corps teaches it.
The point is, your culture needs to be something put in place thoughtfully and deliberately, and it must answer the question, “How do we behave around here?” You need to consider all of your stakeholders . . . customers, employees, and vendors. What do you expect of them, and just as importantly, what do they expect of you? Your culture, what you tolerate and what you don’t tolerate, should reflect all of that.
For more small business blogs, visit my website at www.rocksolidbizdevelopment.com.
All companies have a culture. In some cases, the culture is one that has been carefully constructed and nurtured, in others, the culture has evolved haphazardly over time, but either way, a culture is present, and it is defined by what it tolerates.
Think of IBM in the early days. They wanted a culture of professionalism. Employees were expected to show up for work well-groomed and in conservative business attire. Showing up for work with unkempt hair and wearing a Bud Lite tee shirt was not tolerated.
Ritz Hotels are legendary for customer service. Employees who don’t understand and practice world-class service are not tolerated.
At a manufacturing plant, employees on the assembly line are empowered to shut down the line if they spot something wrong. In that culture, high quality is expected and nothing short of that is tolerated.
Every culture is different. For IBM, conservative dress was an important part of the culture. For a general contractor, having carpenters, electricians, and plumbers trying to put up a building in 3-piece suits would be crazy. Nursing homes don’t tolerate violence. The Marine Corps teaches it.
The point is, your culture needs to be something put in place thoughtfully and deliberately, and it must answer the question, “How do we behave around here?” You need to consider all of your stakeholders . . . customers, employees, and vendors. What do you expect of them, and just as importantly, what do they expect of you? Your culture, what you tolerate and what you don’t tolerate, should reflect all of that.
For more small business blogs, visit my website at www.rocksolidbizdevelopment.com.
Monday, October 12, 2009
Stop Micro-Managing! It's Killing Your People
“Let people accomplish your objectives their way.”
Where systems or processes are concerned, it really is essential that everybody use them uniformly. Imagine an assembly line. Each station on the line must perform its function in a very precise way, each and every time, or stations further down the line won’t be able to do their work. But for the most part, management challenges don’t lend themselves to an assembly line approach. They tend to be unique situations that require specially crafted solutions. However, that’s not to say that there couldn’t be two or five or a hundred specially crafted solutions that would all work equally well.
For most of us, the joy of work is in figuring stuff out . . . doing or trying things that haven’t been done or tried before. When we’re told, “Here we are at A, and you need to get us to D,” that’s a great assignment. Right away we’re thinking, “I wonder if there’s a way to get directly to D without going through B or C. Or maybe it would work better if we went from A to C, then back to B and finally to D.” On the other hand, if we’re told, “Here we are at A, you need to get us first to B, then to C, and then to D,” all the joy, excitement, and creativity just went out of the assignment.
Micro-managing can tear the heart right out of an organization. Leaders set a broad direction and then get out of the way. Tell your people what to do, but let them figure out how to do it. Are you a leader or a micro-manager?
For more small business blogs, visit my website at www.rocksolidbizdevelopment.com.
Where systems or processes are concerned, it really is essential that everybody use them uniformly. Imagine an assembly line. Each station on the line must perform its function in a very precise way, each and every time, or stations further down the line won’t be able to do their work. But for the most part, management challenges don’t lend themselves to an assembly line approach. They tend to be unique situations that require specially crafted solutions. However, that’s not to say that there couldn’t be two or five or a hundred specially crafted solutions that would all work equally well.
For most of us, the joy of work is in figuring stuff out . . . doing or trying things that haven’t been done or tried before. When we’re told, “Here we are at A, and you need to get us to D,” that’s a great assignment. Right away we’re thinking, “I wonder if there’s a way to get directly to D without going through B or C. Or maybe it would work better if we went from A to C, then back to B and finally to D.” On the other hand, if we’re told, “Here we are at A, you need to get us first to B, then to C, and then to D,” all the joy, excitement, and creativity just went out of the assignment.
Micro-managing can tear the heart right out of an organization. Leaders set a broad direction and then get out of the way. Tell your people what to do, but let them figure out how to do it. Are you a leader or a micro-manager?
For more small business blogs, visit my website at www.rocksolidbizdevelopment.com.
Monday, October 5, 2009
Make Better Hiring Decisions
“We hire for skills and fire for behaviors.”
That’s true isn’t it? We were excited about our new hire. He had worked at some great places, been trained in the exact systems and processes we need, and impressed us as someone who is diligent and efficient. This was going to be a marriage made in heaven. Unfortunately, we were so impressed with his skills, we neglected to learn that he is rude, self-absorbed, imperious, and nobody can stand to work with him. So the marriage we thought was made in heaven ends in an ugly divorce.
There are no guarantees when it comes to hiring people. Try as we might to hire only the people who are a “good fit” for our company, we sometimes make a mistake and take in someone who is a bad fit. But there are ways to stack the odds in your favor.
First, in an interview, focus on behaviors that will be necessary success factors for the job you’re trying to fill, and ask for actual events in the candidate’s past that demonstrate those behaviors. For instance, you might say, “You will need to work with a team of people to do your job successfully. Give us some examples from your prior work experience to show how you worked with others to accomplish a particular goal.” Or you could say, “Tell us about a really tough customer service issue you’ve had. How did you handle it?” The point is, ask questions that illustrate the behaviors you want and ask for actual situations from the candidate’s past, not hypothetical ones (“What would you do if . . . “).
Second, when you do reference checks, verify the interview answers you got. “I understand John had a tough situation with the XYZ Company but was able to defuse it by doing thus and such. Is that the way you recall it?”
Behaviors are tough to predict, but if you spend some time thinking carefully about the behaviors you need and then thoughtfully constructing questions to highlight those behaviors, you’ll be surprised how much you can learn about a candidate before s/he becomes an employee.
For more small business blogs, visit my website at www.rocksolidbizdevelopment.com.
That’s true isn’t it? We were excited about our new hire. He had worked at some great places, been trained in the exact systems and processes we need, and impressed us as someone who is diligent and efficient. This was going to be a marriage made in heaven. Unfortunately, we were so impressed with his skills, we neglected to learn that he is rude, self-absorbed, imperious, and nobody can stand to work with him. So the marriage we thought was made in heaven ends in an ugly divorce.
There are no guarantees when it comes to hiring people. Try as we might to hire only the people who are a “good fit” for our company, we sometimes make a mistake and take in someone who is a bad fit. But there are ways to stack the odds in your favor.
First, in an interview, focus on behaviors that will be necessary success factors for the job you’re trying to fill, and ask for actual events in the candidate’s past that demonstrate those behaviors. For instance, you might say, “You will need to work with a team of people to do your job successfully. Give us some examples from your prior work experience to show how you worked with others to accomplish a particular goal.” Or you could say, “Tell us about a really tough customer service issue you’ve had. How did you handle it?” The point is, ask questions that illustrate the behaviors you want and ask for actual situations from the candidate’s past, not hypothetical ones (“What would you do if . . . “).
Second, when you do reference checks, verify the interview answers you got. “I understand John had a tough situation with the XYZ Company but was able to defuse it by doing thus and such. Is that the way you recall it?”
Behaviors are tough to predict, but if you spend some time thinking carefully about the behaviors you need and then thoughtfully constructing questions to highlight those behaviors, you’ll be surprised how much you can learn about a candidate before s/he becomes an employee.
For more small business blogs, visit my website at www.rocksolidbizdevelopment.com.
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