What if your team doesn’t win the Game?

Incentives. Games. Contests.

Most companies use games and contests to get employees fired up and to drive results. Who hasn’t run a sales contest or offered an award for perfect attendance?

At the Great Game of Business, we call these “Mini-Games.” They’re short term, intensely focused, rapid improvement campaigns that affect a change, correct a weakness or pursue an opportunity. Like any game or sport, there is a goal, a scoreboard and a reward for winning.

A well-designed business game can be energizing, fun, educational and exciting. But what if you get to the end and you miss the target?

A business owner I work with was recently in that very situation. His particular game had the goal of reducing utility costs over a 90 day period, which didn’t happen. To avoid his team’s disappointment, he desperately wanted to pay the reward anyway and asked me for advice. My feedback wasn’t necessarily what he wanted to hear but in the end he agreed with the advice, which follows:

I had to tell him that if you give the prize anyway you’re training the team that a miss is as good as a win, and to expect something every time you run a game regardless of the outcome.

It’s better to have a post-game meeting, review the results together and have a discussion about what went right and what went wrong (if anything – just because you didn’t win doesn’t mean something went wrong.) It is possible the target was too optimistic, and you can discuss that.

Did everyone really take the game seriously and do everything possible to reduce utilities? Did they encourage each other to turn off lights, close windows, etc.? If not, it should not be a surprise that we didn’t win.

If someone suggests “It’s not our fault we didn’t win so we should get the prize anyway”, that’s an opportunity to talk about the fact that it’s also not the company’s fault. But in reality, it’s not about “fault.” It’s about creating a win for the company AND a win for the employees. Let’s learn together from this experience and do another game, perhaps on another target or maybe go after utilities again.

My advice to him – and to all businesses embarking on using games and contests – is – with the first few games, pick easy targets to virtually ensure a Win. Don’t share that info with the folks, but do it to let them get the feel of a win under their belts and to show you’re serious about awarding the prizes when they win. Every time, do a post-game analysis with the team: What did we learn? What can we continue to do better going forward, even after the game is over? If everyone involved doesn’t learn something about business from the experience, you’re leaving money on the table.

Get your game on and improve your business!

By the Numbers

“The numbers in a business are just stories about people.”
– Jack Stack, CEO of SRC Holdings and author of The Great Game of Business

What are your company’s numbers, and how do you use them to assign accountabilities to departments and people?

Here’s the Great Game of Business approach:

1. Determine your main measure that defines success. We call it your Critical Number. In a small company, it’s likely profit. After all, you have to take in more than you spend. Set a specific target.

2. Visit with the people in each function or department. Ask them how they most directly impact that number. We’re looking for one to three “drivers” … the measurable activities that “drive” your Critical Number. In some departments – like sales – these will be easy to identify. Depending on what role a department serves, the driver may measure a supporting function and won’t necessarily be tied directly to the Critical Number. But every department should be able to define its contribution to success. Ask lots of questions and soon the drivers will emerge. Set specific targets.

3. Have those departments track their drivers on an ongoing basis, and meet weekly to review and discuss improving them.

Here’s how this might look in action:

ComputerFix is a small computer repair company. Their sales target is $1 million, and they’ve selected Profit Before Tax as their Critical Number. The goal: $100,000.

They have 6 service technicians and 4 support staff, including the owner, Pat. The techs generate revenue based on hourly billing. They have determined that if each team member can invoice for at least 75% of his/her time, the company will achieve its sales target. So their driver is Billable Time.

The support staff decides on these drivers for their main functions:

  • Dispatch: 98% customer satisfaction (measured via surveys)
  • Parts Purchasing: 100% on-time delivery
  • Finance: Accounts receivable outstanding < 45 days

The company selects 10 am every Monday for its weekly “huddle.”

At the first huddle, Pat explains that the employees create the numbers; accounting simply records them. Pat asks everyone for their best effort in keeping their drivers moving in the right direction.

When they get to receivables, an insightful discussion ensues. Jan in accounting talks about the importance of making new clients aware of the company’s payment terms. Alex in dispatch offers to send a “Welcome Aboard” email – including payment terms – to new clients. The techs will carry hard copies for new clients. All agree that clarity on payment terms will help customer satisfaction.

These huddles are nothing more than common-sense discussions about the employees’ impact on the numbers. This is the best way for them to learn the numbers, and to hold themselves accountable for them.

Running the business “by the numbers” is not just for the owner. It’s for everyone in the company.

Got Drama? Act 2

No-Drama-Button

 

“Don’t tell me what they say about me.
Tell me why they feel comfortable telling you.”
— Unknown

To review Act 1, we defined workplace drama as gossip, finger-pointing, whining, bickering and more.

You may be savoring a business which is not infected with the rot of workplace drama. If so, congratulations. Keep up the good work.

Some of you, though, fight the fires of discontent daily. You spend an inordinate amount of time dealing with drama in all its insidious forms. It kills the productivity and potential of the entire company, and sends you home drained. And, any “A Players” you were lucky enough to hire? They’re out of Dodge on the first available train.

Sound like your workplace? If so, go back to read and implement the recommendations from Act 1. That will put the foundations in place for curing this plague.

Then read on for ways to wade directly into the fray and wage combat wh your Nattering Nay-Bobs.

Circle the troops. Look ‘em in the eye. Tell them that you ask for and expect everyone’s full support for a new start. All the drama and nonsense stops today! Be firm.

Then, go over your new rules. Make them crystal clear and non-negotiable. Here’s a list to jump-start your thinking:

  • Treat everyone the way you’d like to be treated OR the way THEY want to be treated … whichever is better.
  • Attack the problem, not the person.
  • Don’t say anything about a person you wouldn’t say in their presence.
  • Zero tolerance for drama, talking behind someone’s back, etc. If someone tries to engage you in such a discussion, refuse to participate. If they have a problem with someone, tell them to discuss it directly with that person, take it to their supervisor or to the other person’s supervisor. If you listen to the drama you’re just as guilty as the person spewing it.
  • When we’re in a meeting and we ask if there are any questions or comments, we REALLY do want your feedback. If you’re unwilling to share your comments in the meeting, then get with your manager afterward. If you’re still unwilling to speak up, you lose the right to complain back in the workplace. If someone complains about a topic we just covered in a meeting, don’t listen. Tell ‘em to take it to management.

Whenever there’s a flare-up, deal with it swiftly. Speak with the offender directly. Don’t set up more rules or punish everyone because of one person’s actions.

Be willing to have this conversation: “Despite our best efforts, you continue to be unhappy here. Maybe we should help you transition to a place of employment that you find more acceptable.”

Warning: If you establish “zero tolerance” and then turn your head the other way, you’ll lose your credibility. Be prepared to enforce it!

Next time, we’ll talk about keeping score. Assigning accountability for numbers eliminates much workplace drama. This is just one of the ways GGOB really shines in helping you craft a winning culture.

 

 

 

Got Drama? Act 1

work-hard-have-fun-and-no-drama-pleaseDo you have drama in your company?

“Drama” covers a myriad of people issues … gossip, finger-pointing, whining, talking behind folks’ backs, can’t/won’t get along, complaining, blame, excuses, under-performing, bickering and more.

If you’re embarking on the Great Game of Business journey, here’s some good news: GGOB is a culture transformation. It’s all about building a culture of winning and learning.

Some organizations have deep-seated people issues, and I find that leaders in this situation like to try to resolve some of their issues as a run-up to launching GGOB.

Even though GGOB itself is a good portion of the cure for what ails your organization, let’s talk about some approaches to removing drama, and for keeping it out in the first place.

Since an ounce of prevention is worth a pound of cure, let’s first talk about preventing as much drama as possible so we don’t have to correct it.

Culture and good hiring go hand in hand. It’s much like the chicken and egg. Which comes first? One begets the other.

A strong, positive culture is exemplified by employees who know they have a good thing going, and who want to keep out the bad ones while welcoming in the good ones. If your hiring process indeed keeps out those who don’t fit your culture, that’s way more than half the battle.

I’ve written quite a bit about the importance of a “culture document” before. A set of Core Values can be invaluable IF they are genuinely used to guide decisions about hiring, firing, promoting and rewarding. If they’ll just be hollow words or a plaque on the wall, don’t bother.

Once you know what values are important, the company’s leaders must set the tone (and the example), educate the troops, and be unwavering in running the business according to these principles.

Here are some ideas for getting your management team on board:

  • Our Core Values apply to everyone in the company. ALL decisions are made with our values in mind.
  • Set the example
  • Hold others accountable. Do it tactfully and professionally, but do it.
  • Speak up in our management meetings. Debate is healthy as long as we keep it professional and not mean-spirited. We don’t need “yes-people” or nattering nay-bobs.
  • Once a decision is made we each support it as fully as if it was our own idea, both among the other managers and especially with all others in the company. Acting like you support an idea and then undermining it or not supporting it in front of employees is not acceptable.
  • Let’s issue an “Adult Card” to everybody in the company … starting with the CEO and our management team. If there’s a problem, we deal with it like the mature professionals we are: with open, honest, direct communications.
  • You can’t just say all this once and think it’s fixed. You’ll have to remind folks over and over. And over.

Hatim Tyabji grew Verifone into a dominant, global credit card transaction company. His key leadership tool was a booklet that explained Verifone’s eight core values. He says, “I essentially spent the last six years repeating myself.”

A stellar smaller example is Sandy Jaffe, who grew his tiny Paperback Supply into GL Group, an admired local multi-divisional company in St. Louis (and GGOB All-Star winner) with over 200 employees. Their main guiding principle over the last 40 years? The Golden Rule.

In Act 2, we’ll talk about taking the message to the rest of the company.

Who’s Running This Ship, Anyway?

“The family business.”

That phrase is so iconic. It’s almost heart-warming.

And yet, many family businesses are flawed. Some are broken beyond repair. In my work, I’m inside family-owned businesses regularly and have gotten used to hearing hear the word “dysfunctional” … used by employees and the family members themselves.

Trouble is, the people in charge generally aren’t objective. It’s tough to deliver an unbiased opinion when you’re the problem.

It’s been said that every family has a black sheep. If you look around at a family gathering (or family business) and don’t see one, maybe it’s you.

I’ve observed – and have had this observation confirmed by dozens of people in and around family businesses – that one of the main sources of strife and mayhem is entitlement. Example: If the company is called Smithco and my name is Smith, I deserve a position of authority, a title, an office, plenty of respect, a portion of ownership and a lifetime income stream … regardless of my qualifications or performance.

In these companies, two or three generations of siblings and cousins run amok, issuing conflicting orders and consuming resources. Non-family employees can be excluded from management positions, or can have their authority diluted by one of Junior’s “great ideas.”

We’ve all heard the stories about family businesses big and small that have been tainted, if not ruined, by family conflict.

Here’s an approach several entrepreneurial families have adopted that makes a tremendous amount of common sense: A family “constitution.”

Some of the folks I’ve met don’t call it that, but what they all have in common – regardless of the terminology – is a discussion around who does what. That discussion leads to key decisions, with the outcome (hopefully) of a professionally-run, drama-free company.

In such scenarios, here are some agreements that get implemented. Each family member:

  • will not necessarily own shares in the company.
  • who owns shares may or may not have voting rights or a seat on the board.
  • will not necessarily have a job in the company.
  • who works in the company may or may be a manager.

In other words, the qualifications for both ownership and management positions extend beyond one’s last name. It’s a meritocracy, with the best-qualified people in each role.

You can see how much sense this makes, while simultaneously imagining the wailing and grinding of teeth that will occur while trying to gain Stanley’s buy-in. That’s the same Stanley who is 46 and has never held a “real” job other than the one created for him by Mom and Dad.

If you own a family business, consider the idea of a family constitution. It might solve what’s ailing the company. Better yet, it might head off problems before they start.

Back to Business Basics

Another year has already come and gone? Really?

As you wrap up this year and prepare to start another, consider using the following list to guide your business activities. If you want to consider this a “New Year’s Resolution” list, that’s fine as long as you actually turn this list into reality and stick with it all year.

Set business goals, and have plans for achieving those goals.

Establish written plans for achieving your business goals. Be sure to assign accountability using the following formula: WHO will do WHAT by WHEN?

Run your business by the numbers.

It’s important to regularly review your progress and results. Your review should include:

  • Sales, broken down by product/service or customer segments
  • Gross profit, broken down the same way as sales
  • Major expense line items
  • Net profit
  • Cash balance and cash flow
  • Accounts Receivable, if you extend payment terms to your customers

Look at both month-to-date and year-to-date results, and compare to the same period from the prior year. It’s also a good idea to look at your P&L statement numbers as a percent of total sales. This allows you to spot trends early.

Use time wisely.

Your time is one of your most precious resources, so be sure you’re making the best use of it. Use a calendar and set aside time for planning and review.

“Hire hard” so you can “manage easy.”

Spend as much time as needed with the recruiting and interviewing process to build a strong team who will grow with your company.

Spend quality time with employees.

Rather than waiting a year to discuss performance with your team members, regularly visit with them informally. Get to know their talents, strengths and weaknesses. Praise them for their good work, and coach them when you see opportunities for improvement.

Delegate.

You can’t do it all yourself, so don’t even try. Continually ask yourself, “Is what I’m doing right now the best use of my time and talents?” If not, find a way to delegate those activities to employees or outside vendors.

Spend quality time with customers.

Find out the answers to these two questions:

  1. What’s important to you? (Quality, customer service, product mix, etc.)
  2. How are we doing in those areas?

Develop relationships with your customers.

Find ways to stand out from your competitors and to become the supplier of choice.

Make smart use of technology.

Technology has become so affordable and easy to use that even the smallest home-based business can afford to appear bigger and to level the playing field with larger competitors. Get tech savvy to reduce costs, improve communication, increase productivity and enhance customer service.

Create a winning culture.

Get everyone in your company on the success bandwagon, starting with you. Think and talk about growing, pushing through challenges and achieving goals. Be winners.

Implement these common-sense business practices, and go make the new year your best yet.

An out-of-this-world profit improvement

“The difference between something good and something great is attention to detail.”
– Charles Swindoll

An alien spacecraft lands near a mobile home park (as alien spacecraft are prone to do) and abducts an earthling. As the extraterrestrials examine the human, they’re fascinated that one toe on each foot is much bigger than the other four.

Why aren’t we earthlings similarly surprised when we see another person’s foot for the first time? Because it’s the norm. Like water to a fish. Ho-hum.

And so it is with many of the line items on your financial statements. We take some things for granted, and look right past them. Sometimes, it’s familiarity. Maybe you’re used to glossing over training expense because you always spend less than you budgeted. Sometimes it’s your perceived lack of influence over certain numbers. No matter what you’ve tried, that one number “is what it is.”

One of the first steps to improving your financial results is to start looking at each line item as if you were seeing it for the first time. Letting them become ho-hum is a formula for decline.

Of course, every section of your income statement is an opportunity for improvement, but here we’ll focus on your Cost of Goods Sold, or COGS.

COGS is defined as the direct costs that go into creating the products or services that a company sells. For example, an automaker’s COGS would include the material costs that go into making the car plus the labor costs used to build it. The other costs that don’t directly go into producing cars, like office supplies, support staff and utilities, are considered Overhead Expenses … another topic for another day.

If you’re a service-only business and don’t sell goods, you probably call it Cost of Sales, or COS. Even if your P&L just shows revenue less expenses, and doesn’t include a COS section, you really do have COS … it’s the direct labor cost associated with your billable staff.

Some great reasons to mine your COGS for improvement opportunities:

  • The improvements fall right to the bottom line. Grow profits using existing sales!
  • It’s one of the biggest costs on your P&L.
  • It’s easy to let COGS become “ho-hum” and thus slowly grow as a percent of sales over time.
  • If there’s a labor component, the failings and shortcomings common to all of us earthlings represent improvement opportunities. Think about wasted time, wasted material, lost productivity, inefficiencies, errors and reworks.
  • Most improvements to COGS have staying power. Negotiate a better price or improve efficiency, and you can likely enjoy that improvement for some time – maybe for years.

Do a detailed analysis of every line item in your COGS, and you might be rewarded with an out-of-this-world profit improvement.

Price is Everything?

“Better a diamond with a flaw than a pebble without.” ― Confucius

About ten years ago in my past life – as CEO of a medical equipment company which I have since sold – we were exhibiting at a trade show. An attendee walked by, checking out our booth. As I started to introduce myself, he exclaimed with a scowl, “Our business goes to the lowest priced vendor! Price is everything!”

If his goal was to set the tone for our interaction, he succeeded. I’m rarely at a loss for words, but I had never encountered anyone so obviously hell-bent on turning his organization into the home of crazy-low prices. The one positive outcome of my blissfully brief meeting with him was the eventual inspiration for this article.

If I had detected even a hint of willingness to enter into a dialogue, I might have asked him how we had allowed things to reach a point where “price is everything.” I also may have challenged him to put himself in my place. What if his customer proclaimed, “Price is everything!” I’ll bet he would have immediately come to the defense of his company – and rightfully so. With the tables turned, his focus would be not on price, but on value – which is where it belongs.

Each company is a value chain. It’s made up of people, facilities, materials, services and suppliers. Like any chain, it’s only as strong as its weakest link. I submit to you that being focused on “cheapest” is asking for lots of weak links.

I doubt that anyone prefers to be driven solely by price. We’re all interested in getting the best value, whether it’s our money or our employer’s. I also recognize the tremendous cost pressure businesses have experienced these past few years. But I’d like to believe that, given the choice, even bean-counters would embrace value over price. (By the way, I use “bean-counter” as a term of endearment.)

Think of your own experiences, either at work or in your personal life. Did you ever buy something at what appeared to be a good price and later regret it? Such a simplistic analogy may not do the discussion justice, but you can bet everyone can relate to it, because we’ve all been there.

It’s tough to resist the temptation to meet the other guy’s price. It takes guts to go out into the marketplace with a higher price. It also takes hard work. Anyone can sell if they’re the cheapest. Getting your customers to realize your added value takes effort.

If business owners and managers have the courage of their convictions and confidence in their people, products, and services, they can move from a price focus to a focus on value. We all owe it to ourselves, our employees and our customers.

Creating a Company Dashboard

scoreboards

The best numbers to put on your dashboard are the specific numbers that define success for your company. Look at the things going on in your market and industry. What are your company’s trends for the last few years? What are your customers and employees saying? These answers will help determine your dashboard metrics.

Keep the amount of information to a handful of critical numbers so your attention isn’t diluted. Just because you CAN measure something doesn’t mean you SHOULD. Less is more.

Don’t focus only on financial measures. Operational numbers (web hits, turnaround time, customer satisfaction, etc.) can be especially helpful in analyzing progress toward your most important goals.

Finally, once you have a dashboard, use it. It’s not decor – it’s an accountability tool. Put a name next to each number – the person who “owns” that result. Go over the numbers regularly with your team and strive to achieve each target.

Mistakes are opportunities

Every company makes mistakes. That’s one thing all businesses have in common.

That said, each mistake is an opportunity – especially if the error affects a customer.

Some companies blame anyone or anything but themselves. They may or may not correct it. They may or may not apologize. Some act like they’re doing you a favor if you ask them to correct their own goof-up.

A culture of blame exists in these firms. Their mantra is “It’s not my fault.”

Other companies immediately correct mistakes – especially for customers. They apologize. They might even offer the customer something extra to show they’re serious.

A culture of accountability exists in these firms. Their mantra is “Fix the problem to the complete satisfaction of the customer.”

Clearly, the second type of company is where you want to be. But, consider kicking it up a notch to turn costly mistakes into profitable occurrences.

Let’s say Bob’s Computer Service gets a call from their customer Big Company, Inc., telling them that Bob’s driver delivered their repaired monitor but they didn’t get their power cord back.

Bob’s has a culture of accountability, so the rep apologizes, arranges to have it delivered right away and offers a discount to make up for the aggravation. So far, so good. Even though the rep did everything right, most of Bob’s competitors would do the same, so it was good, but not extraordinary.

What if Bob’s takes the time to find and fix the root cause of the error? Now they begin to separate themselves from their competitors who, as soon as the customer’s problem is resolved, get back to their hectic routine. (Hey, if you’re busy putting out fires all day, every day, it’s tough to find time to install a sprinkler system.) This is the first way to profit – by driving repeat mistakes out of your business and enjoying the resultant productivity improvements.

And here’s one more step: bring the customer back into the loop. What if someone from Bob’s contacted Big Company, Inc. and it went something like this:

“Thank you for bringing your missing power cord to our attention. As a result of this situation, we reworked our procedures. Each product that arrives for service now gets a tag on which all accessories received are documented. Nobody – including you – should ever fail to get all your accessories back with repaired equipment.”

Almost nobody does this sort of thing. This level of dedication to quality, customer service and follow-through puts Bob’s Computer Service in rare company and helps create strong, life-long customer relationships. And, we all know the value of customers who are also raving fans.

We all make mistakes. You may as well profit from yours.