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.

Your Most Important Document

In a previous column titled Great Expectations, I urged business owners to have realistic expectations for their employees.

Now let’s build on that message: Define your expectations.

In my role as a business coach, most of the issues I hear about are related to employees. And more often than not, a lack of clear expectations is at the root of the problem.

We usually let our people know how to do a job. “Open the software. Click the blue icon. Use the menu to find the customer …”

But how often do we let them know what behavior we expect, or perhaps more importantly, why we expect it?

If the only clues to acceptable behavior are the inevitable corrections that come when straying off course, it may take a long time for your team to figure things out for themselves.

If you expect your team members to treat others with respect, just say so. Clearly. Directly. Early and often.

Some of you may know that I own a company called Arch Engraving in Kirkwood, Missouri. We make and sell awards, signs, nametags and personalized gifts. In 2010, I bought out my two partners and became sole owner. After that, we were busy moving the facility and creating a spin-off business. The dust has settled so I finally found time to create a “culture document.” It was rolled out in late 2012 and early 2013 for our 10 full-timers and various part-timers.

This document contains our Mission, Vision and 6 Guiding Principles. Under each Guiding Principle are 4 or 5 bullet points to explain the principle.

The contents were reviewed individually with each employee. The Guiding Principles and underlying bullet points were used as the performance review form. Since this is brand new for everyone, the review meetings were mostly about explaining our direction and our “why”, with suggested (and in some cases, required) improvements noted as appropriate. I tried to use these primarily as educational meetings, and as my opportunity to get feedback on the document. After all, they were seeing these expectations in writing for the first time so there was no justification to get all worked up about non-compliance.

Going forward, though, this document will be our guide. Everyone now knows we will hire, fire, reward and promote based on it. They know to filter all decisions through it. Our Mission tells them what we’re all about. Our Vision shows where we’re going.

I’m not kidding myself – there will be set-backs. But staying the course and using the document in our daily work will make it real. It’s not just a plaque on the wall.

Some experts advise to make this sort of work a team effort. In this case, I did it myself and tweaked it based on employee feedback. Right or wrong, I felt the business should reflect my own values and expectations.

There’s no doubt in my mind that this is now the company’s most important document.

Do you have a culture document? I’ll show you mine if you’ll show me yours. I intend to write more on this topic and would love to find great examples to highlight. Send me an email.

 

Work ON Your Business

Unless you’ve just been released from a long incarceration in a Turkish prison, you know that the concept of working on your business – rather than in it – was popularized by Michael Gerber in his mega-hit book, “The E-Myth Revisited.”

Gerber made many great points (which explains the “mega-hit” part), but the on/in distinction is the big take-away for most readers.

Here’s an excerpt:

“Go to work on your business rather than in it, and ask yourself the following questions:

  • How can I get my business to work, but without me?
  • How can I get my people to work, but without my constant interference?
  • How can I spend my time doing the work I love to do rather than the work I have to do?”

So, what does it mean to work ON your business?

Well, one of Gerber’s main themes is the idea of systems. Systemize everything. Manage systems, not people.

It’s terrific advice, of course, but many small business owners still struggle, even after reading E-Myth. What’s a system? What systems are needed? Where do you start?

My answer: Anything can be a system. A system is simply a way to avoid NOT making things up as you go along.

  • Instead of plucking interview questions out of thin air, create a hiring system.
  • Leaving the coffee pot on overnight, or forgetting to set the alarm? Create a “last person out the door” system.

Here’s a system I’ve used for years in my own businesses:  “Never, ever ask for computer help until you’ve restarted it. Period.”

Simple? Yep. Like I said, anything can be a system. Not all systems are this simple, but you get the idea.

Beyond creating and installing systems, how else can you work on your business?

Perhaps more to the point, how can you find the time to work on your business when you’re consumed by it all day, every day?

Here’s a way to let the ideas and time find you: Constantly be in “improvement opportunity mode.” Every time an error or crisis occurs, stop. Avoid the temptation to put out the fire and get back to work. Analyze what just happened. Was it human error, or could a system – even a simple one – prevent future recurrence? If so, create it right then and there. In many cases, you can do this sort of “post-mortem” work in a matter of minutes.

Planning is a great way to work on your business. As an early riser, my favorite planning time is early Sunday mornings, before my wife gets up. And business trips can turn into mini planning retreats … if you keep the TV turned off in your room.

I know a business owner who tells me he likes thinking about his business while on his riding mower. Some folks really embrace this concept by taking their teams on annual out-of-town planning retreats.

Exactly what you do is less important than developing the habit. Start working ON your business today.

“Do it. Do it now!”  – Arnold Schwarzenegger

Engage your Employees to Beat a Business Downturn

“I have recently had to let some people go. They were great people, but with our financial projections, we had to downsize. Some of my current staff has begun to get a bit discouraged about the company as a result of slowing sales and their friends no longer working here. What are some ways that I can make sure my remaining team stays excited and engaged during a tough time?”
– Worried Business Owner

Get your people involved in the come-back.

Have a meeting and show them the numbers – where revenue was the last few years, and how much it’s dropped off. Explain the relationship between sales, headcount, and profits. Take questions, give straight answers, and encourage discussion.

Share your vision for the future. It might be emerging from the recession stronger than ever, or simply surviving. Regardless, give them the unvarnished truth. And, be sure to set the tone as positive and optimistic.

Ask for their active participation and support. First, banish the rumor mill and negativity. If your people have concerns or complaints, they should voice them in company meetings, to a supervisor or to you. No grousing around the water cooler.

Put a mechanism in place to collect ideas for improving the situation: Customers. Marketing and sales activities. Cost of goods. Overhead expenses. Productivity. Receivables. Cash.

Of course, your team will want to know how things are going. Have regular follow-up meetings and post results on the wall. Show them that their ideas are being implemented. Share the results, and acknowledge those who submitted ideas. Learn from mistakes and celebrate even small wins.

That’s it. Transparency, engage your team, be smart and work hard.

 

It’s Free!

free

It’s a typical day at Bob’s Company, Inc. Bob notices that a recently-hired employee is now eligible for dental benefits. So, Bob hands her an application. As he walks away, she asks, “What’s the cost?”

Bob’s reply? “It’s free. The company pays for it.”

If this was a movie rather than an article, the startling shower music from “Psycho” would come on at this point.

Or maybe it would turn into a take-off from “Young Frankenstein.” Instead of “It’s alive!” the line could be “It’s Free!”

Shame, shame on Bob. He wasted a terrific opportunity for a “teachable moment” with a new employee.

Of course it’s not “free.” Every benefit provided by the company costs good money.

Free. What was Bob thinking? He should have responded something like this: “Our dental insurance costs about $25 per month. The company pays for it. It’s part of your compensation – just as our other benefits are.”

Too often employees think only about base wage or salary when the subject of compensation arises. This happens because we business owners and employers let it happen. You’re likely to hear something like “I make $35,000 per year.” You are very unlikely to hear an employee say, “Well, my base is $35,000, but on top of that my employer generously pays another $12,000 for my health insurance. Counting my paid time off, my other benefits and my payroll taxes, I cost my employer a whopping $58,000 per year.”

So, how do we get our “bang for the buck”? How do we get our employees to recognize and appreciate all aspects of the compensation package – so the company can enjoy a fine ROI in the form of increased employee satisfaction, improved productivity and reduced turnover? How do we drive the “entitlement culture” out of our companies?

Here are some approaches to use:

  • During hiring interviews, listen for signals. If the candidate is focused like a laser beam on your vacation plan or grimaces noticeably when you explain that you don’t pay 100% of the health insurance, these are not good signs. (Note: Yelling “Next!” is not a tactful way to end an interview.)
  • Your candidate job offer letter should outline the entire compensation package and focus on the total value – not just the salary.
  • Make ongoing education part of your company’s culture. Talk about the cost of doing business. Let your folks know how much insurance rates go up every year. Make sure the employees know that they have a vested interest in the company’s success … if they help the company succeed, you can continue to subsidize their insurance costs and provide excellent benefits.
  • Print a year-end statement for each employee, showing his or her total compensation and benefits costs.
  • Consider all aspects of compensation costs when budgeting and projecting pay increases. Example: Let’s say you like to provide an average 4% pay increase per year, and your total company compensation expense (including benefits) is $800,000. A 4% overall increase is $32,000. If you expect your health insurance to go up $5,000, you now have $27,000 left for salary increases. (Back to education: Explain your rationale and the math to your employees. Involve them in the decision. Maybe they want more salary increases and are willing to bear more of the insurance costs. If they help make these decisions, you’ll get better buy-in.)

You invest lots of money in your company in the form of salaries and benefits. Chances are, payroll and related expenses are the largest line items on your income statement. Spend the additional time and effort to maximize the investment. Done right, it can pay you back many times over.

PS: Bob’s story has a happy ending. He realized the error of his ways and corrected his statement to his employee.