Management

How to Thrive on Your Costs

Andrew Cooke Growth and Profit Solutions, Management, Management Development, Uncategorized

How to avoid being a cost-cutter and create a thriving business from managing your costs.

When times are hard the knee-jerk reaction for many businesses is to cut costs.  Don’t do it!  Or to put it another way – don’t do it!

Before we get into this I want to give you an operational definition of costs for the purpose of this article.

Costs have several relevant definitions, costs are:

  • a payment before something can be done or acquired
  • an effort, loss or sacrifice necessary to achieve something
  • a loss or unpleasant consequence

When we look at cost-cutting we are generally looking to reduce the first, to try to avoid the second, but we often end up with the third! Why is this?  Especially when we are looking for an opposite outcome?

Cutting costs have only one direction, that is downwards, and this gives you a very limited set of opportunities.  A cost-cutting mindset is that of seeing the issue of costs as a problem – you are responding to external events outside your control and not fully taking on responsibility.  Here the individual will continue to cut the grass, even if he or she will kill off the lawn in doing so.

A successful company thrives on costs.  This is not to say it incurs costs without any consideration or thought, quite the opposite, it actually understands that you need to incur the right costs in order to grow, thrive and survive.  As such you need to be able to manage your costs.

Managing costs are about seeing potential opportunities and searching for a solution. To manage your costs you need to understand why you incur them, what they are for, and the relationships between different costs and the business outcomes you are looking to achieve, and when their impact takes place.3

So how do we manage costs?  Here are six powerful tips.

Andrew’s 6 Powerful Tips for Managing Costs

  1. Have a strategic focus – not operational

Decisions made on how to manage costs are strategic.  They are decided at the top and then cascaded appropriately. It is a long-term and considered process.  A cost-cutter will look at the level of costs to be reduced and then look for where these cuts can be made without any guiding strategy.  It is a short-term, knee-jerk reflexive action.

  1. Be targeted

Managing costs require you to be targeted as to where your cost management efforts will be focused and implemented.  This follows on from being strategic.  A cost-cutter will look at the 15% reduction they are looking to realize and apply it across the board to all divisions and departments without consideration of how the contribution made, or the consequences.

  1. Be prepared to be brutal

Too often insufficient costs are removed, the decision is a compromise and this is often due to weak leadership and their not wanting to be seen as the instigator of cost-cutting.  So they try to soften the blow to make themselves feel better, and so that people won’t think so poorly of them.

If you are managing costs you need to brutal when necessary.  It is better to make a single amputation, cleanly, quickly and fast rather than inflicting the pain of a thousand cuts on the business.

  1. Make people accountable

Those who are managing costs are good at making people accountable, they hold them responsible for doing the necessary work in the right way.  Cost-cutting occurs when there is a lack of accountability – there is a lack of transparency and commitment, games are played with budgets, allocations and the transferring of money between different budgets.

  1. Establish & enforce consequences

A lack of clear and enforceable consequences is one of the reasons that managing costs does not happen, and people engage in cost-cutting.  People need to know that if costs are not managed, not just in the short-run but on an on-going basis, then they will face repercussions – even with being fired – and that these will occur if they fail.  Too many businesses have accountability creating a toothless lion with the associated consequences.

  1. Lock up profit & dividends

When you are managing your costs you need to work back from your dividends and profit goals and identify what you need to do in terms of costs and revenue to achieve them.  In doing this the goals need to be sacrosanct.  A cost-cutter will move the goals to suit the cost reductions – this undermines the whole process.

Are you a cost-cutter or a cost manager?  What are you going to do to be an ongoing cost manager? How will you use this six tips? How have you successfully managed your costs?  Share your ideas here.

For further information on managing costs and steps to optimize the impact of your cost management program click here. Remember, share the knowledge – share the wealth!

To view or download a PDF version of this blog click here.

Share your thoughts and ideas here, or email me at andrew.cooke@business-gps.com.au

If you found this article of use or interest please don’t hesitate to share it with others.

Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

Who Knows You Best?

Andrew Cooke Employee Development, Growth and Profit Solutions, Leadership, Management, Performance, Psychology, Uncategorized

Can you tell how good your performance is or how you can improve?  Read on to find out, you might be surprised…

Do you think you can tell?

Those of you who are Pink Floyd fans will immediately recognize the lyrics from the song, “Wish You Were Here”.  The first part of the song, for those of you not familiar with it are below:

So, so you think you can tell Heaven from Hell,
blue skies from pain.
Can you tell a green field from a cold steel rail?
A smile from a veil?
Do you think you can tell?

Let’s be honest – yes we can!  The difference between them is immediate and obvious, and we can all do this easily. Here is another question:

“Do you think you can tell who knows you best?”

If I was to ask you that then you would probably see one word – “Me!”  Yet you would be wrong. How you see yourself and how other people see you are only weakly correlated.

The research suggests that other people’s assessment of your personality predicts your behaviour, on average, better than your assessment does. The truth is, we don’t know ourselves nearly as well as we think we do. When it comes to performance, our surprising self-ignorance makes understanding where we went right and where we went wrong difficult, to say the least.

If you want to be more successful — at anything — than you are right now, you need to know yourself and your skills. And when you fall short of your goals, you need to know why. This should be no problem; after all, who knows you better than you do?

Why is this?

The problem is our brain.  Just because its our doesn’t mean we know what it’s doing – most of what happens is below our consciousness awareness, it’s not directly accessible to us at all.  As psychologist Heidi Grant Halvorson described it our unconscious mind is like a Cray supercomputer processing everything at high speed, whereas our conscious brain has the power of a Post-It note – unable to handle much and when too much is asked of it, it starts dropping things.  This means when things start going wrong we often have difficulty in understanding why.

When you fail to reach a goal you try to establish why(for example, lack of innate ability, lack of effort, poor preparation, using the wrong strategy, bad luck, etc). Of all of these possible culprits, it’s lack of innate ability we most frequently hold responsible.  As such, innate ability is the go-to explanation for all of our successes and our failures.

Research shows that this is rarely the case – for either succeeding or falling short.  If we need to improve performance we need to know where to place blame.  As we can’t find it ourselves, we need to help to find the right answers.

How do we do this – we focus not on who people are, but what they do.

To find out more, and to read the second part of this article then “Do You Think You Can Tell?” – Part 2 at growthandprofit.wordpress.com

What have been your experiences?  What works for you? Share your ideas and thoughts, and share the wealth!

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Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

3 Factors for Building Resilience

Andrew Cooke Business Agility, Business Growth, Change, Continuous Improvement, Employees, Growth and Profit Solutions, Leadership, Management, Managing Cost, Performance, Strategies, Uncategorized

How to assess and develop your organization’s resilience.

Resilience

*by Andrew Cooke, Growth & Profit Solutions

Resilience – a word more often abused than used correctly.  Resilience often is used to describe strength.   Although strength is implied in resilience, it is actually not a trait (a distinguishing quality) – rather it is a capability, something that can be used.

There are two definitions for resilience that can be used here:

  • “the capability of a strained body to recover its size and shape after deformation caused especially by compressive stress”
  • “an ability to recover from or adjust easily to misfortune or change”

The Three Factors of Resilience

Resilience relies on three factors:

  1. Flexibility – how flexible is your business in terms of how it works, how it is structured and how it is organized in producing the same outcome result?
  2. Adaptability – how can you apply what you do and how you do it to produce different outcomes or results.
  3. Learning – how good is your business, at an  individual and corporate level, in learning the lessons from having to adapt or be flexible so that you can avoid repeating them (hard , painful lessons) or you can leverage them in the future (where you have had success) and understanding why you were successful or not.3 Factors for Resiliency - Overview

Flexibility Factors

  • Elasticity – can you easily expand or contract the business in whole or part
  • Alternatives – are there many ways in which you can achieve the same result, or are you locked in to one or only a few ways?
  • Interchangeable – how easy can different building blocks (people, assets, processes) be used in a different sequence and/or configuration to produce the same result or outcome?

Adaptability Factors

  • Reusability – can your core people, processes and assets be used to produce different outcomes and results with little or no difficulty?  For example, a consulting firm can reuse many of its existing people, processes and assets in delivering a new service.  However, the Boeing factory production line can only produce Boeing airplanes – it cannot produce other products without significant changes in people, assets and processes.
  • Speed – how quickly can you move from producing one set of products and outcomes, to produce new products and outcomes?
  • Capacity for Change – how prepared and able are your people to make the necessary changes? 

Learning Factors

  • Measuring – how good are you at being able to quantify or qualify the changes that have occurred, their implications and the associated outcomes?  Are you able to identify where the greatest impact, positive or negative, has been realized?
  • Applying  – can you clearly ascertain as to where the lessons learnt can be applied?  Do you understand what caused the problem and how it was solved, or where and how the opportunity was capitalized on?
  • Anticipating – how good are you at being able to replicate or avoid the lessons learnt?  For example, if you are an engineering consultancy who tried to enter a new market unsuccessfully then can you identify why?  Was it the lack of a local partner?  Cultural differences? Inability to deliver?

These 3 factors apply equally to the individual as to the business.  For real success you need resilience both personally and corporately – if you lack the resilience you may not survive the change, even if the business does.

Resilience is not about just meeting the current challenge, or having met the challenge just past, but it is about putting yourself in a better position for the future – not just going back to your original shape or form before the challenge occurred.  To be resilient you need to be flexible, adaptable and to learn from your experiences.

Two out of Three Ain’t Bad – But It’s Not Enough

So what does it mean if you only have two out of three, let’s see below.

  1. Flexibility & Adaptability – you can meet the challenge in the short- or even mid-term, but your inability to learn from your experience and apply will mean that you will be overtaken by the competition and quickly become irrelevant
  2. Adaptability & Learning – you can diversify into other areas, but you are not at the forefront of your market being weak at delivering in alternative ways.  You are at risk of being out-maneuvered by competitors and being a market follower rather than a leader.
  3. Learning & Flexibility – you are efficient at operating in your particular niche, but you are a one-trick pony, and you are at the whim of industry pressures.  You are more reactive than proactive, and your ability to become diverse, grow and spread the risk is weak.

For each of the 3 factors, and for each of the 3 components for each factor, how do you rate yourself?  Score yourself out of 10 for each component (1= Very Low, 10=Very High), and rate how strong or weak you are in each factor and relatively.

Resilience Worksheet

Which are your strongest and weakest areas?  How can you leverage your strengths to offset your weaker areas and reduce the associated risks and implications?  Are you really as resilient as you thought?

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Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

Personal SWOT – Creating Strategies for Personal Success

Andrew Cooke Management, Personal Management, Strategies, Uncategorized

How to create strategies to build the You of the future.

We are all familiar with a SWOT Analysis being used on our business. SWOT  is an acronym for identifying your company’s Strengths, Weaknesses, Opportunities, and Threats.  But did you know you can use it on yourself? And that you can use it to generate strategies to help you develop yourself?
There are several steps involved:

1. Identify your Key Strengths, Weaknesses, Opportunities, and Threats – have no more than 5 bullet points for each.

2. For each of the intersections ask the following questions:

3. For each intersection develop two or three strategies and write them in the box.

4. From the eight to twelve strategies you have developed select the top three which will have the greatest impact for you and develop an action plan around them. You should produce something like the example in the picture below.

Example of a Personal Strategic SWOT


Top 3 Strategies:

  1. Work with new boss to help him succeed/look good
  2. Learn to be a strong negotiator
  3. Create reciprocity with other areas

Develop your own Personal Strategic SWOT and take action of what you develop for it. Share this with your team and get them to individually develop their own Personal Strategic SWOT.  This will open up the discussion, give you insight to what they are thinking and why, and help to align people, expectations, and performance.

A further freebie: Use this tool for your team – as a group goes through the exercise asking “As a team what do we need to do to be high-performing?”

To view or download a PDF version of this blog click here

Share your thoughts and ideas here, or email me at andrew.cooke@business-gps.com.au

If you found this article of use or interest please don’t hesitate to share it with others.

Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

The Real Costs of Poor Management & Leadership

Andrew Cooke Business Growth, Leadership, Management, Performance, Productivity, Uncategorized

The Cost of Management & Leadership Shortfalls

by  Andrew Cooke, Growth & Profit Solutions

The costs and risks associated with having weak managers and leaders are often overlooked.  What does it mean to you?  How can you overcome it?  And what are the benefits of doing so?

A recent report from the UK’s Department for Business, Innovation & Skills Leadership and Management Network Group (LMNG), showed the UK’s economy has been negatively impacted by a lack of training and support for new managers.  Across 18 management practices by country the UK ranked 6th, whilst Australia ranked 9th – behind France and just ahead of Mexico.  This strongly suggests that the findings for the UK are equally applicable to the Australia and that there is a stronger sense of urgency.

John Hayes MP, UK Minister of State for Further Education, Skills, and Lifelong Learning, suggests that effective leadership is what makes the difference for successful, innovative companies. “Strong leadership and management is a key factor in fostering innovation, unlocking the potential of the workforce and ensuring organisations have the right strategies to drive productivity and growth.”

However, in the UK the research shows that effective management is the exception rather than the rule.

“Too many of our organisations, both private and public, are failing to achieve their full potential: managerial shortcomings and a lack of strategic thinking are holding them back. Overcoming these weaknesses and improving our leadership and management capability is fundamental to creating a culture where more organisations have the ambition, confidence, resilience and skills to respond to the current economic challenges and compete successfully both nationally and globally.”

By providing more comprehensive management training and development for budding leaders, companies can gain the edge over competitor firms.

Key Findings of the UK Research:

  • Ineffective management is estimated to be costing UK businesses over £19billion per year in lost working hours.
  • 43% of UK managers rate their own line manager as ineffective – and only one in five are qualified.
  • Nearly three quarters of organisations in England reported a deficit of management and leadership skills in 2012, contributing to the productivity gap with countries like the US, Germany and Japan.
  • Incompetence or bad management of company directors causes 56 % of corporate failures

Quite simply, improving leadership and management capability is an issue that no organisation wishing to achieve long-term success can afford to ignore. There is no question that good leadership and management can have a truly significant impact on organisational performance, both in the immediate and longer term.

  • Best-practice management development can result in a 23% increase in organisational performance.
  • Effective management can significantly improve levels of employee engagement.
  • A single point improvement in management practices (rated on a five-point scale) is associated with the same increase in output as a 25% increase in the labour force or a 65% increase in invested capital.

Business’ long-term success is dependent on developing these management and leadership skills, these  are crucial to ensuring high performance working and business success. This is especially true as more new managers and leaders will be needed over the next decade as the number of experienced baby-boomer managers and leaders who are retiring increases.

Why are businesses underperforming when it comes to developing their talent pipeline in management and leadership?  There are a number of reasons including relatively low levels of training, shortages of key skills, the failure to apply skills strategically, and employer concern about the relevance of training provision, have also been identified as potential reasons. Other factors include difficulties in recruiting graduates with the right skills, particularly for small and medium sized companies; a perception that leadership and management skills are something you “pick up” on the job; and lack of clarity about the specific leadership and management skills and behaviours managers need to display.

Improving our leadership and management capability makes sound business sense. Helping managers at all levels to develop the right skills and behaviours will ensure organisations have the ability to adapt, innovate and evolve, and seize the growth opportunities that lie ahead.

So what are you going to do?

Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

Why Customer Satisfaction is Irrelevant

Andrew Cooke Coaching, Employee Engagement, Employees, Leadership, Leadership Development, Management, Management Development, Uncategorized

Don’t assume that because your surveys show that your clients are satisfied it will mean that they will be loyal…

by Andrew Cooke, Growth & Profit Solutions

A common mistake to make is that client satisfaction and client loyalty are positively correlated i.e. that higher the level of client satisfaction the higher the level of client loyalty. customer loyalty satisfaction

Working in a harder and more competitive environment often results in businesses focusing on marketing and selling to get new clients. While continuing to bring in new clients is necessary for a business’ survival, so is keeping your current clients loyal to your firm.

Satisfaction vs. Loyalty

How loyal are your clients?  And how loyal are your “very satisfied” clients?  The answer may surprise you, your clients might be more likely to switch to a different provider than you think. In a 2009 study, across professional service industries, it was found that:

  • Only 48% of clients are “very satisfied” with their service provider

and that

  • 60% of these clients would consider switching service providers

Results by Industry

satisfaction vs loyalty

So what does this mean?

It means that fewer clients are loyal to you than you think.  It also is likely that your perception of the real situation as regards your clients’ loyalty is significantly over-optimistic.

For example, a legal firm that equates client satisfaction with client loyalty would assume, on the basis of the above numbers, that 50% of its clients were “loyal”.  The reality is that of this 50% of “loyal” customers over half are likely to switch to another provider. This means that only 25% of the firm’s clients are loyal – it has over-estimated the number of loyal clients it has by a factor of two!  This has a significant on its ability to maintain and grow business, and the strategies and plans it needs to have in place.  In all likelihood, because people do not realise this, the firm will probably be following the wrong strategies, and this can be put the firm at risk.

As the competitive environment continues to intensify, it’s likely that other firms are marketing more aggressively to your own clients and, as this data suggests, a good portion of your clients may be open to having these switching conversations with your competitors.

Why do we make this mistake? It is because people confuse the two concepts of satisfaction and loyalty. The difference is like that between “like” and “love”. Let’s look at them separately.

Client Satisfaction

Client satisfaction is a tactical concept and measurement, and it speaks only to one moment in time – typically, right after a client has completed an interaction such as a purchase or has a problem solved. So measuring customer satisfaction merely tells you if you are doing your job, from the client’s perspective.  Clients express satisfaction in an intellectual and rational manner. In doing this, it makes people think. satisfaction guaranteed

Many organizations should be performing up to their customers’ expectations.  This is really just the basics.   While these days consumers are in the driver’s seat, the mindset tends toward “what have you done for me lately?” as opposed to “that transaction went well so I’m a customer for life.”  Thus, good customer satisfaction does not guarantee that you will continue to keep those customers.  How many times have you bought goods “satisfaction guaranteed”, yet gone to another product or provider even though you had a good or even excellent experience?  All of us have done so at one time or another.

Client Loyalty

Customer LoyaltyThis is a much more reliable and strategic measure.  True loyalty – much harder to earn than mere satisfaction – tells you that your customer wants to stick with you over the long haul and that they will share that feeling with others.  Loyalty derives not from “good” transactions but from exceeding the customer’s expectations on a repeated basis. Loyalty engages your client emotionally and makes them want to tell others about their experience of working with you and your relationship.  As such, emotions make people act!

Next Steps

It is much easier (not to mention more cost effective) to retain and grow your current clients than it is to continuously have to fill the pipeline with new prospects.   It is enough to get people to think, you need to get them act.  You need to engage them both intellectually and emotionally.

Have a look at your existing client base and assess their level of satisfaction. If you are not sure, then use this as an opportunity to ask them for constructive feedback, listen and learn.  Then begin to think, from their perspective, whether you have done enough to earn their loyalty – be specific about what you have done or not done as the client perceives it.  Do this individually and then come together as a group to discuss your scores, perceptions and to share insights.

Next Week

So, what does it take to build the type of relationships with your clients that keep them loyal and coming back to your firm year after year? We look at the 9 questions you need answered in next week’s blog.

Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

The Difference Between Being Involved & Committed

Andrew Cooke Coaching, Employee Development, Employee Engagement, Employees, Management, Management Development, Uncategorized

The Chicken & The Pig

An executive coach is not a silver bullet for your problems.  But what do you need to do before you engage an executive coach, and to make sure you get the most out of your time with them?

Coaching is a two-way process and dialog, based on open, honest  communication and a strong commitment to self-improvement and learning.  It requires effort, discipline and humility – on both sides.

Commitment

But the question to ask yourself is are you ready to be coached?

Coaching starts with the coachee – the person being coached.  There is an old joke that goes, “How many shrinks does it take to change a light bulb? One, but the light bulb must want to change.”

If you want to be coached you need to be committed: “The difference between involvement and commitment is like ham and eggs. The chicken is involved; the pig is committed”

Unless you are willing to change, and are committed to doing so, then no coach can help you.  Before a coach can help you, you need to help yourself so you in turn can help others.  It is like being on an airplane when an emergency occurs – the first instruction is for you to put you oxygen mask on yourself before you help others.  So you need to be willing to change before any other change can take place.  Change starts with you, not with others.

Even if we think that we want to change this is not always true.  The human capacity for self-deception is well-known.  We can rationally believe that we want to change, but unless we are emotionally invested in changing it will not last.  Logic makes people think, but emotions makes people act.

We often overestimate our capacity to change ourselves.  Even in situations which can be life-threatening our resistance to changing ourselves.  Studies show that, when giving up smoking, it takes on average seven attempts and five years; and that half of those quit on New Year’s Eve start smoking again within ten days.  This is despite the overwhelming evidence and availability of information on the risks associated with smoking.

How Do We Reduce Our Resistance to Change

1. Create Commitment, Not Compliance

Research has shown that compliance, when you are responding to a demand, incentive or threat only works in the short-term.  As soon as the pressure is removed people revert to their original behavior.  This is because we are not motivated to change – motivation only comes from within yourself, not externally.  Demands, incentives or threats are there to make you avoid something.

Commitment comes from within you because you are personally engaged in achieving a personal change.  This is the only way of maintaining the change for the long-term and on an on-going basis.  As such commitment comes from your beliefs and mindset.

However, a mindset is not just brought into being.  It has to be developed – you need to view the change as an opportunity and not a problem; to see the opportunity to grow the pie rather than seeing it as of a fixed size where others only gain if you lose and vice-versa.

2.  Commit to the Coaching Process, Don’t Just Participate

When it comes to a breakfast of eggs and bacon there is a major difference – the chicken is participating, but the pig is committed.  Which are you – the chicken or the pig – when it comes to the coaching process?  You need to be invested in it and have skin in the game.

3. Be Honest with Yourself

Do you really want someone to coach you and to be candid and honest with you? Or are you looking for having you ego stroked and lots of unqualified encouragement?  If you are the latter then don’t hire a coach – save your money and don’t waste the coach’s time.

Coaching will do nothing for you unless you are willing to change.  Be clear on whether you want to be coached or not, what you want to achieve from the process, and whether you are committed to it or not.  It’s up to you.

Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

How Middle-Management is at Risk

Andrew Cooke Business Agility, Business Growth, Employee Development, Employee Engagement, Employees, GPS, Growth, Growth and Profit Solutions, Growth Solutions, Influence, Leadership, Leadership Development, Learning, Management, Management Development, Performance, Productivity, Talent, Uncategorized

Why middle-management is essential for business survival and the risks you run of if you lose or alienate them.

The Challenges of Middle ManagementMiddle management.  Often described as the ‘backbone’ of the company, they provide the continuity across the business and the key people for getting things done; communicating and resolving problems up, down and across the line; translating strategy into action; leading key operational areas; have considerable expertise and experience within the business; providing linkages between senior executives and front-line staff; and are implementing and responding to change.

As such, middle management is crucial to the on-going success and survival of the business.  Senior executives are starting to appreciate their role and the impact of their work, but at a time when it becoming harder to develop and retain middle management.

Middle Management Stress & Turnover

In a recent poll by Lane4 in the UK (July 2012) more than 90% of workers believed that the vast majority of workplace stress was falling on middle management, and two in five (39%) of middle management reported that they were under severe stress.  As such, many mid-level managers are dissatisfied and would like to leave their current organization.   In harder times it is those middle managers who are your best and who perform well who find it easiest to find new roles and new opportunities.

This has several impacts on your business: firstly, the business will lose its top middle management talent, this will put an increase burden on those who are left behind; secondly, the exodus of mid-level talent seriously compromises the business’ future  leadership pipeline and its ability to have the right people in the right place to enable the business to grow and develop in the future; and finally those mid-level managers remaining will be the low-performers, who are more likely to be disengaged and who have “quit and stayed”.  All of this means that business’ ability to survive and thrive – especially in challenging times – is seriously compromised.

The Impact of Mid-Management Turnover

One of the current major growth challenges facing CEOs is the lack of key talent to enable them to grow the business.  This is exacerbated with the turnover of good mid-level manager as it compromises the business’ ability to execute the CEO’s strategy and drive results and outcomes.

Furthermore, the costs of middle management turnover are also high.  A common rule of thumb is to assess the cost of a middle manager to the bottom-line at one-and-a-half to two times their annual salary.  Assuming an average salary of $125,000 then this could mean $250,000 off your bottom line.  Alternatively, look at it in terms of the extra revenue you need to achieve just to stand still – assuming your net profit is 10%, then that is a further $2.5m of revenue required!

Practically, I think this heuristic is conservative.  Once you take into account the corporate knowledge, experience, expertise and insights that have been developed over a number of years you are looking at the loss of a very valuable contributor.  Furthermore, to recruit someone who is an equivalent is both difficult and expensive to do.

Causes of Mid-Management Stress

Middle management is under increasing stress for a number of reasons.  They are the people who have to lay off staff when the company downsizes (or more cynically “right-sizes”), in an environment of poor morale, having to do more with less, with little or no increase in salary or benefits whilst being responsible for more, a reduced opportunity for career progression, dealing with people who like them are worried and scared, and frequently being seen as an “unwanted layer” and at a high risk of being laid off themselves (often having had to lay off others first).

So what do we do?

Dealing with the Problem

In challenging times we need to maintain our middle management.  In economies which are struggling the senior executives need to work with and engage with their middle management even more closely.  It is at the mid-levels that the most important projects are, and reducing their resourcing is nigh on suicidal.  If the level of responsibility for middle management is extended, and their capacity and resources is limited or reduced, then you need to invest in their developing the necessary capabilities.  If this is not done then senior management will be faced with a “frozen” middle management compounded by cycles of low morale and low engagement.

Companies need to be resilient – leaders need to provide clear direction, they need engage the middle management and rebuild trust, and in doing so enable them to engage with their reports and teams in turn.  If you cut out the middle, then you are just left with the head and tail of the business – unable to do the necessary work effectively, and a corpse all but in name.

It may seem counter-intuitive but now is the time to invest in your middle management – this will pay off in terms of loyalty, results and longer-term growth.  Treat your key people as an investment, not a cost to be cut but people to be valued, developed and through whom you can achieve leverage and significant returns.

So what are you going to do?

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Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

How to Bait Your Hook

Andrew Cooke Efficiency, Employee Development, Employee Engagement, Employees, Growth and Profit Solutions, Leadership, Management, New Managers, Perception, Performance, Productivity, Profit, Survey, Uncategorized

What do good anglers know which we can use in driving stronger business growth and results?

Fishing is one of the most popular leisure time pursuits in the world.  There is something about going out there, rod in hand, to capture that ever elusive fish.  This takes time, patience, skill and – let’s be honest – a bit of luck.

One thing that experienced anglers do is that they don’t waste time in an unproductive location.  You can try a few casts, change the bait, but if the fish are not biting then it is time to move on to a new spot.

We need to be like good anglers – if the fish do not bite quickly, then be prepared to move on and try elsewhere.  You might try for the same fish in another location, or using different bait or lures, or even go after another type of fish.  You want to be in a market where you will get a positive reaction as early as possible.

Doing this will save you time, money and embarrassment – it will also allow you to learn from the experience, and to apply it in future fishing spots.  What we do or how good we think something is not important.  There is only one judge out there and that is the market, and the market only cares if what you’ve done meets its needs.

The lesson here is that business is not about us, it is about our customers.  The question I like to ask to illustrate is this: “Why do people buy a quarter-inch drill?”

I get a lot of answers – to hang a picture, for home improvements, to replace my old hand-drill etcetera.  They are all wrong.

The answer is simple: “To drill a quarter-inch hole!”

Customers are not interested in the features of the drill – such as its colour, whether it is turbo-charged, the special safety grip it has etcetera – they are only interested in the outcome from using it.

So if your product or service is not getting traction or garnering the sales you want then you need to do three things:

  1. Check that your product or service provides the outcomes that the customers/market need (have your hook properly baited);
  2. Be prepared to change fishing holes if the fish aren’t biting
  3. Continually learn from your experience so that you can:
  • produce a product/service that better meets the needs of the market (don’t confuse this with a better product which has more features but still fails to address the needs) and;
  • find and locate better fishing holes more quickly.

What do you do to find the right fishing holes?  How long do you wait before you move to a different location?  Are you really focused on delivering the outcomes a customer needs or delivering the product or service itself?

Share your ideas, insights and experience!  Share the knowledge, share the wealth!

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Click here to find out more about Andrew Cooke and Growth & Profit Solutions.

9 Ways to Accelerate Customer Loyalty

Andrew Cooke Coaching, Growth and Profit Solutions, Leadership, Leadership Development, Management, Management Development

9 questions to ask to help you keep clients loyal – now and in the future.

 

Customer LoyaltyLast week we looked at the difference between client satisfaction and client loyalty, and the mistake commonly made by leaders in the belief that client satisfaction and client loyalty are positively correlated i.e. that higher the level of client satisfaction the higher the level of client loyalty.

Research has shown that the more value you deliver, the more satisfied your clients will be. The more satisfied they are, the more likely they will be to stay loyal to your firm and refer other clients to you.  There is good logic here, but it makes an assumption which is often not explicit or valid in most instances.

Have you ever had a client for whom you have delivered value, for which they are highly satisfied – and who have then awarded a deal to someone else for any reason?  Most people have had this experience.  We have found that there is a disconnect between our delivering value and our realising client loyalty.

The fault is ours, not theirs.

If we are to keep our clients’ loyalty we need to focus on our clients’ perception of your value and our clients’ perception of your differentiation.  The flawed assumption that is often made is that we look at the value delivered, and how we differentiate ourselves, from our perspective not that of the client.

If you want to keep your clients loyal, you need the answers to nine questions—some of which are focused on the clients’ perception of your value, and others on the clients’ perception of your differentiation.

Five Questions for Valuevalue men

Question #1: What value do clients perceive regarding our general category of company and services?

Perhaps your clients value that you are a diversified marketing company, not just a website firm. Or, that you are a specialist in XYZ, not a generalist. Perhaps they value that you are a family business versus a corporation. How clients perceive your type and category of company will resonate with many buyers.

Question #2: What is the value clients perceive regarding us as a firm?

You might find that clients value your innovation and don’t care as much that you’re periodically unresponsive. Or, that they value your client service excellence, but your technical reputation doesn’t matter quite as much. Maybe there are areas they don’t value or where you are falling down in your delivery.  Clients are not interested in what you do, rather they are interested in the value that you can help them realise.  Be clear on what value they see from your business, and where this value is created, and when, and for how long it lasts.

Question #3: What value do clients perceive regarding the specific services we offer?

This allows you to know what’s working for clients, which services you offer that are the strongest, and where you deliver the best value.

You might also learn that your clients don’t even know you offer particular services. Familiarity, in this case, breeds contempt – one side assuming the other knows, and the other not knowing because they’ve never been told.

Question #4: What value do clients perceive in solving the specific problems they currently have?

We all have problems, but not all problems are created equally. If you know the key priorities for a client, then you can help the client tackle them.  Don’t assume that the client always knows what the problem is – by framing the problem appropriately you can help them to see problems clearly, or to see problems that they never realised they had, or that they had failed to anticipate.  This can be exceptionally valuable to a client.

Question #5: What value do clients perceive they might get if they could solve certain problems or accomplish certain things that they aren’t focusing on right now or might not see as priorities?

In doing this we help clients to create a better future or one that they may not have even known was possible. By helping clients solve problems they didn’t know they could solve, and making improvements they didn’t know they could make, service providers score higher on satisfaction (that, as we mentioned, is an indicator of future loyalty).

differentiationFour Questions on Differentiation

Question #6: What different options do the clients perceive they have regarding different categories of companies that can help solve problems or achieve goals?

Sometimes it doesn’t matter as much which specific companies your client might view as what the other options are that they might be considering.  As such you need to know the types and categories of companies offering services in your region. For example, as a management training company, with a core set of services in classroom training, you need to know if your buyers are considering e‐learning providers—and how to position yourself against them

Question #7: What different options do clients perceive they have regarding specific companies that can help them solve problems?

You need to know your distinctions, advantages, and disadvantages when compared with them. This is from the client’s perspective – not yours.

Question #8: What different options do clients perceive they have regarding specific services available to help them solve problems?

How do clients perceive they can solve their problems?  Can you create options around what they need, rather than what you, to help them think about how they could use you – rather than should they use you!

Question #9: What different options do clients perceive they have regarding other ways to solve problems, such as internal staff?

Competitors are not always the biggest source of competition.  Competition also comes from the option of the client doing it themselves, not doing it at all, changing the scope and extent of the project, or giving preference (and thus some or the entire allocated budget) to other internally competing projects and priorities.

Next Steps

Go through these questions with your clients.  Get it from the horse’s mouth.  Compare this with how you see it, where are the biggest gaps, and which areas are the priority for addressing.

Thanks to Mike Schultz of Wellesley Hills Group whose work provided the basis for much of this article.

Click here to find out more about Andrew Cooke and Growth & Profit Solutions.