Posted By John P. Palen, CEO & Founder of Allied Executives
Waste is a big focus in business. Every leader I talk to is finding ways to cut the fat from internal processes, from production to billing. Many have successfully achieved higher margins, productivity and profits simply by eliminating wasteful activities.
At Lifeworks Services, based in Eagan, this journey started with clothes hangers. After helping a hanger recycler achieve leaner production processes, going from a 25 percent hanger toss rate down to less than 5 percent, the leaders at Lifeworks realized that their own organization could use some waste reduction.
Since the 1960s, Lifeworks has focused on serving people with developmental disabilities. This people and mission focus, as in most not-for-profit organizations, tends to override thoughts of internal efficiency. But as government funding decreases and donors demand that more money goes directly toward the mission, not-for-profits have looked at best practices in the private sector to improve their organizations.
"We have always been a learning organization," said Judy Lysne, CEO and president of Lifeworks. "But in the past few years, we've really embraced lean process innovation and began to apply it to every aspect of our organization."
Taking what they've learned from analyzing businesses like the hanger recycler - which hires Lifeworks to design improved production processes, place and train people with disabilities to perform repetitive or routine tasks - Lifeworks looked at everything from facility layouts to employee tasks and client activities. They counted and measured how long tasks took. They noted where activities slowed down. They determined who or what was responsible for delays.
When it was time to build out a space for a new program center in Brooklyn Park, Lifeworks used this research. They designed the facility so that transportation is streamlined, allowing multiple buses to stop, drop off or pick up clients at the same time. When clients arrive or leave, there is a consistent process for handling coats and personal items with new mobile locker units.
In the food service area, the layout of the kitchen and serving area is designed for efficiency. Changes there reduced prep time and serving by up to two hours.
A more open layout in the facility - with more internal windows between rooms - allows staff to monitor activities throughout the space, respond faster and be more productive.
For the daily distribution of client medication, an automated and mobile cart system has maintained accuracy while reducing distribution time by one hour - and with fewer staff.
Lifeworks also addressed lean process improvements in the headquarters' administration area, which includes customer fiscal/intermediary services for their clients. They identified 21 separate processes in the department. After taking four of them through process improvement, the employees experienced more efficient workflow, which has led to greater job satisfaction as well as improved margins.
"We are still working on process improvements for payroll and billing," Lysne says. "But it's exciting because we can now measure and see actual improvements."
Lifeworks serves Minnesota employers as big as Wells Fargo, REI and Cargill. They continue to share their knowledge of lean process improvements with private employers, as they analyze processes and identify places where a Lifeworks client or crew can increase workflow efficiency.
"Because we want to place our clients in jobs in corporations, we needed to show that we run ourselves like a business too," Lysne says.
Lifeworks' workflow solutions for the hanger recycler alone resulted in savings of approximately $40,000. I'm sure that many companies and organizations would appreciate that kind of savings.
Whether you are for-profit or not-for-profit, the bottom line counts. Are you on the waste reduction train?
Tips for Leaner Workflow
1) Observe daily processes to measure the number of steps and amount of time they take.
2) Determine whether inefficiency is due to tasks performed, equipment design, lack of training or unclear expectations.
3) Identify key people involved in each change. Once you see progress and results, make the change public and applicable to everyone.
4) Stay focused on sustaining change until it becomes part of the culture.
5) Share and celebrate results.
Wednesday, December 31, 2014
Wednesday, December 17, 2014
Driven by Technology featuring Dave Gahn with Corporate Graphics Inc. written December 2011 by John P. Palen for Minnesota Business Magazine
Posted By John P. Palen, CEO & Founder of Allied Executives
It’s often easier to look outside of an organization for answers when the way you do business doesn’t seem to work anymore. Many industries are experiencing sweeping change, and the printing/graphics industry is no exception.
If maximizing the investment in equipment isn’t challenging enough, the very nature of graphic design and printing is shifting from ink on paper to digital. Keeping up with the speed of technology has become a large part of the CEO’s brain trust when strategizing for the future.
But what if the whole way of thinking about your industry had to change?
In 2009, Dave Gahn, president of Corporate Graphics Inc. (CGI, a Taylor Corporation Company), saw a shift happening from traditional printed collaterals for the mass market; to virtual, permission based, context relevant, messaging to individuals. All this fueled by mobile devices. Since then, the company has pursued a lead position in corporate identification methodologies and technologies.
Before they could communicate this vision and direction Gahn and his leadership team had to invest in training and development. Here’s what they learned:
For a recent wedding, codes were added to the invitation to allow guests to use their mobile devices to access RSVPs, calendar reminders, menus, directions, bridal registries, even load photos of the new couple. The bride then had an application set that let her manage who had responded, where to have them sit, what they wanted to eat, even queue up thank-you cards for their gifts.
"Our customer relationships are built on what we print, but if we want to stay relevant, we need to make a paradigm shift." Gahn says. "It's not been comfortable, but we are finding some cool new ways to add value, and now realize other printers probably are not our biggest competitors."
Could your company benefit from a mind shift? Consider the possibilities if you began to think about technology, sales, customer service or even your competition differently.
It’s often easier to look outside of an organization for answers when the way you do business doesn’t seem to work anymore. Many industries are experiencing sweeping change, and the printing/graphics industry is no exception.
If maximizing the investment in equipment isn’t challenging enough, the very nature of graphic design and printing is shifting from ink on paper to digital. Keeping up with the speed of technology has become a large part of the CEO’s brain trust when strategizing for the future.
But what if the whole way of thinking about your industry had to change?
In 2009, Dave Gahn, president of Corporate Graphics Inc. (CGI, a Taylor Corporation Company), saw a shift happening from traditional printed collaterals for the mass market; to virtual, permission based, context relevant, messaging to individuals. All this fueled by mobile devices. Since then, the company has pursued a lead position in corporate identification methodologies and technologies.
Before they could communicate this vision and direction Gahn and his leadership team had to invest in training and development. Here’s what they learned:
- Accept that your traditional business isn't static.
Some CGI employees and customers embraced technology quickly. Most were resistant. So Gahn and his team became evangelists of sorts about the use of two-dimensional bar codes to add interactivity to print.
- Combine sales with technical experts, and get a wider audience.
Because of the educational component, CGI has changed the way it presents opportunities to customers. Salespeople are paired with the technical experts on sales calls for the new technology.
CGI also had to convince the print buyers to invite Marketing and Technology departments to these presentations. It was important for brand managers and IT leaders to connect how technology can embellish communications with printed sales or marketing materials.
- Anticipate client reluctance and varied adoption cycles.
CGI understands there is a predictable adoption cycle for this or any technology. It takes an enormous amount of energy to shift mindsets. They have 5% of customers using the technologies, and another 10% in active decision cycles. The 80% left will take time to adopt, and some will never embrace the shift in communication.
"We are trying things that might not work, or scale. Some customers just don’t have an interest in that." Gahn says. "Still, we've trained folks on the technology and are committed to using the applications with those customers that are stepping up to take this forward."
- Run with early adopters and learn from them.
Leaders are looking for an edge and don't wait until an idea is "fully baked" to embrace it. It was the same shift required to go from mainframes to mini to networked PC's or from photographic film to digital. Early adopters are critical. They take chances early and quick, then help to build the use cases and ROI models the rest of the market needs before they'll move.
For a recent wedding, codes were added to the invitation to allow guests to use their mobile devices to access RSVPs, calendar reminders, menus, directions, bridal registries, even load photos of the new couple. The bride then had an application set that let her manage who had responded, where to have them sit, what they wanted to eat, even queue up thank-you cards for their gifts.
"Our customer relationships are built on what we print, but if we want to stay relevant, we need to make a paradigm shift." Gahn says. "It's not been comfortable, but we are finding some cool new ways to add value, and now realize other printers probably are not our biggest competitors."
Could your company benefit from a mind shift? Consider the possibilities if you began to think about technology, sales, customer service or even your competition differently.
Wednesday, December 10, 2014
Pursuing the Dream featuring Mike and Katie Dickerman with Woodland Hill Winery written November 2011 by John P. Palen for Minnesota Business Magazine
Posted By John P. Palen, CEO & Founder of Allied Executives
Lifestyle Business Bears Fruit at Woodland Hill Winery
The Dickerman's seemed to have it all: great careers - Mike as an engineering sales director, Katie a manicurist. They had all the toys - a personal plane, a yacht and a recreational vehicle ready to travel at a moment's notice with the family. Primed for a future of well-earned ease, they embodied what most would call the American dream.
But not Mike & Katie. They had other ideas that included cashing in all their toys for 20 acres of former corn and soybean fields along with an old farmstead in Delano. The call for a different life started with Mike's beer-making hobby about twenty years ago. Then around 12 years ago, wine in barrels and drums in his basement. But I hardly thought Mike was serious back then when he brought up the idea of establishing a vineyard and winery.
I thought they were crazy. There were so many odds against them. They didn't know the first thing about growing grapes. They didn't want to pursue any outside financing. And then there's the crazy Minnesota climate. I enjoy wine, but Minnesota wines had previously always left me cold.
Still you can't discount an entrepreneur's determined spirit and optimism. The Dickermans proceeded to absorb everything they could possibly find on the science of growing grape varietals - from University of Minnesota research to the Old World techniques of Europe. Mikes engineer mind dug into details about how trellis systems were built to support vine growth. His farming background helped determine healthy methods for planting, treating and maintaining.
"We use sustainable farming techniques. We have to get the soil right with organic natural matter so our plants are healthier and stronger," Mike says. He designed and invented a weeding device that attaches to his tractor and removes weeds while tilling the soil in a highly productive and efficient fashion leaving the soil more nutrient rich.
The Dickermans moved their lives to the farm, calling it Woodland Hill. They enlisted the help of friends, family and part-time employees. They would have to find a market for their new product. Oh, and did I mention that grapes aren't ready to become wine until the vines are at least three years old?
Mike has kept his day job while pursuing his dream - working nights and weekends on the farm. "I've enjoyed it so much, being out in the fields, learning the chemistry; it doesn’t seem like work," he says.
Katie, meanwhile, has focused on the marketing and hospitality, creating beautiful garden-accented grounds, a gift shop and tasting room, and methods to attract and encourage people to linger at Woodland Hill for a day or evening of fun. Just for an added dimension, the Dickermans also have a teen-age daughter to raise.
The results eight years later astounded even the astute U of M horticulturalists. Mike's unconventional techniques have resulted in exceptional quality and quantity vines and grapes. Mike and Katie have a very "green" approach to their methods. Their production rate, quality and capacity have become one of the most impressive operations in the region producing 18 different wines.
"We rely on our own vineyard. Our growing techniques produce high quality grapes that are key to making finer quality wines," Mikes says.
In 2010, Woodland Hill won eight medals at the prestigious International Cold Climate Wine Competition, a partnership between the Minnesota Wine Growers Association, the Minnesota State Fair and University of Minnesota.
Almost every weekend of the year, there is an atmosphere of playful energy at the farm, whether an art fair, dance lessons, summer wedding, fall bonfire or sleigh rides. Often, there is live music. The combination of Mike's chemistry and farming skills and Katie's flair for entertaining have created an escape to the country that attracts people from all walks of life.
The common denominator is wine, of course. And I must admit that I am impressed by the high quality and really like the wines that Mike and Katie have created. I must also admit that I am amazed at how their determination and ingenuity have achieved such incredible success in their business venture. It just goes to show that the dream is alive and well in Minnesota - and it can be deliciously different for everyone.
What’s your dream? It could be less far-fetched than you think.
Lifestyle Business Bears Fruit at Woodland Hill Winery
The Dickerman's seemed to have it all: great careers - Mike as an engineering sales director, Katie a manicurist. They had all the toys - a personal plane, a yacht and a recreational vehicle ready to travel at a moment's notice with the family. Primed for a future of well-earned ease, they embodied what most would call the American dream.
But not Mike & Katie. They had other ideas that included cashing in all their toys for 20 acres of former corn and soybean fields along with an old farmstead in Delano. The call for a different life started with Mike's beer-making hobby about twenty years ago. Then around 12 years ago, wine in barrels and drums in his basement. But I hardly thought Mike was serious back then when he brought up the idea of establishing a vineyard and winery.
I thought they were crazy. There were so many odds against them. They didn't know the first thing about growing grapes. They didn't want to pursue any outside financing. And then there's the crazy Minnesota climate. I enjoy wine, but Minnesota wines had previously always left me cold.
Still you can't discount an entrepreneur's determined spirit and optimism. The Dickermans proceeded to absorb everything they could possibly find on the science of growing grape varietals - from University of Minnesota research to the Old World techniques of Europe. Mikes engineer mind dug into details about how trellis systems were built to support vine growth. His farming background helped determine healthy methods for planting, treating and maintaining.
"We use sustainable farming techniques. We have to get the soil right with organic natural matter so our plants are healthier and stronger," Mike says. He designed and invented a weeding device that attaches to his tractor and removes weeds while tilling the soil in a highly productive and efficient fashion leaving the soil more nutrient rich.
The Dickermans moved their lives to the farm, calling it Woodland Hill. They enlisted the help of friends, family and part-time employees. They would have to find a market for their new product. Oh, and did I mention that grapes aren't ready to become wine until the vines are at least three years old?
Mike has kept his day job while pursuing his dream - working nights and weekends on the farm. "I've enjoyed it so much, being out in the fields, learning the chemistry; it doesn’t seem like work," he says.
Katie, meanwhile, has focused on the marketing and hospitality, creating beautiful garden-accented grounds, a gift shop and tasting room, and methods to attract and encourage people to linger at Woodland Hill for a day or evening of fun. Just for an added dimension, the Dickermans also have a teen-age daughter to raise.
The results eight years later astounded even the astute U of M horticulturalists. Mike's unconventional techniques have resulted in exceptional quality and quantity vines and grapes. Mike and Katie have a very "green" approach to their methods. Their production rate, quality and capacity have become one of the most impressive operations in the region producing 18 different wines.
"We rely on our own vineyard. Our growing techniques produce high quality grapes that are key to making finer quality wines," Mikes says.
In 2010, Woodland Hill won eight medals at the prestigious International Cold Climate Wine Competition, a partnership between the Minnesota Wine Growers Association, the Minnesota State Fair and University of Minnesota.
Almost every weekend of the year, there is an atmosphere of playful energy at the farm, whether an art fair, dance lessons, summer wedding, fall bonfire or sleigh rides. Often, there is live music. The combination of Mike's chemistry and farming skills and Katie's flair for entertaining have created an escape to the country that attracts people from all walks of life.
The common denominator is wine, of course. And I must admit that I am impressed by the high quality and really like the wines that Mike and Katie have created. I must also admit that I am amazed at how their determination and ingenuity have achieved such incredible success in their business venture. It just goes to show that the dream is alive and well in Minnesota - and it can be deliciously different for everyone.
What’s your dream? It could be less far-fetched than you think.
Wednesday, November 19, 2014
Its Personal featuring Troy, Justin and Matt Hanratty with Hanratty & Associates written October 2011 by John P. Palen for Minnesota Business Magazine
Posted By John P. Palen, CEO & Founder of Allied Executives
A lot of companies claim to have a family atmosphere. I assume that's supposed to be a good thing: caring people, working together, sharing dreams? Well, not every family culture is like that. Some are competitive. Some are disconnected. Some are plain annoying. Before a company claims to have a family atmosphere or any other culture, leaders need to define and claim it. Then they must share and develop it throughout the organization.
Three brothers at a second-generation Plymouth firm did exactly that. In the process of acquiring equity from their father, brothers Troy, Justin and Matt Hanratty realized that they needed to agree on a clear future for Hanratty & Associates, an employee benefits consulting and brokerage firm.
They sat down and mapped out their definition of a successful company, who they were as leaders and how they would work together to achieve their goals in the business. They also wanted business goals to match their personal goals of building families. Their first priority was to invest in the company culture. They approached their father and CEO, Tim Hanratty, with a plan. He agreed.
"We chose the acronym CERVICE as a focus, with the C meaning Clients first," said Justin, who serves as president and has been with Hanratty for six years. "We wanted the spotlight to be on clients and how we would serve them." The other letters stand for Excellence, Relationships, Value, Integrity, Community and Empowerment.
The brothers communicated their goal to the approximately 50 employees. "We told them that we wanted to create a brand that was known as family-focused and that gives back to the community. And we wanted clients who valued their employees and valued our relationship with them," said Troy, vice president of operations who has been with Hanratty for eight years.
Justin focused on sales (with Matt, as part of the sales team). He set up weekly TOT meetings, which stands for "Tree of Trust," the acronym reminding staff to act with maturity. The goals of the meetings include helping each employee stay accountable, understand his or her role at Hanratty and align personal goals with those of the firm. Sales and service teams were set up with a focus on scheduling lunches and other interactions with clients beyond sales.
Troy focused on internal service to the staff and operations, sharing the brothers' goals and determining with employees how to accomplish them. One of the first employee-driven projects was the "Hanratty community crew," which determined several ways that employees could reach out to their communities. Some of their favorite causes include Feed My Starving Children, blood drives and emergency food shelves.
Employees also identified technology investments that would help them serve customers better and do their jobs more efficiently. Following these and other internal changes, Hanratty has succeeded in realizing zero turnover of staff since early 2010. "Relationships are stronger than ever internally and externally," Troy said.
Hanratty focused on clients by defining who they wanted as clients, the values that clients should share with them and what it meant for Hanratty to be a partner and friend with clients. Their marketing message became, "It's Personal."
Making some difficult choices, the brothers realized that clients who didn’t match the culture they were creating would probably find another service provider. They used the "It's Personal" benchmark to locate and attract clients who were interested in relationships and service, not just low rates.
Troy notes that relationships with insurance carriers have also changed for the better. "We explained our new core values to our carriers and our clients. We asked to be held accountable to them. We actually do something with the feedback they give us."
Response has been "magnetic," Troy adds. In 2011, Hanratty expects sales to double. After 35 years of running the firm, Tim Hanratty is stepping back from operations, while his sons continue to pursue a family-focused culture.
"We are excited to create something with our employees that is bigger than sales growth and profits, something we can be proud of as brothers and with our own families someday," Justin said. There are times when the brothers don’t agree on everything, but focusing on CERVICE has helped them reach their goals.
What values and culture drive your company? Define your culture and client experience - then follow through. It’s a proven model for success in business - and family.
A lot of companies claim to have a family atmosphere. I assume that's supposed to be a good thing: caring people, working together, sharing dreams? Well, not every family culture is like that. Some are competitive. Some are disconnected. Some are plain annoying. Before a company claims to have a family atmosphere or any other culture, leaders need to define and claim it. Then they must share and develop it throughout the organization.
Three brothers at a second-generation Plymouth firm did exactly that. In the process of acquiring equity from their father, brothers Troy, Justin and Matt Hanratty realized that they needed to agree on a clear future for Hanratty & Associates, an employee benefits consulting and brokerage firm.
They sat down and mapped out their definition of a successful company, who they were as leaders and how they would work together to achieve their goals in the business. They also wanted business goals to match their personal goals of building families. Their first priority was to invest in the company culture. They approached their father and CEO, Tim Hanratty, with a plan. He agreed.
"We chose the acronym CERVICE as a focus, with the C meaning Clients first," said Justin, who serves as president and has been with Hanratty for six years. "We wanted the spotlight to be on clients and how we would serve them." The other letters stand for Excellence, Relationships, Value, Integrity, Community and Empowerment.
The brothers communicated their goal to the approximately 50 employees. "We told them that we wanted to create a brand that was known as family-focused and that gives back to the community. And we wanted clients who valued their employees and valued our relationship with them," said Troy, vice president of operations who has been with Hanratty for eight years.
Justin focused on sales (with Matt, as part of the sales team). He set up weekly TOT meetings, which stands for "Tree of Trust," the acronym reminding staff to act with maturity. The goals of the meetings include helping each employee stay accountable, understand his or her role at Hanratty and align personal goals with those of the firm. Sales and service teams were set up with a focus on scheduling lunches and other interactions with clients beyond sales.
Troy focused on internal service to the staff and operations, sharing the brothers' goals and determining with employees how to accomplish them. One of the first employee-driven projects was the "Hanratty community crew," which determined several ways that employees could reach out to their communities. Some of their favorite causes include Feed My Starving Children, blood drives and emergency food shelves.
Employees also identified technology investments that would help them serve customers better and do their jobs more efficiently. Following these and other internal changes, Hanratty has succeeded in realizing zero turnover of staff since early 2010. "Relationships are stronger than ever internally and externally," Troy said.
Hanratty focused on clients by defining who they wanted as clients, the values that clients should share with them and what it meant for Hanratty to be a partner and friend with clients. Their marketing message became, "It's Personal."
Making some difficult choices, the brothers realized that clients who didn’t match the culture they were creating would probably find another service provider. They used the "It's Personal" benchmark to locate and attract clients who were interested in relationships and service, not just low rates.
Troy notes that relationships with insurance carriers have also changed for the better. "We explained our new core values to our carriers and our clients. We asked to be held accountable to them. We actually do something with the feedback they give us."
Response has been "magnetic," Troy adds. In 2011, Hanratty expects sales to double. After 35 years of running the firm, Tim Hanratty is stepping back from operations, while his sons continue to pursue a family-focused culture.
"We are excited to create something with our employees that is bigger than sales growth and profits, something we can be proud of as brothers and with our own families someday," Justin said. There are times when the brothers don’t agree on everything, but focusing on CERVICE has helped them reach their goals.
What values and culture drive your company? Define your culture and client experience - then follow through. It’s a proven model for success in business - and family.
Wednesday, November 12, 2014
Is Your Business About to Bust featuring Larry Haberman with V-TEK, Inc. written September 2011 by John P. Palen for Minnesota Business Magazine
Posted By John P. Palen, CEO & Founder of Allied Executives
It's no longer surprising to read about businesses filing for bankruptcy or restructuring or even failing in the last three years. What is surprising and unfortunate is that many of these companies have been around for 20 years or longer. For one reason or another, they are not making it in a very changed economy.
So it's refreshing when you come across a company that has faced similar challenges and turned things around through very strategic and time-tested methods. These stories are out there. The best ones provide a road map for other companies to follow. In the final analysis, these companies are stronger for having faced the challenges and overcome them - leading to a stronger economic base.
About 18 months ago, Larry Haberman was brought on as president of V-TEK Inc., a Mankato-based company that provides packaging of electrical components for the circuit board industry. Established 26 years ago, the company employed more than 200 people in Minnesota and several locations in Mexico. The owners, Dennis and Vivian Siemer, knew that they needed a fresh perspective to navigate the changes in their industry and the economy. They met Haberman through a mutual business connection.
After observing operations for about 60 days, Haberman described the company as "underperforming in every respect." But he was familiar with this kind of challenge.
A veteran CEO of several companies, Haberman set down five objectives to bring the company into a new level of growth and performance.
1. Maximize cash.
Focusing closely on profit and loss, Haberman zeroed in on opportunities to improve the P & L and balance sheet. "We pick one item at a time. It's more of a sharp shooter approach than a shotgun approach," he said.
Haberman relies on charting the progress of traditional metrics, from sales to gross margin to net operating margin, units per hour of labor and even profit by head count. It's no exaggeration when he says that he tracks about 30 charts and graphs every month.
2. Assess and align talent.
For this kind of turnaround, Haberman said that he "took everyone off the bus to determine who belonged and who should sit in which seats." A comprehensive assessment of talent across the company identified talent gaps. Then some tough decisions were made about replacing people with others who fit the needed skill requirements.
"We needed people to understand how transactions tied to cash and profits in order to compete. At the same time, I had to communicate consistently so that employees knew what we were doing and why in order to establish and build trust."
3. Revitalize sales and customers.
When sales are down, it can become self-fulfilling, as the sales team believes that "no one is buying and nothing can be done," Haberman explains. In addition to transforming that mindset within sales, Haberman also helped V-TEK identify the best customer opportunities.
"Customers do not want to hitch their A-team to a C-team wagon. We needed to prove that we were the A-team wagon for them."
4. Optimize products and services.
One of the ways that V-TEK proved their A-team status was by assessing and optimizing their entire product line. One surprise was that inventory was only turning over once a year. They set a goal of inventory turnover of no less than three times a year.
Some products were discarded as obsolete. "This was the most difficult phase of the turnaround process," Haberman admits. "Writing off obsolete inventory gave us less cash than anticipated."
5. Measure results.
Remember when I talked about those 30 charts and graphs? They came in handy as V-TEK monitored their progress on the previous four objectives. The rate of transformation was astounding.
In 18 months, V-TEK managed to pay down its line of credit in full, dropping its debt to equity by 50 percent. Sales have doubled in the last two years, transforming corporate profits from significant losses to above industry norms.
Another indicator of company health is the lack of turnover. After two years of frozen wages, V-TEK has begun a journey to return wages and benefits to competitive industry levels in order to retain its talent.
But most telling is the response of bankers to V-TEK's initiatives. Once considered a significant constraint, the company now has several banks competing for its business. "This actually took less than a year to achieve," Haberman says.
Not only has V-TEK and its employees found new life in a changed economy, the company's owners have gained an opportunity to pursue their interests in supporting higher education technology programs. Taking the leap to bring on outside leadership, the Siemers have succeeded in preserving what they've built so they can mentor future engineers, inventors and entrepreneurs.
If you are at a crossroads with your business, there is still hope. As V-TEK demonstrates, the decisions can be difficult in a significant business turnaround...but not as difficult as putting up the "closed" sign.
It's no longer surprising to read about businesses filing for bankruptcy or restructuring or even failing in the last three years. What is surprising and unfortunate is that many of these companies have been around for 20 years or longer. For one reason or another, they are not making it in a very changed economy.
So it's refreshing when you come across a company that has faced similar challenges and turned things around through very strategic and time-tested methods. These stories are out there. The best ones provide a road map for other companies to follow. In the final analysis, these companies are stronger for having faced the challenges and overcome them - leading to a stronger economic base.
About 18 months ago, Larry Haberman was brought on as president of V-TEK Inc., a Mankato-based company that provides packaging of electrical components for the circuit board industry. Established 26 years ago, the company employed more than 200 people in Minnesota and several locations in Mexico. The owners, Dennis and Vivian Siemer, knew that they needed a fresh perspective to navigate the changes in their industry and the economy. They met Haberman through a mutual business connection.
After observing operations for about 60 days, Haberman described the company as "underperforming in every respect." But he was familiar with this kind of challenge.
A veteran CEO of several companies, Haberman set down five objectives to bring the company into a new level of growth and performance.
1. Maximize cash.
Focusing closely on profit and loss, Haberman zeroed in on opportunities to improve the P & L and balance sheet. "We pick one item at a time. It's more of a sharp shooter approach than a shotgun approach," he said.
Haberman relies on charting the progress of traditional metrics, from sales to gross margin to net operating margin, units per hour of labor and even profit by head count. It's no exaggeration when he says that he tracks about 30 charts and graphs every month.
2. Assess and align talent.
For this kind of turnaround, Haberman said that he "took everyone off the bus to determine who belonged and who should sit in which seats." A comprehensive assessment of talent across the company identified talent gaps. Then some tough decisions were made about replacing people with others who fit the needed skill requirements.
"We needed people to understand how transactions tied to cash and profits in order to compete. At the same time, I had to communicate consistently so that employees knew what we were doing and why in order to establish and build trust."
3. Revitalize sales and customers.
When sales are down, it can become self-fulfilling, as the sales team believes that "no one is buying and nothing can be done," Haberman explains. In addition to transforming that mindset within sales, Haberman also helped V-TEK identify the best customer opportunities.
"Customers do not want to hitch their A-team to a C-team wagon. We needed to prove that we were the A-team wagon for them."
4. Optimize products and services.
One of the ways that V-TEK proved their A-team status was by assessing and optimizing their entire product line. One surprise was that inventory was only turning over once a year. They set a goal of inventory turnover of no less than three times a year.
Some products were discarded as obsolete. "This was the most difficult phase of the turnaround process," Haberman admits. "Writing off obsolete inventory gave us less cash than anticipated."
5. Measure results.
Remember when I talked about those 30 charts and graphs? They came in handy as V-TEK monitored their progress on the previous four objectives. The rate of transformation was astounding.
In 18 months, V-TEK managed to pay down its line of credit in full, dropping its debt to equity by 50 percent. Sales have doubled in the last two years, transforming corporate profits from significant losses to above industry norms.
Another indicator of company health is the lack of turnover. After two years of frozen wages, V-TEK has begun a journey to return wages and benefits to competitive industry levels in order to retain its talent.
But most telling is the response of bankers to V-TEK's initiatives. Once considered a significant constraint, the company now has several banks competing for its business. "This actually took less than a year to achieve," Haberman says.
Not only has V-TEK and its employees found new life in a changed economy, the company's owners have gained an opportunity to pursue their interests in supporting higher education technology programs. Taking the leap to bring on outside leadership, the Siemers have succeeded in preserving what they've built so they can mentor future engineers, inventors and entrepreneurs.
If you are at a crossroads with your business, there is still hope. As V-TEK demonstrates, the decisions can be difficult in a significant business turnaround...but not as difficult as putting up the "closed" sign.
Wednesday, October 15, 2014
Tracking Trends featuring Dan Ferrise with Miller Manufacturing Company written August 2011 by John P. Palen for Minnesota Business Magazine
Posted By John P. Palen, CEO & Founder of Allied Executives
Someone once told me that all airplanes have instrument panels, but reading the dials doesn't mean that you know how to fly the plane.
Apply that to business. Most business owners don't know what to measure in the wealth of data generated from all of the departments. That's because there are infinite things to measure and ways to measure them. The most critical concern, however, is that a spreadsheet of data does not lead directly to action steps or the skills to communicate action steps to your people.
This was the dilemma for Dan Ferrise, CEO of Miller Manufacturing Company and Springer McGrath Company, owned by Frandsen Corporation. These companies manufacture products and provide wholesale distribution to the farm, ranch and pet industries.
In 2008, Ferrise was reviewing monthly reports but the data did not allow him to quickly understand if the company had a trend or an anomaly, or what the impact on longer term performance was.
"I am responsible to our companies' owner and to our management teams," Ferrise says. "We needed to closely monitor our performance on KPIs (key performance indicators) so we could identify negative trends early. When our dashboard KPIs don't meet trend expectations, we need to take action quickly."
Ferrise's solution was to develop a trailing 12-month trend line. Taking gross revenue, Ferrise calculated the current month plus the prior 11 months and divided it by 12 months to get a rolling average. Creating a chart for each month's rolling average eliminated seasonality or anomalies and helped Ferrise spot changes quickly. Applying a trend line to any measure of dollars, units or percentages gives Ferrise and his team a true picture of company performance.
"If the 12 month trend lines for margins are less than expected, then we recognize quickly that we have an issue to investigate," Ferrise says. "We then look to see if customers are buying the lower margin products, if program pricing is too aggressive, or costs in certain areas are creeping up. Our dashboards show us where we need to take action."
Ferrise's primary dashboard measures include dollars and percentages on gross sales, net sales, gross margin, net operating income, cash on gross margin and net operating income. Other items on the dashboard include lead time, transit time, backorder value, inventory turns, and bookings.
Ferrise and his team also came up with a one-page business plan model. They conduct annual strategic planning to evaluate the market, review prior year accomplishments, and identify key strategies and priorities for the upcoming year. Executive Team members are assigned different parts of the new plan. They then involve managers and supervisors in setting objectives and implementation schedules. Once complete, they announce and launch the plan to all employees. Performance reviews and compensation are then tied to these objectives.
"Each new employee gets a copy of the company's one page business plan with a hand-written welcome note from me (the CEO) with the mission, vision and company core values," Ferrise says.
To stay on track, Ferrise also conducts a 30-minute weekly management meeting. Management reviews what’s going on in the dashboard within each division. Notes, including action items are taken and made available for future reference, accountability and anyone absent.
On a quarterly basis, team leaders give a presentation to the management team related to their objectives and re-plan as necessary. There are support meetings between team leaders and their direct reports as well as with senior management to ensure one-on-one accountability.
"Once people understand why we need this information, what it tells us and how we use it, then they relate to it and embrace it," Ferrise adds. "We share our plan and progress with all employees so that they know we have a plan, how they contribute to accomplishing it, and that it truly means something."
What it has meant is double-digit growth and strong margins through the recession. The company has also stayed on pace to meet objectives for new internal product development and the company is poised for strategic acquisitions.
GETTING STARTED WITH DASHBOARDS
Someone once told me that all airplanes have instrument panels, but reading the dials doesn't mean that you know how to fly the plane.
Apply that to business. Most business owners don't know what to measure in the wealth of data generated from all of the departments. That's because there are infinite things to measure and ways to measure them. The most critical concern, however, is that a spreadsheet of data does not lead directly to action steps or the skills to communicate action steps to your people.
This was the dilemma for Dan Ferrise, CEO of Miller Manufacturing Company and Springer McGrath Company, owned by Frandsen Corporation. These companies manufacture products and provide wholesale distribution to the farm, ranch and pet industries.
In 2008, Ferrise was reviewing monthly reports but the data did not allow him to quickly understand if the company had a trend or an anomaly, or what the impact on longer term performance was.
"I am responsible to our companies' owner and to our management teams," Ferrise says. "We needed to closely monitor our performance on KPIs (key performance indicators) so we could identify negative trends early. When our dashboard KPIs don't meet trend expectations, we need to take action quickly."
Ferrise's solution was to develop a trailing 12-month trend line. Taking gross revenue, Ferrise calculated the current month plus the prior 11 months and divided it by 12 months to get a rolling average. Creating a chart for each month's rolling average eliminated seasonality or anomalies and helped Ferrise spot changes quickly. Applying a trend line to any measure of dollars, units or percentages gives Ferrise and his team a true picture of company performance.
"If the 12 month trend lines for margins are less than expected, then we recognize quickly that we have an issue to investigate," Ferrise says. "We then look to see if customers are buying the lower margin products, if program pricing is too aggressive, or costs in certain areas are creeping up. Our dashboards show us where we need to take action."
Ferrise's primary dashboard measures include dollars and percentages on gross sales, net sales, gross margin, net operating income, cash on gross margin and net operating income. Other items on the dashboard include lead time, transit time, backorder value, inventory turns, and bookings.
Ferrise and his team also came up with a one-page business plan model. They conduct annual strategic planning to evaluate the market, review prior year accomplishments, and identify key strategies and priorities for the upcoming year. Executive Team members are assigned different parts of the new plan. They then involve managers and supervisors in setting objectives and implementation schedules. Once complete, they announce and launch the plan to all employees. Performance reviews and compensation are then tied to these objectives.
"Each new employee gets a copy of the company's one page business plan with a hand-written welcome note from me (the CEO) with the mission, vision and company core values," Ferrise says.
To stay on track, Ferrise also conducts a 30-minute weekly management meeting. Management reviews what’s going on in the dashboard within each division. Notes, including action items are taken and made available for future reference, accountability and anyone absent.
On a quarterly basis, team leaders give a presentation to the management team related to their objectives and re-plan as necessary. There are support meetings between team leaders and their direct reports as well as with senior management to ensure one-on-one accountability.
"Once people understand why we need this information, what it tells us and how we use it, then they relate to it and embrace it," Ferrise adds. "We share our plan and progress with all employees so that they know we have a plan, how they contribute to accomplishing it, and that it truly means something."
What it has meant is double-digit growth and strong margins through the recession. The company has also stayed on pace to meet objectives for new internal product development and the company is poised for strategic acquisitions.
GETTING STARTED WITH DASHBOARDS
- Good dashboards and KPIs eliminate surprises. Too many KPIs muddy the water.
- Start by measuring one thing at a time to get practice.
- Use historic data for more accurate benchmarking.
- Once your data makes sense, then the sky’s the limit.
Wednesday, October 1, 2014
Build a Proactive Organization in Volatile Times featuring Tim Herold with Herold Precisions Metals written June 2011 by John P. Palen for the Minnesota Business Magazine
Posted by John P. Palen, CEO & Founder of Allied Executives
You don't know if you don't ask. Lately, I find myself telling leaders this very thing — the first risk required to find hidden opportunities in their businesses to cut expenses or add income.
The most successful businesses right now have restructured in order to flow with the still volatile expansion and contraction of their industries. They have also reinvented how they serve customers to improve their value.
One such company is Herold Precision Metals in White Bear Lake which had peaked at $22 million in revenue pre-recession. Through this tough period of going from gangbuster growth to a dismal bid-to-award ratio, three brothers have worked very hard to build a position of strength with their client base.
First, the owners went through their financial history to identify benchmarks and key performance indicators (KPIs). Reviewing their existing sales, they took steps to "right-size" their organization in light of fewer sales. Yes, this did mean a change in their labor force, with more reliance on temporary and contract-for-hire employees. In the long run, however, they have created more job security for key employees.
"By utilizing temp services, our main employees know that when we need to expand or contract that it's coming from our temp workforce and not the full-time ranks," says Tim Herold, partner.
In addition, this manufacturer conducted some aggressive price negotiation with their valued vendors and communicated higher expectations for service delivery.
"In some cases, it was a collaborative effort as we agreed to offset the discounts as business or the economy improves," Herold says. "We would return to previous pricing as we could. Every discount or price reduction added up collectively and we felt that our vendors were partners in that."
They also met with their best customers and investigated ways that their processes and service would make products more convenient and ultimately less costly. For example, with one customer they were able to add an additional step — a simple weld of one more component on the ordered part — that the customer had previously done in-house. Delivering that one step cheaper and easier resulted in improved margins for Herold Precision Metals and the customer. The company's depth of experience in design and engineering has become a competitive difference.
Another area that the company is exploring is a diversification of product lines through strategic alliance. By exploring up-and-coming businesses in the R&D stage that will need timely production of metal components, this company anticipates getting in on the ground floor of new business opportunities.
"You need to really understand the partners involved, the level of risk and investment potential, but we have been very aggressive about finding new business opportunities," Herold says.
Rather than accepting the ebb and flow of an inconsistent sales pipeline and worrying about paying the bills, these leaders are taking the action steps necessary to create a business that flows smoothly with its customer demand. While it might even mean turning down business that doesn't provide the necessary margin, the long-term goal is a recession-proof company that won't be fooled twice.
"We used to bid 10 jobs and get five of them. Now we bid 50 jobs and get five. The environment is much more competitive and commoditized, so we have to maintain our value proposition of producing parts faster and of higher quality than our competition," Herold says.
If you haven't asked for what you need or want from vendors, customers and your talent, it's time to take that leap. People don't know what you are capable of delivering or improving if you don't know yourself. Do some research and improve your thinking from dismal to dedicated. The new core competency for leaders is proactivity.
You don't know if you don't ask. Lately, I find myself telling leaders this very thing — the first risk required to find hidden opportunities in their businesses to cut expenses or add income.
The most successful businesses right now have restructured in order to flow with the still volatile expansion and contraction of their industries. They have also reinvented how they serve customers to improve their value.
One such company is Herold Precision Metals in White Bear Lake which had peaked at $22 million in revenue pre-recession. Through this tough period of going from gangbuster growth to a dismal bid-to-award ratio, three brothers have worked very hard to build a position of strength with their client base.
First, the owners went through their financial history to identify benchmarks and key performance indicators (KPIs). Reviewing their existing sales, they took steps to "right-size" their organization in light of fewer sales. Yes, this did mean a change in their labor force, with more reliance on temporary and contract-for-hire employees. In the long run, however, they have created more job security for key employees.
"By utilizing temp services, our main employees know that when we need to expand or contract that it's coming from our temp workforce and not the full-time ranks," says Tim Herold, partner.
In addition, this manufacturer conducted some aggressive price negotiation with their valued vendors and communicated higher expectations for service delivery.
"In some cases, it was a collaborative effort as we agreed to offset the discounts as business or the economy improves," Herold says. "We would return to previous pricing as we could. Every discount or price reduction added up collectively and we felt that our vendors were partners in that."
They also met with their best customers and investigated ways that their processes and service would make products more convenient and ultimately less costly. For example, with one customer they were able to add an additional step — a simple weld of one more component on the ordered part — that the customer had previously done in-house. Delivering that one step cheaper and easier resulted in improved margins for Herold Precision Metals and the customer. The company's depth of experience in design and engineering has become a competitive difference.
Another area that the company is exploring is a diversification of product lines through strategic alliance. By exploring up-and-coming businesses in the R&D stage that will need timely production of metal components, this company anticipates getting in on the ground floor of new business opportunities.
"You need to really understand the partners involved, the level of risk and investment potential, but we have been very aggressive about finding new business opportunities," Herold says.
Rather than accepting the ebb and flow of an inconsistent sales pipeline and worrying about paying the bills, these leaders are taking the action steps necessary to create a business that flows smoothly with its customer demand. While it might even mean turning down business that doesn't provide the necessary margin, the long-term goal is a recession-proof company that won't be fooled twice.
"We used to bid 10 jobs and get five of them. Now we bid 50 jobs and get five. The environment is much more competitive and commoditized, so we have to maintain our value proposition of producing parts faster and of higher quality than our competition," Herold says.
If you haven't asked for what you need or want from vendors, customers and your talent, it's time to take that leap. People don't know what you are capable of delivering or improving if you don't know yourself. Do some research and improve your thinking from dismal to dedicated. The new core competency for leaders is proactivity.
Wednesday, September 17, 2014
Crystal Clear featuring Chuck Dahlgren with Crystal D written by John P. Palen for the Minnesota Business Magazine.
Written by John P. Palen, CEO and Founder of Allied Executives
Published July 2011 in the Minnesota Business Magazine
Imagine attending your company’s annual rewards and recognition ceremony. More than half of the employees are personally recognized for specific accomplishments. Imagine that people take this so seriously that they are competing to achieve excellence every day. When recognized, the award recipients shed actual tears of joy and appreciation.
Doesn’t sound like your company? You’re not alone. Many leaders with whom I have worked have been clueless about their culture. Far too often, culture is a dysfunctional environment where the people are frustrated, exhausted or unhappy. Leaders aren’t always aware of how they influence and define the corporate culture because they haven’t paid attention to its development along with business development. Yet the two actually go hand in hand.
There are healthy business environments where the people are collaborative, aligned, productive, respectful and happy. To get there, leaders need to actively participate in defining the “rules of engagement” with their people. If they don’t, they risk the loss of top talent and the profits that go with them.
Chuck Dahlgren, CEO of Crystal D, a manufacturer of high-end recognition awards mostly made of crystal, has created a winning culture over the past six years — with profound results. “For my first 12 years in business, I had no formal methodology,” Dahlgren admits. “I just expected employees to work hard and be loyal. Absenteeism, quality and turnover was an ongoing struggle.”
Being in the rewards and recognition business, Dahlgren knew that he needed to get his employees more emotionally attached to what they were doing and how they were doing it. In January 2005, he and senior management integrated new strategic planning practices involving the company’s core purpose, mission and values.
They defined their core purpose: To turn emotions into memories. They also created five core values: Integrity, Quality, Respect, Commitment and Passion. These core values represented a way of being for all employees to understand and embrace.
“Through reading and training, we decided we wanted to become more of a servant leader based on a coaching culture. We knew there had to be an emotional attachment to our purpose,” Dahlgren adds.
The company also created a formal recognition program. Employees nominate a champion for each of the five core values. Management reviews and approves each nomination to assure authenticity. To foster participation and commitment, the company conducts monthly gift card drawings for people submitting nominations. “Wow” champions are recognized quarterly and annual champions are announced at the yearly employee recognition event. A grand champion is ultimately selected who best encompasses all five core values for the year.
In addition, winners receive custom DVDs high-lighted with praise from fellow workers, and have their photos hung in the company hallways. They get reserved parking spaces for the year and participate in key leadership teams and meetings.
Crystal D also celebrates birthdays and work anniversaries. They have an annual summer steak barbecue in addition to the annual recognition ceremony.
“We have to keep this program in front of people, top of mind on a daily basis,” Dahlgren says. “Sometimes new employees think we’re crazy. It can take a year for some to figure out.”
What distinguishes this program from others? First, Crystal D makes a significant investment with its workers through internal marketing budget. Second, they tie day-to-day management and communication to the core values, so front line managers must be completely committed.
The investment has clearly paid off. From 2005 to 2010 (after the company’s cultural shift and during the recession), Crystal D has achieved nearly 100 percent growth. Other benefits include improved margin, retention and productivity. There is high energy and positive morale in the environment that employees and customers can see and feel.
If you suspect the culture of your company is affecting retention, customer service and growth, it’s time to claim your responsibility for transforming it. Involve and invest in your people just as you do in your business. Connect their paychecks to purpose and imagine the results.
Published July 2011 in the Minnesota Business Magazine
Imagine attending your company’s annual rewards and recognition ceremony. More than half of the employees are personally recognized for specific accomplishments. Imagine that people take this so seriously that they are competing to achieve excellence every day. When recognized, the award recipients shed actual tears of joy and appreciation.
Doesn’t sound like your company? You’re not alone. Many leaders with whom I have worked have been clueless about their culture. Far too often, culture is a dysfunctional environment where the people are frustrated, exhausted or unhappy. Leaders aren’t always aware of how they influence and define the corporate culture because they haven’t paid attention to its development along with business development. Yet the two actually go hand in hand.
There are healthy business environments where the people are collaborative, aligned, productive, respectful and happy. To get there, leaders need to actively participate in defining the “rules of engagement” with their people. If they don’t, they risk the loss of top talent and the profits that go with them.
Chuck Dahlgren, CEO of Crystal D, a manufacturer of high-end recognition awards mostly made of crystal, has created a winning culture over the past six years — with profound results. “For my first 12 years in business, I had no formal methodology,” Dahlgren admits. “I just expected employees to work hard and be loyal. Absenteeism, quality and turnover was an ongoing struggle.”
Being in the rewards and recognition business, Dahlgren knew that he needed to get his employees more emotionally attached to what they were doing and how they were doing it. In January 2005, he and senior management integrated new strategic planning practices involving the company’s core purpose, mission and values.
They defined their core purpose: To turn emotions into memories. They also created five core values: Integrity, Quality, Respect, Commitment and Passion. These core values represented a way of being for all employees to understand and embrace.
“Through reading and training, we decided we wanted to become more of a servant leader based on a coaching culture. We knew there had to be an emotional attachment to our purpose,” Dahlgren adds.
The company also created a formal recognition program. Employees nominate a champion for each of the five core values. Management reviews and approves each nomination to assure authenticity. To foster participation and commitment, the company conducts monthly gift card drawings for people submitting nominations. “Wow” champions are recognized quarterly and annual champions are announced at the yearly employee recognition event. A grand champion is ultimately selected who best encompasses all five core values for the year.
In addition, winners receive custom DVDs high-lighted with praise from fellow workers, and have their photos hung in the company hallways. They get reserved parking spaces for the year and participate in key leadership teams and meetings.
Crystal D also celebrates birthdays and work anniversaries. They have an annual summer steak barbecue in addition to the annual recognition ceremony.
“We have to keep this program in front of people, top of mind on a daily basis,” Dahlgren says. “Sometimes new employees think we’re crazy. It can take a year for some to figure out.”
What distinguishes this program from others? First, Crystal D makes a significant investment with its workers through internal marketing budget. Second, they tie day-to-day management and communication to the core values, so front line managers must be completely committed.
The investment has clearly paid off. From 2005 to 2010 (after the company’s cultural shift and during the recession), Crystal D has achieved nearly 100 percent growth. Other benefits include improved margin, retention and productivity. There is high energy and positive morale in the environment that employees and customers can see and feel.
If you suspect the culture of your company is affecting retention, customer service and growth, it’s time to claim your responsibility for transforming it. Involve and invest in your people just as you do in your business. Connect their paychecks to purpose and imagine the results.
Wednesday, September 3, 2014
When to Fire Yourself: Three Roadblocks to a Thriving Enterprise
Posted by CEO and Founder of Allied Executives, John P. Palen
If it is the intent of all CEOs to build a business that is independently self-sufficient, then they will create more independence, freedom and value with their company.
How do you do that? You hire and develop strong key leaders around you to make the right kinds of decisions to independently run the business so you don’t have to. By eventually getting out of the way, you don’t have to sell. You can keep a self-sufficient, independently operating company and reward employees who run it for you.
Few entrepreneurial business owners know how to fire themselves from working in the business — at least early on. There are three main roadblocks they need to remove in order to grow the business and reap the rewards.
Micromanagement
CEOs who think they have to be on top of every little thing to avoid failure end up with exhaustion and frustration. The only reason to be a micromanager is if your people are incompetent. If you have good people, then you are limiting momentum and faster growth by requiring constant updates, approvals and confirmations through the CEO’s office.
Hiring the Wrong People
Don’t hire incompetent people. Hire slow and fire fast to ensure the right fit for the role and the culture. If the role and cultural fit are correct, then you can develop people for the skills and aptitudes you need to replace your skills and aptitudes as well as to cover areas where you are not strong. You can trust them because you trained them properly on the processes and procedures of their role in the business. You communicated expectations clearly for reaching the goals.
Running the Business
When the right people are in place to run the business, get out of the way. Successful CEOs lead a business. They don’t run it. They manage a system, not people. Allow your people to earn rewards by working toward the goals set forth by your vision and long-term planning. Will it be as perfect as you think you personally could do it? Maybe not always, but minor imperfections are worth the rewards of leading a company that can survive without you.
Don’t know how to fire yourself? Talk to Allied about our CEO and executive peer groups for confidential insight from leaders who’ve done it and thrived!
If it is the intent of all CEOs to build a business that is independently self-sufficient, then they will create more independence, freedom and value with their company.
How do you do that? You hire and develop strong key leaders around you to make the right kinds of decisions to independently run the business so you don’t have to. By eventually getting out of the way, you don’t have to sell. You can keep a self-sufficient, independently operating company and reward employees who run it for you.
Few entrepreneurial business owners know how to fire themselves from working in the business — at least early on. There are three main roadblocks they need to remove in order to grow the business and reap the rewards.
Micromanagement
CEOs who think they have to be on top of every little thing to avoid failure end up with exhaustion and frustration. The only reason to be a micromanager is if your people are incompetent. If you have good people, then you are limiting momentum and faster growth by requiring constant updates, approvals and confirmations through the CEO’s office.
Hiring the Wrong People
Don’t hire incompetent people. Hire slow and fire fast to ensure the right fit for the role and the culture. If the role and cultural fit are correct, then you can develop people for the skills and aptitudes you need to replace your skills and aptitudes as well as to cover areas where you are not strong. You can trust them because you trained them properly on the processes and procedures of their role in the business. You communicated expectations clearly for reaching the goals.
Running the Business
When the right people are in place to run the business, get out of the way. Successful CEOs lead a business. They don’t run it. They manage a system, not people. Allow your people to earn rewards by working toward the goals set forth by your vision and long-term planning. Will it be as perfect as you think you personally could do it? Maybe not always, but minor imperfections are worth the rewards of leading a company that can survive without you.
Don’t know how to fire yourself? Talk to Allied about our CEO and executive peer groups for confidential insight from leaders who’ve done it and thrived!
Wednesday, August 20, 2014
The Business Marriage: Tips for Healthy Partnerships
Posted by John P. Palen, CEO & Founder of Allied Executives
Do you have the right
buy-sell agreement and documents in place for a healthy partnership? The
members of Allied Executives can identify what you might be missing. Call us to
join a confidential executive peer group that fits your role and business.
In my experience, the healthiest partnerships are those
in which one partner retains majority voting control even if profits are shared
50/50. Then if any conflict happens, the majority voter makes a decision and
ends the conflict quickly.
But many partnerships choose to be equal in voting
shares as well as distributions. In order to maintain health and good relations
long term, these partnerships need to clearly state in their buy-sell agreement
the rules for every possible conflict or crisis that could arise in the life of
the business. Here are a few considerations to maintain a healthy partnership:
Valuation of the Business
State the rules for valuing your business at a predetermined
value no matter at what point in time an owner decides to sell shares.
Separation Rules
Include considerations for separation of roles or
departments in the event that the business could be separated into two
businesses.
Pay Fair Market Value
Pay business partners according to the role they perform
at fair market value. Distribute profit based on the agreed upon percentage of
ownership.
Hold Regular Partner Meetings
These are not management meetings where you talk about
operations. The partner meeting is where you discuss philosophy, long-term
strategy and culture. Recognize any minor partner conflicts and deal with them
early on. These meetings also support respectful communication and value among
the partner group, which is critical to the health of the partnership and
organization.
Review and Revise Documents
As the business grows and changes, review your legal
documents a minimum of every three years, or more often if a major change has
occurred in the business or for a partner. Make adjustments to fit the changes
for partners or the business.
Wednesday, July 23, 2014
Mixing Family and Business: Best Practices
Posted by John P. Palen, CEO of Allied Executives.
There are two general paths to working effectively with family in business. I’ve witnessed family members who work their way up in the business and demonstrate that they’ve earned their position. I’ve also witnessed family members who spend time out in the world working for other companies or organizations in order to bring that perspective and expertise back to the family business.
There are two general paths to working effectively with family in business. I’ve witnessed family members who work their way up in the business and demonstrate that they’ve earned their position. I’ve also witnessed family members who spend time out in the world working for other companies or organizations in order to bring that perspective and expertise back to the family business.
Either path can be effective. The main thing is to set
aside family ties and emotions in the interests of a successful business. If
family members truly offer the skills and strengths necessary in the role they
seek, fine. If not, either they need to develop those skills and strengths or
find another job.
If a family member is allowed to take a leadership
position just because of their name and relationship with the founder, then
there are problems. Some parents, for example, don’t have the courage to tell
their kids they aren’t right or ready to join or take over the family business.
Use these best practices gleaned from other successful family businesses to
make that conversation easier.
1. Get real.
Check your family member’s attitude. Is there a sense of
humility and willingness to follow a development plan, or a sense that the role
is theirs regardless of their effort? Ensure that their attitude is right
before anything else.
2. Conduct an interview.
Just like you would for any business partner or
potential employee, interview the family member to find out why he or she wants
the job. You will figure out pretty quickly whether this person is being truly
realistic about their level of skill, responsibility and willingness to take
direction.
3. Agree to a plan or trial period.
Whether it’s a 1-year, 3-year or 5-year plan, outline
the steps this family member must take to develop skills, maturity and trust
for the role he or she wants. This might include working outside the business
for a while, or working in a less glamorous role to learn the industry
literally from the ground up. In a construction company, for example, the
family member might start in the field to learn about the people, processes and
costs of construction.
Make the plan public, so that other leaders and
employees know that the family member is earning a future role — especially if
the plan is to groom this person as an executive or owner. This way, others can
participate in supporting the plan and challenging it when necessary.
This plan, rather than the owner’s feelings or blood
ties, will determine the family member’s potential in the business. If there is
evident passion and a willingness to work, there is a way. It might not mean
the family member becomes CEO, but it could mean a very satisfying way of life
and sustained family legacy.
Make sure to measure the family member’s progress along
the way and have regular conversations. Things can change over time, and if it
happens that the family member chooses another path, then your company should
have a plan B.
Wednesday, June 25, 2014
Recommit to Your Business
Posted by John P. Palen, CEO of Allied Executives
How to define your place in a changed market.
Why would a business owner make changes that result in a 50 percent turnover in staff and management? It’s this kind of balancing act that I see owners and leaders performing as they come to terms with the shift in business goals and results.
Let me introduce you to one company that is coming into balance after some difficult and, might I say, brutal strategic changes to its business practices. Just before signs of the recession appeared, CEO Jeff Dougherty of Aquarius Water Conditioning recommitted to his business by setting a goal of becoming a world-class organization. He not only wanted it, he called a company meeting and declared it.
It’s not that business was bad. Jeff just believed that they might be missing opportunities they didn’t know existed due to informal service and sales processes. Then came the hard part. He took the painful steps to define and implement a world-class organization and to create a corporate culture that “earns the right to be recommended.”
“Our mission and tagline is to earn the right to be recommended,” Dougherty says. “In order to accomplish this, everything we do, from the way we answer the phone, conduct ourselves while in the customer’s home and handle all sales and service related activities in our corporate office environment, must reflect a culture that earns the right to be recommended.”
Writing a one-page business plan, Dougherty and his leadership defined their mission and core values and what it would take to be recommended. Taking feedback from current and prospective clients, the company moved from department to department and restructured processes and professional expectations to meet their new world-class definition.
For example, when a service technician arrives at a customer’s home, a red carpet is laid at the door, the technician wears shoe covers and asks the customer if the service vehicle is parked in a good spot. There is a protocol for introduction and respecting the customer’s home that is consistent and measurable.
In the same way, customer service handles calls in a specific manner and ensures that each customer has a follow-through process and is supported to their satisfaction. Salespeople are trained to follow through on any accounts that technicians have deemed interested in additional services.
“We defined specific, measurable criteria for quality and efficient performance, so service technicians, salespeople and all employees can review results on a daily basis and be accountable for following them,” says Dougherty.
These ground-level changes took about six to eight months, and in that time many people decided that the changes were not for them. “I told my people from the beginning that we as an organization are going to change,” explains Dougherty. “Either you will be committed and excited about making necessary change, or I will support your need or decision to find another place to work that is a better fit for you. We increased our daily communication about expectations and results, and those who were on board made it an exciting and fun environment.”
The company carried on through the changes and has realized an uptick in sales, improved margins and an expansion of their locations in the region. They had a grasp of their timeline and action steps needed to fulfill new strategic goals.
Has the transition been perfect? I think Dougherty and his leaders would call their pursuit a work in progress, but this fourth-generation entrepreneur is finding that people seem happier in their work and united in a common goal like never before.
“There is more energy. People like the new environment and the clear expectations. And we celebrate successes more often as we meet and even exceed objectives.”
If your business seems stuck in no-man’s land about its mission or place in the market, it may require some bold action to redefine and recommit to the realities now, rather than wishing for what once was. Your talent needs to know that leadership has the reins and it working one step at a time to build a business that can compete for years to come.
How to define your place in a changed market.
Why would a business owner make changes that result in a 50 percent turnover in staff and management? It’s this kind of balancing act that I see owners and leaders performing as they come to terms with the shift in business goals and results.
Let me introduce you to one company that is coming into balance after some difficult and, might I say, brutal strategic changes to its business practices. Just before signs of the recession appeared, CEO Jeff Dougherty of Aquarius Water Conditioning recommitted to his business by setting a goal of becoming a world-class organization. He not only wanted it, he called a company meeting and declared it.
It’s not that business was bad. Jeff just believed that they might be missing opportunities they didn’t know existed due to informal service and sales processes. Then came the hard part. He took the painful steps to define and implement a world-class organization and to create a corporate culture that “earns the right to be recommended.”
“Our mission and tagline is to earn the right to be recommended,” Dougherty says. “In order to accomplish this, everything we do, from the way we answer the phone, conduct ourselves while in the customer’s home and handle all sales and service related activities in our corporate office environment, must reflect a culture that earns the right to be recommended.”
Writing a one-page business plan, Dougherty and his leadership defined their mission and core values and what it would take to be recommended. Taking feedback from current and prospective clients, the company moved from department to department and restructured processes and professional expectations to meet their new world-class definition.
For example, when a service technician arrives at a customer’s home, a red carpet is laid at the door, the technician wears shoe covers and asks the customer if the service vehicle is parked in a good spot. There is a protocol for introduction and respecting the customer’s home that is consistent and measurable.
In the same way, customer service handles calls in a specific manner and ensures that each customer has a follow-through process and is supported to their satisfaction. Salespeople are trained to follow through on any accounts that technicians have deemed interested in additional services.
“We defined specific, measurable criteria for quality and efficient performance, so service technicians, salespeople and all employees can review results on a daily basis and be accountable for following them,” says Dougherty.
These ground-level changes took about six to eight months, and in that time many people decided that the changes were not for them. “I told my people from the beginning that we as an organization are going to change,” explains Dougherty. “Either you will be committed and excited about making necessary change, or I will support your need or decision to find another place to work that is a better fit for you. We increased our daily communication about expectations and results, and those who were on board made it an exciting and fun environment.”
The company carried on through the changes and has realized an uptick in sales, improved margins and an expansion of their locations in the region. They had a grasp of their timeline and action steps needed to fulfill new strategic goals.
Has the transition been perfect? I think Dougherty and his leaders would call their pursuit a work in progress, but this fourth-generation entrepreneur is finding that people seem happier in their work and united in a common goal like never before.
“There is more energy. People like the new environment and the clear expectations. And we celebrate successes more often as we meet and even exceed objectives.”
If your business seems stuck in no-man’s land about its mission or place in the market, it may require some bold action to redefine and recommit to the realities now, rather than wishing for what once was. Your talent needs to know that leadership has the reins and it working one step at a time to build a business that can compete for years to come.
Wednesday, June 4, 2014
Choose Your Battles: The CEO’s Map for Handling Conflict
Posted by: John P. Palen, CEO - Allied Executives
Every organization has conflict, and not every conflict
requires the CEO’s involvement. But when a big problem shows up that impacts
the profits, reputation or operations of the company, it’s time for the CEO to
step in.
Avoid the urge to jump to a quick conclusion. The best
solutions come from gathering feedback from everyone involved. You need
information — the right information — to uncover the true problem underneath
visible symptoms. Your goal isn’t just to fix the problem, but to get everyone
on board with the solution.
Most people approach conflict from a win-lose perspective:
in the end, someone will win and someone will lose. The leader’s job is to find
a solution where there can be more than one winner, or at least an acceptable
compromise that feels like winning. Involve all relevant parties in the
investigation and ask for their best ideas.
The resolution should also align with the company’s core
values and purpose.
If the conflict is around insufficient technologies or
communication to serve customers properly, then the resolution should not only
solve the problem, but also lead to better customer service. If the conflict
revolves around a person, then the awareness and development plan of that
person should lead to better workflow and culture. In rare cases, the answer is
to help a person find another job, but that too can be a win-win in the end.
CEOs who are comfortable with the process of conflict
resolution will run more fulfilling and dedicated work environments because
people will feel empowered and supported to do their best work — without drama.
That, in turn, leads to more growth and success.
At Allied Executives, we deal with
conflict and drama in a controlled environment. Feel free to bring your hot
topics as a member of a peer group, and learn new techniques for conflict
resolution.
Thursday, May 29, 2014
Breaking Up is Hard to Do: How to End a Partnership
Posted by John P. Palen, CEO of Allied Executives
Small conflicts can lead to big ones if left to fester
and persist. Partners who can maintain professional respect and appreciation
for each other can sometimes work out issues without breaking up. Once you
start losing respect and value for one another, it leads to deeper resentments
and issues down the road — and negative impacts on the business.
Despite all your best efforts, sometimes a partnership
has to end. The best break-ups are anticipated with a solid buy-sell agreement.
The alternative is to spend a ton of money on attorneys and court fees to sort
out the loopholes and missing documentation.
Whether you have two partners or several in a business,
the first step in a break-up is to review the rules of the buy-sell agreement
for procedures to split operations, dissolve the partnership or buy out one or
more partners — whichever route is preferred among the partner group. It will
be quickly evident if the agreement doesn’t clearly spell out the rules for the
preferred outcome, and that’s where attorneys will need to sort out the next
steps.
For this reason, it’s important to clearly spell out all
possible scenarios for a business partnership break-up. Be careful of your
choice of advisors for drawing up the buy-sell agreement and other legal documents.
Choose advisors who have seen business break-ups before and understand the
language and rules that will protect partners from needless stress or expense
in a break-up.
Ultimately, any business break-up will have its share of
loss or bad feelings. But you can minimize the pain by sticking to the facts of
the break-up and leaving emotions on the sideline until a resolution is
discovered, vetted and confirmed by all partners. Just as you would maintain
professionalism with customers, keep your relations above board in a business
break-up — and live to do business another day.
Wednesday, May 14, 2014
The Unexpected Benefits of a Peer Group Meeting
Posted by: Kevin Lovegreen, Allied Executives Peer Group Director
As a member and a Peer Group Director for over 15 years, I have seen many meeting unfold into unexpected directions.
As a business owner, you are pulled in many directions and there are times when you show up at a Peer Group meeting and are not prepared to share any hot topics you have been dealing with. I remember one meeting when a business owner gave a short update and at the end mentioned he was going to be buying an existing business with his brother. A member quickly jumped in with excitement and started probing for more details. He started asking questions like, “What’s in your buy sell agreement between you and your brother?” The reply was, “We don’t have one, we trust each other.” That was the starting point for a fantastic exchange of information. Several members, who had been through similar situations quickly and clearly laid out experiences they have had. In less than fifteen minutes the member had a list of things to look closer into.
Things like;
As a member and a Peer Group Director for over 15 years, I have seen many meeting unfold into unexpected directions.
As a business owner, you are pulled in many directions and there are times when you show up at a Peer Group meeting and are not prepared to share any hot topics you have been dealing with. I remember one meeting when a business owner gave a short update and at the end mentioned he was going to be buying an existing business with his brother. A member quickly jumped in with excitement and started probing for more details. He started asking questions like, “What’s in your buy sell agreement between you and your brother?” The reply was, “We don’t have one, we trust each other.” That was the starting point for a fantastic exchange of information. Several members, who had been through similar situations quickly and clearly laid out experiences they have had. In less than fifteen minutes the member had a list of things to look closer into.
Things like;
- How to create a short, clear and simple buy sell agreement.
- What are the expectations of each brother?
- What happens if one brother gets divorced, dies or is disabled?
- What is the maximum cash limit both are willing to put in if things go bad?
- What is the exit strategy?
Wednesday, April 30, 2014
Three (or Four) Big Excuses that Prevent Leadership Growth
Posted by John P. Palen, CEO - Allied Executives
Think about your own excuses for not investing in your
professional development. Then bring them to Allied Executives for a
breakthrough. Let’s move that ball forward together.
I’ve heard lots of excuses for why leaders don’t provide
time for their own development. Most of them are pretty lame when you consider
what they could gain from regular personal and professional development.
The first excuse is to blame
others.
When there are obstacles in the company, this leader’s
first instinct is to deflect responsibility rather than consider what he or she
could do differently. Leaders who accept responsibility are primed for growth,
open to coaching and interested in finding solutions. If they see a ball drop,
they are interested in picking it up and moving it forward. In contrast, if
it’s not their problem, then whose problem is it?
Another big excuse is time.
Leaders who are “too busy” to invest time in themselves
means they are too busy to focus on the big picture needs of the organization.
Time to reflect, collect new perspectives and apply them to the organization
should be part of every leader’s regular schedule.
What if it’s not in the budget?
To that excuse, I say, let’s solve all your budget
problems with 12 cost-saving ideas gleaned in a peer group, a coaching session
or educational conference. Say you are making a software investment that costs
$130,000, but you find out at an outside venue that you could use something
cheaper and more user-friendly? You just saved yourself loads of time, money
and distraction by stepping out of the office and getting a new perspective.
I also hear the excuse that it’s
not about time, but timing.
Leaders are often heading up large strategic planning initiatives,
client projects or investments that require their focus. I understand, but
isn’t that the best time to collect outside insight and feedback, skills and
support? No leader is an island; the best leaders seek fresh ideas,
collaboration and a change of venue to refresh their view on things. When
you’re down on the ground, you tend to see more dirt than sky.
Tuesday, February 11, 2014
Five Secrets of Highly Successful Leaders
Posted by: John P. Palen, CEO - Allied Executives
For more information on how
to improve your leadership, contact us about Allied Executive peer groups.
After working with CEOs, executives and business owners
for many years, I’ve seen common themes in the ways that successful leaders run
their businesses. Here are five of them. They seem like secrets because only
the best leaders use all of them consistently.
Organization – Highly
successful leaders create a structure of processes and procedures that define
how the business should work. They have a formula for how they most efficiently
produce the best possible results. Leaders ask: What do we need to do every day
to get the results we want? How many phone calls does it take to get to the
appointment, then to the proposal and to actual sales? That is a sales formula.
Highly successful leaders create these formulas and apply them to all areas of
their business.
Communication – Highly
successful leaders effectively communicate the processes and procedures that
help their people follow through successfully. This includes proper onboarding
and training so that everyone is clear on roles and responsibilities. As the
business grows, the leader is also responsible for communicating changes and
improvements to get better results.
Accountability – Within the
infrastructure of processes and procedures, highly successful leaders provide
clear expectations of performance to get predetermined results. There are lead
measures (strategy) as well as lag measures (goal). Lead measures are specific
activities that need to happen to hit the goal (lag measure). What gets measured gets done. Make it public.
Talk about it daily or weekly. Don’t just create a list, go away and come back
three months later to find out it wasn’t done or done right. Accountability is
a gift to the people in your organization to understand what is expected of
them, when it’s due and what the intended result should be. When people are
clear on their role and purpose, they are happier.
Discipline – Highly successful
leaders don’t have 100 goals. They pick one to three goals maximum. When one
goal is achieved, they add a new goal. They stay the course and don’t get
distracted by off-track ideas. Accountability supports discipline so you can
easily measure progress.
Peer Groups – This is my
favorite secret for highly successful leaders. If you don’t get exposure to new
ideas and perspectives outside of your business and your team, you won’t be as
challenged, educated or fulfilled as a leader. It’s lonely at the top; you
can’t take things to your executive team or home and expect to always get
objective feedback. A confidential peer group helps you stay disciplined,
accountable, organized and communicative on the most important strategies for
your goals.
Tuesday, January 28, 2014
Top 10 Reasons Why I Joined Allied Executives 12 Years Ago and Continue As A Member.
Posted by: Tom Fafinski, Allied Executives Peer Group Director
I joined Allied Executives in 2002 and have remained a member for most of the time since then. I was a member even after selling my business and, after a short absence, began facilitating meetings. After re-establishing my business 4 years ago, I joined a group as a member while continuing to facilitate. As a “business-junkie,” I seek peer interaction much in the same way I speak to friends about sports or other interests. Here are my top 10 reasons for joining Allied Executives.
I joined Allied Executives in 2002 and have remained a member for most of the time since then. I was a member even after selling my business and, after a short absence, began facilitating meetings. After re-establishing my business 4 years ago, I joined a group as a member while continuing to facilitate. As a “business-junkie,” I seek peer interaction much in the same way I speak to friends about sports or other interests. Here are my top 10 reasons for joining Allied Executives.
- I was interested in establishing an independent and non-subordinate advisory board to collaborate with as it related to growth and operations issues within my organization;
- The commitment of 6 months (rather than 1 year) gave me an opportunity to test the solution without being wed to it;
- The financial commitment was accessible and it continues to generate a return on investment in my membership fees;
- The AE format was manageable as a half-day solution;
- It provides opportunities to evaluate business models from other industries;
- I established relationships with people who are also committed to professional development and growth and who are very interested in business;
- Professionally facilitated for balanced participation and rich monthly meeting content;
- Timely educational workshops that really teach you management skills and techniques;
- On-demand educational resources in the on-line member business center;
- While I have access to over 100 business leaders in my network, I am a member of a peer group of roughly a dozen similarly situated business owners.
Allied Executives was
the right fit for me and continues to be.
Irrespective of the organization, as a business leader, you are missing
out on a treasure trove of information and advice if you do not pursue an
opportunity with a peer group solution provider.
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