On Dead Elephants & Communication

“You’ve got a gift” – so said one of my guys after a fantastic meeting with one of our customers.

Don’t know whether I agree with him.  Whatever gifts I may have, I probably don’t use as much as I should.  However, I digress.

The real essence of this post is that we, as professionals, need to be aware of the issues that are confronting our customers and, if we are unclear, ask better questions to enable us to get to the guts of the issue.  This is a skill that I am still learning – although I understand that I will never perfect it.

The discussion with our customer was meant to be about getting some clarity about their goals for their business.  We had the meeting booked in for a while and had let them know that this was the purpose of the discussion.  They arrived late (normally not a great sign – putting it off), which flagged a possible issue with the process about to be undertaken.

The discussion opened up with them identifying some frustrations they were experiencing with one of their team members.  It then progressed on to analysis of the communication styles adopted by both people and, how not fully appreciating the communication style of the recipient and tailoring the message for their needs might have been the actual cause of the frustration in the first place.

This then led to a discussion about the style of the owner of the business.  They started to open up as our discussion developed around why they were aware of the style they had and the impact it could have on their team, they made the statement “I know this, but I’m not doing it”.  That then caused the question to be asked “why not”?

Source: polarzoo.com.kr
Source: polarzoo.com.kr

And that’s when the really positive stuff started.  Suffice to say, the tissue box got a bit of a hammering as they opened up about external issues (non work-related) that were impacting on them and had been impacting on them for some time.  It was fantastic as we could now understand why the business, which has incredible potential, has been stagnating and not exploiting the  numerous opportunities that have presented themselves.

The owner of the business has simply not been in the emotional state they needed to be in to enable them to drive and direct the business.  Powerful.  Meaningful.  Honest.

So, we did what all accountants do, and walked through the journey they have been on (isn’t that what all accountants do?) to enable them to fully verbalise the feelings they had been having and to enable them to understand that they had massive opportunity in the team – if only they could trust themselves to “let go” a bit.  About half way through this discussion, they indicated that they would go home and cry all afternoon.  That’s not necessarily a bad thing.

However, as we continued to talk through the issues and acknowledge the impact they had on the owner and the business, the air seemed to clear a bit.  By getting the issues out in a non-judgmental and non-confrontational environment, we were able to help them see that the “fork in the road” wasn’t actually anything to be feared and that the way they were feeling was OK.

The discussion eventually returned to the communication with the team (that’s where it all started remember) and how it can be improved.  They will be undertaking some Trimetrix Reporting with the team to allow everyone to better understand and appreciate the differences in the team communication styles and create an environment for better communication within the group.

Our customer could then see that there was a path forward and, whilst acknowledging the impact of the issues outside of work, started to get refocused back on their business.  We made commitments as far as setting some goals (some wonderful additional opportunities came out in this discussion) – the big battle will be getting the goals prioritised over the coming month or so – there are so many opportunities for this business we have to narrow them down and align them to the goals that will be fleshed out.

At the end of the meeting, we recommended that they go home to enable them to have the big cry they had earlier said they needed.  “No – don’t need that now.  I’m feeling a lot better”.

A really positive outcome was achieved by creating the environment and asking better questions (usually the ones starting with “why”) to get to the core of an issue.  Unless you carve up the elephant in the room, it crowds everything else out.

Don’t think I have a gift, but I’ve got a dead elephant in meeting room one and I need more tissues.

On “Call THAT a Profit Increase?”

The purpose of a business is to make a profit – so have uttered many business sages over the years.  As one of my mates states “Profit is the applause you get from your customers”.

Whichever way you look at it, we need to understand that improving profit is a goal that all businesses should strive for.

idea

You may recall that some time ago, I posted about the results one of our favourite customers had realised from appointing someone they would not have previously considered to the role of Manager of one of their remote sites.

Well, we now have the full year results in and – they’re even better than I had previously reported.

For the previous financial year, the site in question had generated an EBITDA loss of $13,000.  Yep, a loss.

The results this year?  Well, the EBITDA  result for this site has come in at comfortable number in excess of $155,000.  That represents a $170,000 turnaround.  Bottom line.

In a highly competitive market, with lots of challenges.  How?  By getting the right person in the job, giving them the opportunity to thrive, providing them with the support they needed in the way they needed it and, otherwise, keeping out of their way.

How many people in your organisation are you not setting free to do their best?  What would happen if you did have some absolute stars who you could enable to be of their best for and with you?

It happens.  Wouldn’t it be great if it could happen in your business?  If you would like to find out how you might be able to sleep better at night, give us a call.

After all, it’s only profit you’re missing out on.

 

On Tax Scams – Beware but Take Note!

Today, we had one of our clients phoned by a “representative” of the Australian Taxation Office (ATO) concerning “fraudulent activity” relating to his tax returns and stating that a “petition notice” had been lodged against his file.

Source:  smartraveller.gov.au
Source: smartraveller.gov.au

Our client was suspicious and immediately phoned our office as he was (naturally) a bit concerned about the matter.  We indicated to him that this looked and sounded like a scam and we would check it out.  On phoning the ATO, we were assured that this was in fact a scam and there was nothing to be concerned about with regard to our client’s affairs.  We advised our client of this fact immediately after speaking with the ATO.

We also advised the Tax Office of the contact name and phone number as provided by the scammer and, hopefully, they will be receiving a “friendly” visit from the Australian Federal Police in the very near future.

If you receive phone contact direct from the ATO concerning your tax affairs, be highly suspicious – this is not their standard method of contacting a taxpayer.  They will normally come through us (or your Registered Tax Agent) and contact will initially be made by letter.  If you are contacted by phone regarding tax “irregularities”, make sure you get the name of the person calling and their phone number and let them know you will call them back as you are in a meeting.  Let us (or the ATO) know immediately – the ATO contact number is 13 28 61.  If you receive a suspicious email, forward it to the ATO at ReportEmailFraud@ato.gov.au

The scammers are scum and they deserve to have the full weight of the law applied to them.

On Measuring the Real Stuff

I recently posted on the Verasage website about measurement and why it can be a bit of a poisoned chalice.

Source: quickmeme.com

Source: quickmeme.com

Thinking about this further, it came to me that the high performing sports teams and businesses in the world don’t necessarily look at the scores to see how they are going (and by this, I mean that the scores are considered, but it is the valuable inputs that result in the scores that are more vital).

For example, at a recent football game, I was invited to sit in the Coaches Box.  The information the coaches were interested in related more to the particular areas of performance that were important in achieving the goals of the team – the effectiveness of kicking, turn-overs, inside 50’s (it was Australian Rules footy) and, especially, the “1%-ers”.  These things are the efforts that the team made to help the team get to the outcome they wanted.  And the things the coaches were most eager to see and make a “song and dance” about?  The 1%-ers that members of the team did that didn’t have a metric but helped things along and served as examples to and for the rest of the team.  These were the things that had a lot of impact.  By highlighting them and praising loudly, they encouraged the behaviour they wanted to see.

If the focus had been only on the scoreboard, that wouldn’t have told them anything about how the score was achieved.  And it is the high-value/high pay-off activities that create the score.

We often see in businesses that people focus so much on the outcome (profit especially) they lose sight of what actually created the profit.  Asking themselves the most powerful question about the profit or metric of choice (you know, the one starting with “Why”) gives a lot more valuable and actionable information than just looking at the result.

Understanding the activities that did or didn’t get you to where you have got is important – focusing on those that get the results you want is critical as you can encourage and repeat those that work and refine/stop those that don’t.  This analysis process isn’t purely about numbers – it’s about the effort that went in to achieving those numbers.

For many years, I have adopted the view that reviewing a set of financials is like driving your car using the rear vision mirror – it will tell you where you have been, but won’t inform you much on where you are going.  This is the reason why our firm encourages people to plan forward and anticipate.  Look at what is coming up and adapt to the changes in the economy, market, competitive landscape etc (there are heaps of things that can be considered).

Don’t get me wrong, you need some understanding of the numbers, however my argument is that they should not be the sole focus of attention.  Where you do have the total numbers focus, you lose sight of the bigger game.  The measuring and assessment process should be on the Key Performance Indicators (or, as Ron Baker likes to say “Key Predictive Indicators”) that impact the outcomes.  Just like the football team which highlighted the 1%-ers.

Going back to my hackneyed argument – why-fore the timesheet?  It only measures inputs and doesn’t have a damned thing to do with outcomes or results.  Are you measuring things in your business that have little or no impact on the results your business achieves?

There is a statement often (inaccurately) ascribed to Peter Drucker – “What you can measure you can manage”.  His views were actually different to this and are nicely summarised here.  But, does the fact that you can measure something make it worth measuring?  Does the information you obtain from the measurement actually add to your analysis or decision making?  Unfortunately, I often find that “better” measurements don’t lead to better outcomes.

source: slideshare.com
source: slideshare.com

It has been argued that one of the most important factors in “good” management is sound judgement.  How do you measure that?

Judgement is a skill that is built up over years – to try and measure it, we would need to ascribe a value to the “inputs” and then value the “outputs”.  How exactly?  What exactly is the return on investment when we cannot realistically “value” the investment?

The judgement the football players showed the other week in the way they carried out the 1%-ers, the focus on the activities that mattered to the outcome rather than the score, helped highlight that the measurement game is a little subjective (!) and requires less quantification in some respects.  It appears to me that qualitative is far better than quantitative on the things that really matter in whatever you do.  I will take effective over efficient any day of the week, but effective is a bit more difficult to measure/quantify.

So, at the end of the day, after the rain had passed, with the sun setting and the wind cutting through me, the Coaches Box was pretty happy.  They had been effective in delivering the things that actually mattered to them playing the opposition.  They had done more 1%-ers than the other team.  And they won – by about 70 points.

I think the only time the score was mentioned was late in the final quarter – the coaches wanted the the team to get in excess of 100 points – not that they told the players that – it would have taken their focus off where it needed to be.

 

On Dying and Boxes

Everyone I know dreads annual staff appraisals – management and (especially) staff.

Source: davidsonmarbleand granite.com
Source: davidsonmarbleand granite.com

We’re just going through the process at the moment and it’s going pretty well.  Some robust discussions going on and issues raised (both ways) which have highlighted some things that I need to do to enable my crew to work more effectively and to remove some of the “speed humps” that interrupt the normal flow of things in and around the office.

On Thursday afternoon though I did realise that the most valuable thing we do with our crew is not put them into boxes.  We don’t classify them, we don’t worry too much at all about hierarchy and, where people extend themselves, we reward them on the growth an development they have demonstrated.  We challenge them and push them outside their comfort zones as it is only by doing this that we and they can fully appreciate the talents and skills that they have (Trimetrix helps in identifying these things – massively).

A fundamental part of our approach is actually to de-categorise people as much as possible.  This does present its own layer of challenges but, by allowing people to identify their preferred areas of work and the things they would like to do, we are removing the barriers that can hinder their development.  These barriers, when not addressed, develop into bigger issues which eventually become frustrations and lead to disengagement and significant negative influences on culture.

How many times have you heard people describe themselves and/or their roles as “I’m just a  …”?  This, in my opinion, is terribly sad.  The story behind this phrase is that they are unhappy and unfulfilled in their roles and would like to develop more but there are hurdles for them to overcome.  They might have tried for a number of years but, in the end, they’ve just given up.  What a waste.

The further indicator of the “… just a …” is that they have been and/or have seen themselves as being classified or placed into a particular sort of “box” within the organisation.  This smacks of the managers in an organisation not wanting to get to know their people as human beings.  They are treated as cogs in a machine that chugs along doing tasks and delivering outcomes without any great sense of purpose or meaning.  They probably do not see their contribution as being meaningful or valued.  How terribly sad.

I believe that people are inherently better than this.  I believe that, where you offer the opportunities and support for people, they can grow and excel beyond your expectations (and, more often than not, their own).  But this takes trust, courage and a willingness to be open to failure.  Things that can be an anathema to many managers and business owners!

The staff appraisal process is but one step in the development of people – feedback needs to be constant, encouragement needs to be genuine (and regular) and discussions about what, where and how your people want to go/be/become need to be the core of the communication with them about them.  In a lot of businesses that I have worked with, discussions like this happen rarely, and, in most cases, never happen.

One of the discussions we had was with Jane (our admin guru). She is an absolute star and contributes in many ways to the results the business achieves and the culture within the organisation.  We were talking about her role and where she sees it developing.  Did she want to go more down the accounting route (which she has been doing) or work back into the more admin side of things?  She wasn’t sure.  What we know is that she is incredibly capable of operating in either (or both) roles – at the end of the day, were trying to work out with her where she would ideally like to be – a spot that will allow her to use and develop her skills and give her the satisfaction that she likes (craves?).

So, after some really positive and open discussions about what was needed, where she would like to be and what was coming up that is going to require people to take ownership for some outcomes, we decided that we would make no decision. We would “suck it and see”.  In reality, we decided to make no decision as to do so would be to place  limitations and restrictions on Jane that wouldn’t be good for her and therefore, wouldn’t be good for anyone in the business.

No good squeezing someone into a box that they don’t want to be in.

And that’s when I realised: The only time you put people into boxes is when they’re dead.

On Business Growth & Chaos

It’s funny – most businesses feel like they are operating in an environment where chaos reigns.

The sad thing is, most businesses do not understand that, until you get to about 20 employees, chaos is actually a natural state of being.

Source: brucemctague.com
Source: brucemctague.com

The good news about this fact is that when you’re aware of it, you can plan for it.

James Fischer wrote “Navigating the Growth Curve” (Growth Curve Press, 2006) following his research of (then) 600 businesses that had grown and developed.  He found that there were some very common issues that those businesses faced and that, armed with this knowledge, other businesses could predict and plan for the issues that would accompany their growth.

As a consequence of his research and writing, Fischer and Laurie Taylor from FlashPoint! developed the Growth Curve program and this has been picked up and tailored for ease of use by Targeted Training International in the US.

We first came across the concept some three years ago and have now adopted the program as part of our offering to our clients.  We’ve rolled the program out to a number of our customers in the past 18 months  and the results have been sensational.

So, the chaos bit?  Well, the table below shows the findings of the five top challenges for businesses at the various stages of growth.  Some businesses will face some different challenges, however, based on the research, the following are the most common issues businesses face as they grow:

Stage 1

Stage 2 Stage 3 Stage 4

Stage 5

1-10 staff 11-19 staff 20-34 staff 35-57 staff

58-95 staff

Cashflow challenges

Cashflow challenges Improved profit design Employee turnover Improved profit design

Limited capital

Limited capital Improving staff buy-in Project management and resource co-ordination

Staff training

Chaotic periods destabilising things

Hiring quality staff Unclear values Vision for future growth (Where? How?)

Lost knowledge when employees leave

Slow getting new products/services to market

Communication gap (leaders – staff) Culture resistant to change Difficulty diagnosing the real issues impacting growth

Difficulty forecasting problems in advance

Expanding sales

Expanding sales Communication gap (leaders – staff) Slow in getting systems and procedures implemented

Expanding sales

Copyright – 2013 FlashPoint!, Origin Institute & James Fischer

When you review where your business is against the issues you’re currently trying to manage, do you find any of the issues raised above resonate?  I have yet to find a business that doesn’t identify very closely!

Source: johngattorna.com
Source: johngattorna.com

The best bit about this is though that, with the identification of the issue, there are processes and approaches specifically designed that enable you and your team to address the issue for once and for all.  It “cures” the problem and allows the operation to grow in a less chaotic and more planned and deliberate way.

The approach we use not only looks at the above (as part of the “27 Challenges”) but also addresses the style of the leader, the Non-Negotiable Rules for each stage the business passes through, the right balance of confidence and caution in the business (that bit gets REALLY interesting) and the mode of operation of the teams within the business.  In short, it brings out the “elephants in the room” and cuts them to bits so that we remove the “hidden agents” that are holding the business back.

Business is complex – the more people you have on board, the more complex it gets.  By undertaking the processes such as those outlined above, we can de-clutter the business and get it on the path you originally desired when you set it up or took it over.

It’s fun, challenging and enlightening.  It’s also incredibly valuable.

On Weightlessness

Just did a session with one of our customers and all their staff about what they need to do in their business to position it for sustainable growth.  It was terrific – they were all contributing and we generated some really valuable ideas that they can implement in their business.

Source: forwallpaper.com
Source: forwallpaper.com

At the end of the day, it was absolutely fantastic when one of the senior staff said of her feelings about the outcomes and process “I feel like a weight has been lifted off my shoulders.”

How good is that?  This business is going to outperform and grow very solidly as they have their engagement and communication issues being addressed and have committed to a process to make some minor, but important, changes to their operating structure that will get them back in line with delivering on the vision of the owner.

It is a real privilege to work with people on stuff like this.

On Bureaucratic Incompetence

The common complaint about bureaucrats is that it seems they don’t really know what goes on out here “in the real world”.

Bureaucracy

Interesting meeting with one of our customers this week. They are dealing with a bureaucracy as part of their operations and they need to work with this bureaucracy to assist their clients obtain and retain registration to operate within the particular industry.

Now, I’m not sure about you, but my (probably misplaced) belief is that bureaucracies should exist to assist the section of the broader community that they were created to serve.

How can it be then, that this bureaucracy, which regulates and approves businesses to trade has not the first clue about how the sector actually runs?

Some examples?  OK, try these on for size:

  • no understanding of the form of the contract that is standard in the industry;
  • absolutely no understanding of the way that businesses in the industry account for income, expenses, assets and liabilities;
  • a demonstrated absence of clarity about how cashflows in the industry work; and
  • adopting a “slave to the process” approach rather than looking at what is really happening – if there is a box that needs to be ticked because someone(unknown) says it needs to be ticked, then, if it cannot be ticked, they will close the business down.

From our client’s perspective, the regulator’s approach is one which is great for their business.  Lots of clients approach them for assistance in dealing with the myopia that is prevalent in the organisation that registers and re-registers the operators in that industry,  BUT, as our client indicated, the approach they are forced to deal with from “big brother” is one which wastes an incredible amount of time, resources, effort and emotional energy.  All because the bureaucrats do not understand the first thing about what they are trying to regulate.

For the sake of some education and appreciation of the peculiarities of this particular industry, the whole process could run much more smoothly and the regulator might actually be able to get on with doing their real job rather than being consumed servicing an ineffective process and creating mayhem in the process.

We all have a grizzle about dealing with bureaucrats – it’s almost a national past-time.  In this case, the grizzle is warranted as the effects of the incompetence displayed is creating a reality that is adversely impacting on a large sector of industry – and it need not be the case.

Having clarity about the industry and its processes will enable systems to be designed and implemented that actually do what they are supposed to do.  Designing and implementing systems and processes that bear no resemblance to reality just wastes everyone’s time.

Happy to speak with anyone from the Victorian Government about this.  They have created an unworkable outcome for an industry that simply doesn’t need it.

On Next Year – and a special offer

OK, we have a week to go until the end of this financial year.  How has this one gone for you?  Has it delivered what you envisaged or not?  What have you done well and what have you stuffed up?

Have you been satisfied with your progress this year or have there been things crop up that derailed you/your business on the way through?

Each July, it is worthwhile going through a process of re-aligning you and your business to ensure that you start the new year in the best mindset possible.  This can be a challenging exercise – especially if you’re brutally honest with yourself.  It does present a great opportunity for you to invest some time and clear thinking in determining the direction and focus of your business.

hopeMany businesses often fall into the “same same” trap – they keep doping what they’ve done in the hope that things get better.  As I say to our guys in here and to our customers – Hope is not a strategy.

Taking the time and making the effort will pay-off.  The plan to do this, make some decisions and get things going in the direction they need to go will help “de-shackle” the business and ensure that you are making the most of the opportunities that have presented themselves.

Given the fact that hardly any businesses have any sort of plan and, when they do, it’s stuffed in the bottom drawer until your bank wants to see it, undertaking a proper planning approach and then implementing it can give you a very powerful competitive advantage over your rivals.

We have found that our customers who develop and implement a proper plan for their business – one that reflects the vision and goals of the owners, create superb results.  They are more profitable, more effective and create far better working environments than the businesses that don’t.  The secret to this is getting your team involved in the process.

By getting your team on board in the planning and implementation, you enable them to develop a real context about the “why” of the business.  They get to understand the dreams of the owners and, on all occasions where we have seen this, they own it for themselves.  In many respects, they take on the business direction personally.  This creates an incredibly powerful culture within the organisation.

So, please think very seriously about investing the time to develop a plan and then invest the time to implement it.  Hint: make your KPI’s reflect the implementation.  If you want more information about this, please let me know.

We use the Growth Curve approach (research based) with our customers.  It’s proven, effective and exceedingly powerful.  The changes it has made to the businesses who have gone through the process are profound.

Special offer – sign up for one prior to 30 June this year (to be rolled out through next financial year) and we will attend to the implementation for you at a reduced price.  Contact us to discuss.

Planning is an essential element for any successful business.  Implementation is the key component of any plan that sets the really great businesses from their competition.

Invest the time in your business this July – you will be glad you did!

On Incentives Going the Wrong Way

Every so often in a meeting, you find out information that makes you shake your head in wonder.  I had one such meeting this morning.

Our customers have been requested to provide a price for some work to a large Australian, publicly listed company.  Great.

The issue is that the price they put in was some 55% over the price the company had received from another business.

OK, but, when you receive two prices that are aboutShort term bonusthe same from different providers and another price that is significantly lower than them (over $500,000 less), you would more than likely pause to consider whether the significantly lower price was, well, realistic.  Or whether the price was submitted to get the job in the hope that other work will crop up once the contractor is entrenched on site..

The trouble is, the managers of this publicly listed company are incentivised to under-spend their capital budgets each year – the more money they save against their budget, the bigger bonus they get.

As our customer said this morning – “they will end up with a pile of crap that won’t do the job but the manager doesn’t care as he got his bonus”.

The incentive program any business uses needs to align itself to the needs of the business and the staff but also, fundamentally, to the long term goals and strategies of the business.  Where there is no alignment, you run in to significant problems on a number of fronts.

Firstly, you want the incentive to encourage the type of behaviour you want to see.  If short term profit is the focus on the business, build your incentives around that.  However, the focus on short term profit is, to my way of thinking, myopic.  Getting a longer term strategy is far better for everyone concerned.  There are some notable people who like longer term strategies.  People like Warren Buffett.

Secondly, the incentive needs to match the motivators of the person being incentivised.  Using cash bonuses is fantastic however, the bonus can take other forms which might not cost as much but which may be far more highly valued than cash.  By aligning the bonus to what actually matters to your people you are also showing that you care for them as people rather than using a blunt force (cash) for everyone.  For example, a cash bonus is terrific but if you were to pay for a family holiday for your staff member, or give them some extra time off as a bonus (especially when they have a young family), this can have far higher value to them than anything else.

Finally, think about how you might face your shareholders/financiers where you had to explain how your business was so focused on short term thinking and behaviour that the investment decision made in plant and equipment spend was solely based on price and not quality or longevity.

They might, on hearing this information (however it is packaged) cause to question your thinking and ability to act as a custodian for their interests.  I seem to recall a similar approach was adopted by some banking institutions during the 2000’s.  That really didn’t end well.

The current business environment is very challenging for a lot of businesses.  There is a lot of competitive pressure due to a lack of consistent activity – especially in commercial construction.  This causes many businesses to try and “buy” work – price it with little or no (or, occasionally, negative) margin.  All they succeed in doing is making their exit from the market more rapid and they tend to deliver incomplete jobs as they go broke before the job is finished.

If your incentive program gives your team tacit or explicit approval to seek lower and lower prices – at any price, the quality of what you purchase will decline and will end up costing you more.

rich enough
A friend put it beautifully many years ago “I am not rich enough to buy second best”.  When you are designing and implementing your incentive program, make sure it delivers what you really want – not a facsimile of what you think you might like.