Quality management’s slow ROI

We talk about numbers, metrics, & dashboards from time to time. One of the more difficult things to measure, much less manage, is quality.

Is there a single measure?

Some might suggest Net Promoter Score as an ideal single measure. NPS ranges from -100 to 100. It represents the willingness of a company’s customers to recommend their products & services to others.

If your business makes / sells cars, what single measure indicates your overall quality? Number of recalls per model year? Number of cars returned under lemon laws? Annual average cost of warranty repairs? Repeat sales?

Quality management is difficult

What makes it so hard to manage & measure quality?

Cost: Quality management systems are expensive, at least they feel that way. If you manufacture things (including software), the investment necessary to measure & report quality can easily approach the cost of producing the product. Finding the ROI is difficult at best, while the price sticks out of your P&L like an ingrown toenail.

Time: Quality control isn’t easy, fast, or simple. Measuring & reporting quality either during or immediately after the manufacturing process is a complex, incrementally-built thing. It takes time to build. If your team’s culture is focused on speed above all else, quality management may not make your “projects to implement” list.

Quarterly expectations: Time-to-return-on-investment compounds the difficulty. Quality control feels like an expensive, plodding animal, making it easy to view as an extravagance rather than an investment.

Accountability: Quality measurement can feel like blame creation, rather than data collection. Accountability must extend beyond the head/hands of the worker to the team’s management, systems, and to the training & tools provided to that worker. Quality work is accountable by design, and rarely happens by accident. It’s resilient, running for days or weeks at a time without stopping. It’s ready for the edge cases that try to inject chaos into your customers’ world. Customers appreciate when the products they buy can take a punch.

Culture: Quality isn’t a job. It’s a value. If your team sees it as an incumbent part of their job, it will change their work, how they work, & how they think about their work. If someone doesn’t see quality as part of their job, they may need training. If training fails, they may fit in better elsewhere. People who value quality don’t want to work with those who don’t value it. Who would you rather lose?

Every job is a quality job

Years ago, a leadership instructor moped into the room after a break & started droning on in monotone. He sounded like he was having the worst day of his life. After a few minutes, he took a break. When he returned, his mood was positive & very happy to be there – despite being in the same room with the same people.

He stopped for a minute & asked if anyone wanted the old, depressing guy to return. No one did. His lesson from that little act was that “Every job is a sales job.” If you’ve ever been “greeted” by a sullen receptionist, the meaning of “every job is a sales job” is obvious.

The point? Every job is also a quality management job.

Like the sullen receptionist, it only takes one person, event or action to make us forget the good work a business has done. Similarly, when one department’s role in quality management fails, it devalues the work of the rest of the company.

Quality management systems help us monitor & correct these things before they cause reputation damage.

Forests, forest fires, and reputation

In a world dominated by short term views, quality management’s slow ROI & difficult to identify returns seem too expensive & time-consuming to invest in. Even for those who invest, a ROI search in their accounting system comes up empty.

As a result, a bad financial period makes it easy to cut what seems like an extravagance that isn’t contributing to the bottom line.

Think twice.

Quality & reputation can be both sturdy & fragile, like a forest. It takes decades to grow a healthy forest. Reputations grow similarly.

Like a random lightning strike, a carelessly discarded cigarette butt, or an abandoned campfire can destroy a decades-old forest in hours, a change in quality that goes undetected can cause reputation damage that takes months or years to recover.

Does your business have months or years of staying power? In a pinch, you can borrow to bridge a short-term cash flow gap.

You can’t borrow reputation.

Your town can fuel the rise of two pizza teams

Last time, I noted that Amazon received no HQ2 (second Amazon global headquarters location) proposals from communities in a number of rural states. At the time, I noted that the decision to pass on that opportunity was a well-considered choice.

More importantly, I asked the following question:

What would the impact be if your community had five new, active payrolls of that size five years from now? “Technology” could be software, wood products, water purification, medical research, etc.

Payrolls “of that size” refers to two pizza teams, ie: a team small enough that you can feed it with two pizzas.

I’d like to talk about what communities can do to encourage the formation of two pizza team. Every community can gain from the benefits these teams produce.

You’re not too rural for pizza

Rural communities can benefit from the kind of jobs HQ2 will bring, without bringing Amazon to town. If your community manages to do what’s necessary to help build only one new 300-400K payroll in town every year or two – the benefits are substantial.

The initial question to address is “What should communities do to create a local culture that encourages the formation of these teams?”

Your town already has an entrepreneurial petri dish, but in most cases, new business creation currently depends on:

1) the bullheaded optimism of entrepreneurs (and sometimes, their access to capital), or

2) Desperate situations demanding that the impacted family do something, anything to create an income.

In both cases, these creations tend to be tied to a short list of highly-motivated (internally or externally) individuals. Some families have always started businesses, so their kids learn to do the same. Others are forced into it. Both groups experience varying levels of success.

We want to create conditions that make your entrepreneurial petri dish a bit warmer and a bit more nutritious, making it easier to grow something in it. A stronger entrepreneurial culture is more likely to hatch a creation that can survive on its own when transplanted into the real world.

While funding is important for some businesses, most two pizza teams start off as knowledge-based businesses that don’t need large capital expenses to get started. Capital needs will likely appear during periods of fast growth.

Fuel for two pizza teams

Two pizza teams need:

  • ideas that serve a hungry market
  • people with the right skills and the spare time to devote to their “side hustle”
  • the confidence to adjust & keep trying when things aren’t going so well

Communities don’t need an inventory of unserved ideas to hand out to wanna-be entrepreneurs. Instead, create conditions that consistently produce ideas. These include Startup Weekends, makerspaces, meetups, & coworking spaces.

Almost any clean, empty warehouse / retail space will do. Dedicated, fancy areas aren’t required. Start with a library or business conference room. Meeting in a clean, safe, empty warehouse or retail space is an inexpensive way to get meeting space while raising awareness of a space looking for its next productive use.

The keys? Create a constructive environment for discussion, formation, & execution of ideas – and get the right mix of people there.

How can community leaders help?

Every community has people with the skills to create a side hustle. What they often lack is experience, confidence, a group to brainstorm with and to ask “Does this make any sense at all?”.

What encourages people to have the confidence to suffer through the rough times? Experience. Mentors. Sounding boards. A community of business owners / side-hustlers who are going through & have gone through that bramble of thorns and roses.

Community leaders can leverage their connections to experienced business owners / managers & local angel groups to get them involved and gain access to meeting space. Like-minded people with the right skills & spare time meet each other at these gatherings. When experienced business owners add their voice, their insight & mentoring builds confidence in those trying to figure it all out.

The confidence part is important. When a small group of people is dedicated to turning an idea into a side hustle & then a payroll, they need the self assurance to weather whatever storms come over the ridge. They need know that it’s OK to pivot (ie: adjust their business and business model to reality) rather than quit.

Every community has a meeting space, experienced business people & folks looking to start a business who need advice & critical mass. Get them together.

Photo by cote

The ingredients of effective criticism

Today we’re going to use a common political event (and some football) to discuss the effective delivery of criticism.

Recently a new candidate joined a local political race. The new candidate’s campaign has spent plenty of time pointing out things that are broke, need attention, or didn’t go well. That doesn’t mean the candidate has nothing to say, nor that they have nothing valuable to add to the conversation about how their community is run. Even so, this “list” dominates their campaign while offering no specifics about their qualifications for office.

Criticism is not a qualifying skill

We all have the right to bring attention to things that aren’t working or need improvement. Even so, the ability to identify problems doesn’t qualify us to run the organization exhibiting those problems.

For example, my alma mater is (putting it politely) having a rough decade on the football field. It’s easy to note my team’s problems (or at least the symptoms), including their consistent inability to win a game after trailing at the half. When this doesn’t happen for six years, it stands out.

The ability to identify the team’s problems doesn’t qualify me to run a NCAA football program. That’s why I didn’t offer a solution. I might have theories, but management expertise doesn’t make you a coach.

The same kind of expectations exist for that political office. It’s real work. The ability to criticize isn’t enough. The job requires related experience.

If you want a job that requires leading the management of a $25 million budget, people expect that you’d have a fair amount of experience successfully managing a budget of at least low seven figures. Criticizing your opponent’s handling of the budget is fair game. Likewise, so is the public’s desire to hear about your experience and specifics about what you’d do differently and why.

If you want a job that requires leading the management of a team of ~900 employees, you should have experience successfully leading the management of a team of 100 or more. Tell us about your management successes, what you learned from your management struggles, and specifically how you’d make things better. Don’t think we won’t be taking notes and coming back to them to remind you of your suggestions if you win.

Criticism in the workplace has similar demands. If you provide context and propose specific solutions, great. If you’re simply complaining – does that help you, the company, or your target?

Embarrassing people isn’t criticism. It’s ego.

While I frequently discuss inept, unfortunate, or unproductive business behaviors I’ve experienced, I avoid mentioning the business. Why? Embarrassing an employee or business owner serves no purpose. It doesn’t improve the lesson / advice. It doesn’t positively serve the reader, or the business. It’s the kind of criticism that accomplishes nothing.

I prefer to shine a light on things a business can improve how they serve their customers. In turn, this gives the business a better chance of not just surviving – but thriving. It should also build job security for their team, and help the owner’s family benefit from the risk they took wh en opening a business.

To make your team’s feedback loop more valuable, teach them how to deliver effective criticism.

Criticism delivery determines the response

Whether running for office, grumbling about your team, or criticizing how you were treated in a local business, how you deliver that criticism says more about you than it does the recipient. It also plays a substantial part in how your criticism is received and the response you receive.

Criticism is not a bad thing. We all need it. It serves the recipient, not the one delivering it. Much of the criticism people given these days serves only the ego of the person doling it out – and does nothing for the person receiving it.

Ego-driven criticism looks like this: “(business / org / person) is terrible at (whatever). Fire them.

Effective criticism is intended and designed to help those receiving it, rather than drawing attention to the provider.

When delivering criticism, include specifics and where possible, suggestions for improvement. Describe the problem behavior / activity / outcome. Compare it to the desired behavior / activity / outcome. Discuss solutions. Ask how you can help. The outcome is usually what needs to be fixed, not the person.

Think about the best criticism you’ve received. What made it so valuable? Consider that when criticizing the work of others. You’re giving them a gift.

Photo by AutrementDit Toronto.

Discarding clients & the math of job security

How often are you discarding clients? When fussy, needy, and/or high-maintenance clients complain repeatedly, there’s significant temptation to simply toss them out with the garbage. Some business owners build “filters” into their marketing designed to repel such clients.

When an existing client provokes thoughts of “Life’s too short to deal with this“, who fires them? How is the decision reached? Is the process documented? How is the decision communicated to the client and to your team?

Hammers, nails & curmudgeons

I asked some friends how they describe people they’d fire as clients. Their responses included unreasonable, unrealistic, frustrated, afraid, disgruntled, troublesome, pedantic, rebarbative, cranky pants, curmudgeon, etc.

Are you teaching your team that getting rid of imperfect clients is the only acceptable solution? Owners know there are situations that don’t merit dropping a client. Owners discard clients based on their experience. Does your team have that experience to back up their decisions? Take care that your team doesn’t use this tactic like a hammer while seeing every complaining customer as a nail.

It’s essential to be careful using “You’re fired!” as too-frequent use can damage your reputation. Businesses learn to detect bad apples and few are surprised when these clients get fired. Taken too far, your business can get a reputation for arrogance. People will think you discard clients the first time there’s an objection or even a question. You don’t want your reputation to be “At the first hint of a problem or even a question, they tell people to leave and not come back.” Some prospects will hear that and decide not to show up.

The math of discarding clients

Discarding clients sometimes feels as easy as pulling a splinter. The pain and aggravation fades quickly, making you wonder why you ever tolerated them. Even so, every choice to discard a client impacts your bottom line. While getting rid of high-maintenance “time vampires” will probably improve your bottom line, you have to be careful not to let your team believe that’s the only solution available. That’s where the math kicks in.

If your team gets rid of one customer a month, what does that mean to your bottom line? You likely know the typical customer’s lifetime customer value (LCV). Owners usually know how often the typical customer buys from them. They also typically know how much customers spend on average per transaction. Combined with the rate at which you are adding new customers, you can determine what an improper “firing” costs you and how long it takes to recover from it.

Uninformed profitability math

Employees don’t usually know the financial impact of discarding clients. When you explain the financials of your business to your team, it helps them understand why you think the way you do. Tools like “The Great Game of Business” (start with the book) help employees understand how the business works financially (free resources) vs. how they think it works.

Learning how the business works from a financial perspective encourages employees think more like owners. It can alter “I’m working my tail off for $15 an hour while the owner gets rich.” to something closer to reality. Even if the owner IS getting rich due in part to the risks they took & the investments they made, “uninformed profitability math” isn’t healthy. This “uninformed profitability math” rarely create behaviors that are positive for the business.

Many employees have never had the opportunity to see how their work (and how they work) impacts company financials. Meanwhile, business owners regularly complain how their people don’t think like owners. Part of that thought process is understanding the financial impact of events that occur in the business each day. Knowing that what your work does for the bottom line carries substantial value.

A “We’re having a good (or bad) month” message to employees is rarely accompanied by data explaining why. Understanding what good and bad month means affects the security a team member feels about their job. This impacts their confidence in their ability to provide for their family – and certainly affects job performance and attitude.

What does “we’re having a good/bad month” mean at your business? What message does it send to your team?

Photo by Shinichi Haramizu

Training: One cure for sales problems

When having a conversation about sales problems, I might remind you about the folly of only taking cash (depending on the type of business). I might also remind you to eliminate the tedious & annoying out of your buying process. There are cases where that’s useful, but mostly – it isn’t. But not today. Today, I’d like to remind you of the value of training your sales team.

You’ve got questions

Heard of Quora.com? Quora is a website where you can ask questions. Many times, you’d never have access to those who answer: world-class subject matter experts. If you asked an airplane question, you might hear from an engineer who helped design it & three commercial pilots who fly it.

Why Quora? Because I found a Quora question pertinent to this discussion: “What can businesses learn from the military?” It reminds me of the not well informed “Why don’t non-profits run like a business?” question, but this is a much better question.

A Marine named Jon Davis who deployed to Iraq & Afghanistan answered: “Training”.  His answer breaks down like this: 1) A detailed process to track progress. 2) Regular job specific training. 3) An annual schedule to ensure standards are met. 4) Find & reward teachers. 5) Ignore the “training them to leave” myth. 6) Discipline.

If those six items are checkboxes – can you check any of them?

I’ve recently met several folks who work in the car business. The one I wrote about last week is the only one I’ve encountered recently who knew the product well. I don’t mean he could wake him in the middle of the night & tell me (blindfolded) how to change a timing belt. I mean he didn’t have to run to the showroom to find out the horsepower for a vehicle whose manufacturer makes cars with only two engine choices across the entire product line. Yes, it happened.

This isn’t a sales team failure. It’s a management failure. Are you preparing your salespeople to succeed? Product knowledge isn’t what sells cars. Rapport is. Guiding me to a “special value” (car that’s been on the lot too long) because it pays more than a mini (minimum commission) doesn’t build rapport.

A question about the value of rapport: What’s worth more to you, getting that “special value” off the lot, or creating a relationship that provokes me to return every x years to buy only from you for the rest of my vehicle buying days, while also encouraging my friends to do so? You decide.

Sometimes product knowledge is critical: “Can you help me find a good red wine?” The salesperson who knows less about your product than most prospects will struggle – & reflect poorly on your business. You need someone who understands the problems your prospects want to solve & how your solutions address them.

Don’t have a sales team? Still affects you.

One of the best parts of the answer Jon gives relates to on-boarding. He describes how the military trains recruits and leads them. He then compares that to the training that most businesses provide: haphazardly, if at all, and with little ongoing mentoring –  which unfortunately matches my observations over time.

You probably hire experienced people so they’ll step in & become effective quickly. Do they do it the way you want it done? Did they learn a completely different way of doing what you do? What if you don’t want them to do it that way? How will they learn your proprietary way of doing things?

Don’t assume an experienced new hire has mastered the systems, machinery, methods, and processes your business uses to succeed. Learn from their experience, but train / mentor them.

No matter what, the last thing you ought to be doing is turning them loose on your customers, prospects, products, and services and simply assuming that everything’s going to work out. Maybe it will. They might survive, or get by, or be good enough. Did you exert all that effort to find just the right person only to toss them to the lions with the expectation that they’d get by?

How much does it cost each time you have to replace a poorly trained salesperson who failed? How much does it cost to keep someone who isn’t as effective as they could be because they had to learn your ways by the seat of their pants?

Photo by formatc1

Sustainable revenue demands leadership

Recently, an employee of a tool company publicly commented (in a snarky way) about another vendor in their market. The target of his remarks isn’t a competitor. They create tools which complement what’s created by tools sold by the company that the snarky guy works for. Do employees who publicly snark about a vendor (or a client) think about the outcome of a vendor conflict that escalates badly? Perhaps. Let’s take a look at what’s at stake. The situation speaks to the leadership you provide to your people, even at a small company, and how it affects the sustainability of your company, and possibly that of your market.

What does sustainable company really mean?

We talk about sustainable companies and how culture, hiring, marketing, product, service, and leadership all contribute to create a company that lasts a very long time. Let’s tear this down into the pieces you and I can directly relate to. We’ll do it in the context of the two companies I’m referring to, but keep in mind that these things affect every company – including yours.

Many millions of dollars (and other currencies) are made each year from work created by the tools sold by the company that snarky guy works for. The company is rather small and one might think they’re insignificant in the big picture when compared to the big vendors who own that market internationally. You might think the same thing about your business. Don’t. When you look at regularly performed analyses of tool usage worldwide, the snarky guy’s company rarely appears on the list. In the rare occasions when it does appear on such lists, it’s in the second 50 or second hundred. In this market (perhaps like yours), it may seem insignificant. As such, why should we care what one employee said in public, right?

The leadership of that “insignificant” company should care. As should you when your people speak.

The math of an “insignificant” company

While there may “only” be 5000 to 10000 people worldwide who own tools made by snarky guy’s company, a portion of them are generating a good income – good enough to support their families for decades in some cases. This is not “random math”. I know a fair number of these folks. Many have employees. A few have 50 or more employees in the U.S. and/or scattered around the globe, and/or their products are a critical tools for companies with many employees.

When you take that community as a whole, we’re conservatively talking about between 100,000 and 200,000 people affected by the income generated via products created by these tools. Included in that figure are employees, customers, family members of the vendors, client companies, and other groups directly affected by that income. Expand that to the users of the products created by these people by adding those who make a living from the products. Add those making a living where these products are a critical tool in their work day. Now add their employees and families. Add the vendors all of these companies and families buy from. While this tool isn’t a global leader (and that’s OK), it still creates a significant amount of impact. For those who keep the lights on and their kids fed based on income rooted in those tools or businesses run by products created with those tools, it’s quite personal.

I suspect the 100,000 to 200,000 figure is quite low, even though it’s the estimated cumulative impact of one small tool maker who rarely (if ever) shows up on the radar of their industry. Small, much like the impact from any number of small businesses in your town. Including yours, perhaps.

So how does leadership affect sustainability?

The impact of even the smallest of companies must be taken seriously. Your company may seem insignificant compared to large multi-nationals, but the sustainability and leadership of your company has real impact. It affects homes, cars, kids, retirements, groceries, utility bills, and college plans for more families than you may have considered. Your team’s behavior follows the leadership example you set, which reflects upon your community, your company and you. Counsel your people about speaking about your company, your clients, your competitors, and those you collaborate with even in the smallest of ways. The smallest of things start a forest fire. When they do, everyone gets burned. Photo by Payton Chung

They don’t want to work & they don’t care like I do

Human resources. Human capital. Two terms that I really don’t care much for (especially the latter one), yet they attempt to describe what is usually the most important part of your business: employees.

You might think your customers / clients are the most important part of your business, but without good employees who want to take care of your clients, one of two things happens: Either you won’t have any clients or you’ll be doing all the work yourself – which sounds more like a job than it does a business. Two complaints I hear most often: “They don’t want to work” and “They don’t care like I do“.

They don’t want to work

If you have people working for you who don’t want to work, it’s not their fault. It is your company’s fault because the company hired them.

They may be lazy. You may be exactly right about why they are lazy, but it doesn’t matter. The fact that they are lazy and the reason(s) for that laziness are irrelevant. It’s relevant that the company hired them before figuring out they were lazy. Your job as the hiring manager is to find a way to figure out who is lazy (etc) and be sure not to hire them.

Repeatedly complaining (for example) that “all millennials are lazy and don’t want to work” is not only incorrect, but a waste of time. If the millennials your company hired don’t want to work, blame the broken process used to hire them. If three of every 100 applicants show the right stuff, then make sure your process finds the three.

Hiring people is easier if you put a process in place that makes it all but impossible for someone to join your team when they have the attributes of someone who can’t be successful at your place. This process doesn’t come in a box from Amazon. You can’t simply open the box and plug it in. It requires ongoing attention. It’s work. It takes time. It isn’t easy. The process needs to involve the people a prospective employee will work with, and those they will work for.

There are people who shouldn’t work at your place with your people. Your job is to eliminate them before you hire them. To eliminate each attribute that you don’t want working at your business, you add steps to the process that identify those attributes. “Drama queen” is a one of the attributes I eliminate, noting that these folks are both male and female.

Do you want to hire passive aggressive jerks who will tick off your customers? If not, your hiring process needs a way to filter out those people. Sometimes, it isn’t easy, but if you wanted “easy”, you shouldn’t have started / bought a business.

Attributes like lazy, passive aggressive, or any other that cause you to wish you’d never hired someone are no different than “must be able to lift 70 pounds”. They are a minimum qualification for employment. It isn’t the job prospect’s responsibility to apply only for jobs that they are ideal for. That might be nice, but isn’t realistic. It’s your job to sort them.

They don’t care like I do

Of course they don’t. Remember, they aren’t owners, so it will be rare that they will care like you do. They don’t have as much at risk as the owner and they sure don’t have as much potential upside as the owner.

Expecting someone to act like an owner at $10 an hour is silly. Training them to think like an owner and then giving them more responsibility (and more cash) when they act that way is a whole different thing. Some will still work hard, but won’t think like an owner. Some will work hard and think like an owner once they are trained and learn that there are things to be gained by doing so.

A rare few will act like an owner, at least to the extent they can. “These people” will start caring when they figure out that you do. That starts at the hiring time. If you find a way to stop adding lazy, crazy, and dazed to their department, they will notice. If you ask them for referrals, they won’t suggest you hire their dodgy, lazy friends. It simply makes more work for them. Instead, you’ll get the friends they trust to do their part.

Photo by jonny goldstein

Listen to clients. They say the darndest things.

I love polarized lenses. Sunlight reflected off snow or water is brutal on my eyes. Polarized prescription shades make it all better. They aren’t inexpensive, yet the payoff in improved vision and eye strain is huge. These special lenses help me see things in a way I can’t otherwise experience. Taken further, consider the special lenses available for folks with color blindness. Many YouTube videos show a thrilled & tearful reaction to wearing these lenses for the first time.

You need special business lenses for the same reason.

A special lens filters out glare, distractions and visual “noise” while making it easier to see what’s not normally apparent. This is why  I repeatedly suggest the use of dashboards. Trends and intermediate figures stick out on a dashboard. They don’t typically become apparent (or appear at all) on an income statement – or they’re buried in other numbers.

One of the best lenses for viewing your business is the lens your clients see through. You might see things that you might not normally value – at least not how your client values them.

New clients vs. long-term clients

One area where it’s easy to miss this data is in the difference between your newest clients and the ones you’ve had forever. I visited a long-term client a while back. When I asked “Where do you the value in what we do for you?”, they mostly talked about how (and why) the relationship started. Eventually, the discussion turned to the feeling that they felt protected and that we had their best interests at heart, even after all these years.

I felt like I wasn’t getting “the dirt”, so I asked what makes our stuff critical to them day-to-day. What affected them more than anything was being on time, every day. Not 15 minutes late. On-time meant six figures of difference in their daily cash flow.

While new clients may have bought your stuff because of the latest, greatest thing you’ve done, not everyone fits that mold. Long-term clients may not need the newest stuff you’ve done because whatever you do inherently has more impact on their business day-in and day-out.

The new stuff we’d done was designed to deal with issues that didn’t exist when we first started working together. Even so, those issues paled in comparison to the impact of not being on time. Anything that can affect a company’s cash flow by six figures each day is pretty important (British understatement). It might allow them to avoid hitting a line of credit that week, or even having to have that line of credit. It might be what allows them to take that “month off” each year that many lines of credit require.

Ask openly

When you listen to clients, you have to be careful what you ask, and how. I don’t know if I would have heard about the daily cash flow impact if I had asked about a particular feature, service or product.

Instead, I simply asked them to tell me how (and why) they felt they benefited from continuing to do business after all this time. You could drive an airport snowplow through the opening I provided. Not only did that allow them to tell me about something super critical, but to do so outside of the product / service context.

Cash flow has nothing to do with what’s sold to them, at least not directly (as I learned). What it clarified was that a slower than normal response from customer service could cost them $100K+ that day. To some clients, that hour isn’t important. Getting a quick response at a certain time of day was huge to these folks. Setting up with a special rapid response service would likely benefit them greatly multiple times per year.

Listen to clients without an agenda

While your clients may not have that kind of time-bound value tied to certain hours of the day, there are things to learn from asking open-ended questions that don’t necessarily point at product / service topics – and then listening intently to what they say.

When you listen to clients openly and without an agenda, the value of what you learn can be huge. Questions intent on confirming what we think we already know serve no one. Instead, ask better questions.

Photo by mattlucht

The Value of Trust

In personal relationships, trust is something we generally have a handle on. We know whether or not to trust a family member or friend (and how much) based on their behavior over time. In a business environment, things may not be that simple. Think about it… If you have employees, do you trust them? If you have people working under contract, do you trust them? If you work for someone else, whether you’re considered an employee, team member, associate, or staff member, do you feel as if the business owner (or your manager) trusts you? Likewise, if you’re an employee or working under contract, do you trust your manager / the business owner?

Brick by brick, we build trust over time, yet it can be lost in an instant. What creates that trust? Your pile of bricks grows as time passes based on your consistency, dependability and/or responsiveness. And what else?

What owners need to trust a team member

What do owners see in team members that provides the faith to trust them? Owners like to know you have their back. They’d like every employee to behave and think like an owner at some level. Note that I said BEHAVE and THINK like an owner.

The best employees think like an owner, even if their responsibility is limited to coffee machines, ice machines, and floors in your building. When you think like an owner, you want the machines to be cleaned and disinfected regularly so no one gets sick, even if they don’t get sick enough to take time off. Clean, puddle-free floors are safer than cluttered floors that occasionally have puddles like the one that your peer slipped and cracked their elbow on.

When you behave like an owner, you don’t walk past that puddle because you aren’t the one in charge of the floors. You mop it up before someone gets hurt.

What team members need to trust a business owner

Some owners work 80 hours a week. When owners think “behaving like an owner” means their employees should also work 80 hours a week, they aren’t really looking for people to behave like an owner.

Owners: What trust doesn’t mean

If you are thinking “I can’t trust my employees because…”

  • they don’t work as hard as I do.
  • they don’t think like an owner.
  • they don’t take ownership of their work.
  • I have to monitor everything they do.

Ask yourself if you worked as hard as the owner did in your last job. Rather than expecting them to be as vested as you (assuming you have everything on the line and everything to gain), consider your last gig as an employee. How’d you feel about it? What’d you like? What’d you dislike? Did you trust the owner? Did the owner train you to think like they did?

If your people don’t take ownership, do you encourage them to take responsibility and own their work? More importantly, do you reward them based on those actions? Do you “over-manage” them? Some might call it micro-management, but over-manage might be more descriptive.

MBWA (management by wandering around) isn’t micro-management. Training isn’t micro-management. Good hiring, middle managers, documented work processes and management systems take the place your innate need to “monitor everything they do”. It’s an adjustment as your company outgrows you – which it should do. Employees expect owners to focus on strategic work that prepares the company for its next challenge(r), not over-managing.

Employees: What trust doesn’t mean

If you are thinking “The owner doesn’t trust us because…”

  • they installed a security system, digital access keypads for some areas, etc.
  • they installed security cameras.
  • they ask us to have a peer confirm bank deposit before we head out the door with the bank bag.
  • they ask us to have a peer double check the shipping list before we close a box going out to our largest commercial customer.

… you aren’t thinking like an owner.

When you complain about these things, it sounds like you aren’t interested in protecting the company’s assets or reducing the company’s risk. The value of double checking deposits or shipments to an important customer is obvious. Mistakes happen. Security systems limit access to assets by those with no business need to access them. Increased risk increases costs. These systems impact insurance costs & provide evidence gathering capability that protects good employees from bad ones.

When a family member threatens their ex who works with you, your spouse or your kid, it’s the owner who worries about whether or not it’s safe to allow people to come to work. Before you doubt that, bear in mind that I’ve lived that situation and had those thoughts. You can’t install security cameras and harden your business overnight. You have to be “a bit more ready” when you can afford to be.

Put yourself in the other person’s place, no matter what your role.

Being prepared for employee turnover

There’s an old saying that you’ve probably heard about employee training. “What if I pay to train these people and they leave?”, the short-sighted one asks. “What if you don’t train them and they stay?”, responds the sage. One of the most expensive activities your business can experience is employee turnover. When employees leave, a piece of the company leaves with them. Their knowledge of work processes, clientele, things they do without thinking due to “muscle memory” and so on. Then there is the act of replacing them.

Hire too fast and you risk getting a culture mismatch, someone with the wrong work habits and/or someone who can’t step into the role and be reasonably productive. Sometimes you might feel “forced” to hire solely based on culture fit, which means you’ll have to give them time to grow into the job. Even when you find an experienced person who can step into the role, the expense is substantial. While working that process, there’s work that isn’t getting done, isn’t getting done as well or as quickly, or it’s getting done by someone who is already doing their fair share. The process of properly finding, vetting and eventually hiring a replacement for a lost team member is expensive when done right. When done wrong, the cost can skyrocket.

Sometimes, a place is so toxic for one reason or another that it is literally a revolving door. A couple of years ago, I visited a logistics warehouse that was losing 100% of their workforce every 30 days. Read that again and consider how a situation like that would impact a business. They weren’t losing the warehouse managers, but they were having to replace the entire staff every 30 days for positions actually doing the “real work” in this warehouse – that is, moving pallets around, driving fork lifts, dealing with the related paperwork and trucks. None of the people there on June 1st were there on May 1st. It was impressive that they managed to keep the place operating at all, particularly without sharply increased injuries. The investment in interviewing, on-boarding and training time had to be unbelievable.

Imagine being in that situation. It’s difficult to process the pain this would cause simply dealing with it one time, much less having to deal with it month after month.

Being realistic

While that warehouse was a real situation, it’s not normal. The turnover you experience is troubling enough. You hate to see it happen, even if you’re happy for the opportunity your quality people found. Even so, they were accomplishing something at your business, leaving you with a hole to fill. Do you really know everything they do? Do your people really realize everything they do? In some roles, it isn’t unusual to find work that gets done intermittently that can be forgotten. What work at your business is undocumented?

Even if someone doesn’t leave, they might get sick for a week. They might have to travel out of the country for two weeks. They might go fishing in the backcountry and spend a week in places with no cell coverage. How will your business survive that week? In my experience, a company can easily take a punch that only affects them for a week. Where you get into trouble is losing someone permanently, or even for a month. A parent gets sick, or someone has to have a knee replacement. If this happened to someone at your place, how would it affect production? Day to day operations? Management? If you had to replace your administrative person (assuming you have only one) for a month, would the replacement be able to step in and find documented processes and a list of all the things that must be done each week of the month?

Now extend that to your highly skilled people. Is their work documented? I know, I know. It seems like busy work… until you lose one of them. Or two. Or three. The timing of these things never seems to be kind even when it isn’t malevolent.

Extend that thought to your key employees.

Finally, there’s you. What doesn’t happen if you disappear for a month? Who makes sure people get paid? Who can sign checks and manage company funds? What else doesn’t happen? You get the idea.

Being prepared for employee turnover isn’t solely about being ready to deal with losing employees. It’s about building resilience for the situations that life brings.

Photo by stu_spivack