What If We Don't?

Today, I would like to expand upon an article I received from TEC, The Executive Council, regarding spending money on our people during the down economy. George Buckley, CEO of 3M, was asked if he really should be spending money on training & leadership development. He was specifically asked, what if these people leave the company? He answered, what if we don't & they stay?

It's no mistake he's one of the most influential leaders we have now. The good ones know that they can take advantage of their competitors' fears and make substantial gains BY INVESTING IN THE RIGHT THINGS. People are our most valuable resource, why not excel by using the additional time we have now to invest in them?

I have spoken & written on this until even I am tired of it! So here's a bit more inspiration.

We must continue to develop our bench strength, our future leadership, even when we're cutting jobs. Wow! Talk about counter intuitive, but right on. We must watch cash, & differentiate from our competitors, but our future depends on our leadership.

This develops trust, continuity, and self-confidence; these are all qualities critical to leadership in turn improving and developing our people.

It's not what if they do, it's what if we don't?

Subjective Dynamics of Family-Owned Businesses

When I begin work with many companies whose owners are the family, I am often presented with a fair amount of data relating to the area(s) they want "fixed". This is very helpful, from a distance, in identifying causal factors that limit or diminish performance, or show lost opportunities.

At the same time, Family-Owned businesses are different. The family unit, regardless of whether they own a business or not, is a more emotional entity than a corporate organization. Accordingly, more subjectivity like concern for parents, siblings, or nieces & nephews might, though not always, enter into decisions.

Today, in this article, we'll look at how family-owned businesses do differ, and how some of the subjective things can influence results. As I've said many times before, HOW your employees or the ownership sees & does things can assist or hinder performance. By understanding some common challenges that often arise, steps can be easily taken to mitigate problems and restore performance to the level desired.

Typical questions to consider:

1) Do your employees understand that family-owned businesses differ from others? The ownership, whether it be mom & dad, the family collectively, or second & third generation, may have certain family goals, which is their prerogative. These might include things like, providing job opportunities, training & development of the children, grooming members for top management, or mom & dad's cash out & retirement. If this is not understood and presented in a positive way, resentment can build, taking away from performance.

2) Are Family-owned policy & procedures explained & documented ? In your corporate manual, there should be a "Family-owned" section outlining, for example, how hiring decisions will be made when a family member is involved, how the decision will be made when employees are competing with a family member for a promotion, or how family members are to be compensated.

The key here is to have it out there for everyone to see. I like this because, if it can't stand the test of being out in the open, maybe it should be re-considered. And if it is published, then the employees should support it; if not, it is their prerogative to leave the company. Lou Gentine & Sargento do a magnificent job of this.

3) Is company morale affected by the actions of the ownership within the company, or among the owners themselves? This is critical. Everyone, owners & employees alike must understand the difference between ownership & management. Oftentimes I see, especially in the second generation, a passion to perform, to excel, and even to please mom & dad. This can result in the children, with good intentions, interfering with day to day operations, and other managers by going directly to them. If the reporting structure is violated, confusion, stress, and resentment can build.

Another detrimental dynamic found in some instances is sibling rivalry. Whether it's one child wanting to get promoted first, or second guessing each other, this can be really damaging. With clear identification of rules, conduct, and structure, this can be kept to the boardroom where it belongs. And then, it must be discussed in a professional & caringly manner to avoid the inevitable notice of the employees, and the hurt that can potentially be brought to the family.

The Biggest Lesson in Worzalla's Turnaround

Charlie Nason, the President of Worzalla Publishing, is a good friend of mine that I saw last week at the Lindenmeyr Paper Annual Outing. Knowing that over the past few years, Worzalla has fashioned an incredible evolution recovering from significant erosion from China, I asked Charlie to share with me how it was accomplished. He said it would be difficult to say in a few words, but that he would e-mail me, which he did the following day.

He outlined three things: 1) Willingness to Diversify 2) Right-Sizing the Operation 3) Effective Communication These in themselves should not be surprising to many of us, especially those that read the Harvard Business Review. However, I happen to know a good deal about Worzalla & Charlie, and I think there is an incredible HOW here that Charlie is too modest to tout.

First, the background: Worzalla is 100% employee owned and has been that way for some time. Charlie realizes that he only is President for as long as the employee owners choose to have him. Accordingly, and because Charlie is naturally a person who sincerely cares about his people, he has stayed close to them.

When China began to negatively impact the U.S. print industry, he went on an extended trip to learn everything he could. Upon his return, he was very vocal in his concern for American Industry, and his people. When their erosion in 4 color book printing declined drastically as a result, the first place he went was to his people. Because of his relationship with them, he chose to trust them to be part of the solution.

So yes, they rid themselves of 4 sheet fed 4 color presses & replaced them with 2 new presses and increased capacity by 23%. HOW they did this was to work together with each other to involve everybody in the solution. What this did was to achieve incredible buy-in due to the complete understanding of the situation and their response. When folks understand and are treated as equals, they will do most anything to achieve a goal.

And yes again, they did reduce staffing from as many as 625 to 360 full time ESOP employees. Even though their sales dropped from $61 million to $44 million, it then recovered to $65 million, all with just the 360 employees! You you can just imagine how much more profitable they are.

And finally, yes once more, it was the communication that did it. They not only kept everyone a part of the solution, but they updated them regularly on progress. They close their plant once every quarter to have an employee meeting where their sales activity and financials are shared. Equipment acquisitions, training, and manning issues are also reviewed. Questions can be submitted ahead, and answered in front of everyone.

To sum it all up, Charlie stated, "If your people know where you are going, (and are part of the effort) it makes it easier for them to step up and follow!"

Thanks Charlie for the information and data, but as Paul Harvey used to say, "Now you know the REST of the story"

Accountability - an All Too Rare Gem

Today I had the good fortune to pick up an article written by a man I've quoted before, Ian Cook, of Vistage. He has previously had much to say about managing through our economic crisis. In today's article, he focused on accountability, and here, I will build on what he wrote, using my words.

What I liked most was that he advocates FOSTERING accountability, not FORCING it. To facilitate is not to demand, but rather expect. To lead is to place the responsibility within your people, not allowing them to shift it to you, or taking it from them when things go bad.

He advocates building clear goals with lots of latitude around HOW to achieve them; he tells them WHAT must be done, and then expects them to accomplish it their way. By letting go with the how, he allows them to learn and grow stronger.

Ian states that we must resist the temptation to jump in when they're struggling and solve the problem for them. Yes we might decide to help them, but then we should step back again and allow them to continue the attempt.

Along the way, we need to stay in touch, but only with the big picture; allow them to work on the details; remember, the devil is in them!

Also, remember to acknowledge their progress, especially when they take on more responsibility. Encourage them not to be afraid to fail; failing is only a temporary state. Failing is often the fastest way to learn. We consistently need to reinforce positive behavior.

In summary, don't tell your staff the detailed what to do, but rather the overall goal, then let them work together (teams are great with effective leadership) to get the results. Celebrate when they do; you'll be not only growing in responsibility, but growing your people and bench strength.

The bottom line is that accountability need not be an unpleasant task. Instead, make it a productive one.

How to Manage in Times of Crisis Part 3

This article resumes with quotes from Ichak Adzies new book. He continues on with integration issues for the organization.

What does not kill you makes you stronger. Act. A crisis is your time to show your true colors as a leader. Look inside, because that's where the solution is. You cannot control the outside, but you can control the inside.

You believe the danger is that while you manage the long term solution, you'll go bankrupt. So what do you do? You must manage on multiple fronts - cash and systemic integration. And preserve your strengths.

Be cautious about firing people. Get rid of the non-producers, but you should have done that long ago. Why does it take a crisis to make you do the cleaning up? If you are 20lbs overweight, do you cut off a foot? Now your weight is fine, but you don't have a foot. In tough times, what do you do personally? Throw one of the kids out on the street so others can eat?

It doesn't make sense to cut critical people. Cut fat, not muscle. How much will it take to re-place, re-hire, & re-train good people later on. Conserve your assets so when the upturn occurs, you are ready to roar again. Alternatives are to have everyone work fewer hours, or challenge your folks, with their additional time available, to come up with innovations and efficiencies. In so doing, you will also preserve the culture of mutual trust & respect you have built with human resources.

Every organization needs to align 4 sub-systems: 1) Your purpose 2)Responsibilities 3) Structure of authority 4) Reinforcing behavior. Tell everyone you want to hire, this is our value system; if you don't share these values, don't work for us.

Be careful with authority. As the company grows bigger & bigger, the founder can't make every single decision, so he delegates. First he delegates the right to say "no", but keeps the right to say "yes". Layers of "no-sayers" develop, & bureaucracy results. You have to pass the problem and its solution up to where there is authority to say both yes & no.

We'll end the review here. It is my fervent hope that you have gained as much from these insights as I have. Please do yourself a favor and buy the book!

How to Manage in Times of Crisis - Part 2

This is a continuation of the previous article with quotes from Ichak Adizes. He continues on with why change causes problems.

Everything, your company & even you as a person, is a system, and sub-systems comprise it. When there is change, sub-systems do not change at the same rate; therefore gaps are created. Gaps create problems, because there is misalignment. If you are age 47, but 17 years emotionally, 30 years spiritually & 70 years intellectually, these conflict. Similarly, with your company, perhaps sales changes direction very fast, but accounting is much slower, and H/R may hardly exist. Problems; disjointing/disintegration happens.

The faster the company grows, the less information top management has. With incomplete or inaccurate information, management may make flawed decisions. Meanwhile, H/R is hiring tomorrow the people needed yesterday; the company's sub-systems are operating at different speeds. Problems turn to crisis.

More innovations were made in the 20th century than cumulatively in the history of civilization.

If change causes disintegration, and disintegration causes problems, what is the solution? Integration. And the most effective way is to integrate proactively, not reactively.

THOSE WHO FREEZE, DO NOTHING, & ALLOW THE CRISIS TO TAKE OVER THE ORGANIZATION, CAUSE ITS DEMISE. Worse, they may disguise the problems with actions that make the organization look good only delay the inevitable crisis. Some organizations do nothing because they are waiting for the storm to pass. WRONG.

Success is not about how rarely you fall down, it's about how quickly you get up.

I am not smarter than anyone else; I just identify my mistakes faster and correct them faster.

In a badly managed company, people do not trust one another; it is easier to attack each other than the competition. What happens? The enemy has a better opportunity to kill us all. So, in times of crisis, more than anytime else, trust is critical.

If you're falling apart, how can you take care of others? Take care of yourself. Keep together by 1) Slow down, meditate or pray. 2) Keep your family together, give hope. 3) Call your friends; help them & ask for their help. 4) Address the fears your employees have; be honest. 5) Call your clients; help them. Remember, if your clients go bankrupt, so will you.

How to Manage in Times of Crisis

I continue with my theme for May, reviewing business articles and books. Small, but power packed, is the best description of this book from Ichak Adizes, world renowned philosopher, author, and teacher. He is the father of Shoham who's article on being proactive, not adaptive, was reviewed earlier.

This is a must, not only for your library, but for your desk. So much of it is incredibly profound, you'll want to refer to it often. Accordingly, this will be a compilation of quotes you can remember and continuously apply, ESPECIALLY NOW.

He starts with Albert Einstein; "A crisis can be a real blessing to any person, to any nation, for all crises bring progress. It is in crisis that inventiveness, discoveries, and grand strategies are born."

Adizes - Crisis is a rapid change. It's all about strength, or lack thereof; if you're robust, change makes you stronger. But if you're weak, change can kill you.

Change is nothing new; what is new is that the rate of change is happening faster. And when we solve problems, change creates more: so we will always have problems. Therefore, if you have problems, relax! You are in good company.

You are as big as the problems you can handle; problems are a sign of growing. In Chinese, the word for problem and the word for opportunity is the same!

Do you want me to be a problem or an opportunity? You decide. If you don't do what you need to do, I will be a problem. If you react appropriately, I will be an opportunity. Which do you want me to be?

A problem left untreated, becomes a crisis. Our worldwide financial crisis did not happen overnight. It began with problems left untreated over time.

The crisis involves your competition, too; everybody has the same problem. Who is going to survive? Those who are most capable of change. Crisis makes the weak die faster and the strong grow faster. So the key to making a crisis an opportunity is to be strong BEFORE the crisis develops.

If there is no change, the mediocre catch up. We need to be more agile, to change faster than the competition-or at least as fast as the market is changing.

There's much more to come, so we'll continue in the next article.