Category Archives: Management

Your employees don’t want your money

Your payroll cost is probably one of the largest items in your P&L on a monthly basis. It is critical for the profitability of your business to keep the cost down, yet your employees seem to always request for another raise in their salary. Is money really the only thing in your employees mind?

More MoneyThe answer – unsurprisingly – is no. People are motivated by different things, and money is just one of those. As a matter of fact, it is not even money per se, but what comes along with it: The ability to buy better things, prestige, status. And having status is important for many or most people. For employees whose first job this is, they may have to justify to their parents how much salary they are getting. Married employees may be questioned by their spouses, and “buddies in bars” may boast about their take-home pay.

But it is not money by itself that people really want. What they really want, is to feel good. And money allows them to potentially achieve this objective. If I get more money than my neighbor in my job, I feel good about myself. If I can prove that I have sufficient income to afford a nice vacation, I again feel good. But “feeling good” isn’t purely and only driven by money, but often by status and recognition. Being recognized for a job well done compensates for slightly less salary. This recognition doesn’t have to be in the form of a raise. It can be a couple of extra days vacation, public recognition in a company event, permission to work from home or similar. In too many cases, managers don’t even say “thank you” or “well done” to employees for completing certain tasks, implicating that “they are just doing the job they are being paid for anyways.”There are many ways to provide people with sufficient motivation. Many of them – such as salary, promotions, titles – are extrinsic motivators. However, intrinsic motivators are much more powerful, and companies fail to acknowledge this.

Driven by intrinsic motivation, people want to do things because they want to do them, not because they are being paid for them. This requires people to be given the right tools for the job, sufficient freedom on how to get the job done, responsibility on making choices impacting the quality of the job – in short, allowing your employees to be self-guided, responsible peple capable of doing the job they are hired to do, and making them feel good about it. If people are proud of what they are doing and have been given sufficient training and the right tools, they will do the job well and with responsibility without continuously asking for more money.

HR improvement  without raising salariesAnd this is where companies, managers and HR organisations sometimes fall short. We forget that driving factors for doing a job well are not necessarily money and financial rewards, but status, recognition and pride. W. Edwards Deming said: “All anyone asks for is a chance to work with pride”. If you give your employees a chance to be proud of what they do (and ensure they get recognised accordingly), you might be able to convert extrinsic motivation (salary) into intrinsic motivation. Your employees and your CFO will thank you.

Think about this before your next appraisal meetings, and you will find many ways to motivate your employees while keeping salaries at reasonable levels.

 

Lessons from the Wordcup – Talent Development



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The road to winning the world cup in Brazil for te german soccer team started in June 2000. At that time Germany ended dead last in their group of the European Championship. 14 Years later Germany has the best soccer team in the world, and built the “world’s most successful soccer factory”. The secret to success: Talent Development.

Germany started a very comprehensive youth development program, requiring any club to hire full-time youth coaches. They built appropriate training grounds, established medial departments and initiated co-operations with schools. The German FA started a US$13 million per yar youth initiative, and now operates 366 youth centers in the country, which serves 25,000 kids.The program paid off in 2014 with a very talented and capable football team winning the world cup. The majority of the players in the world cup team are 25-years old or younger.

Mario Goetze, who scored the winning goal, is 22.  Thomas Mueller is 24, Neuer is 28, and one of the “older” players in the team (next to Miroslav Klose, the 36-year old striker, who had the most goals in world cup hstory).  So chances are, many of those players will still be around for the next worldcup. And with the german soccer factory in place, many more talented players are starting to emerge, creating a continuous stream of talent to secure Germany’s top spot in world soccer.

How do you nurture talent in your company? Do you have the equivalent of a “Youth Development Program” to ensure a continuous supply of talented people into your organization? Do you reach out to universities and schools to find potential in early stages, which you then develop or do you rely on external sources to find the people required to help you run and grow your business? While growing and fostering talent from within the organization can take years, the benefits are obvious. Talent from within requires no adaption to your company culture, you have ample time to assess their strengths and weaknesses over time and place them in the positions where they can really shine. Or replace them in early stages with other talented people, if they just cannot perform as expected.

All successful large companies (be it Google, Microsoft, SAP, or DaimlerChrysler or similar) have a very well-thought through internship program, which allows them to grab talent straight from university and mold such talent to become effective contributors and future leaders of the organization.

germanyweb16s-4-webYou may want to consider implementing your own talent development program to secure your internal supply of future company leaders, instead of merely relying on the outside world (potentially mainly people leaving your competitors) to fill important positions in your organisation. To create you own world-class winning team, start early and foster talent.

Oh, and by the way: Thomas Muller (24) has so far scored 10 goals in world-cups. By the time he is 36 (like Klose), he could have three more world cups under his belt, and easily beating Klose’s record. The german soccer team is just getting started…

 

GER – BRA 7:1 – and what it means for Success in Business

As everyone else on this planet for the last weeks, I have been watching the world-cup. Lucky for me, I spent the last couple of weeks in Germany, hence I was able to watch the semi-final during a reasonable time (i.e. 10 pm rather than 4 am). After having seen the host country not only defeated, but crushed, I then started to think about what lesson can be learnt from this game for business success. The answer: teamwork wins, not heroism.

I have seen it too many times: there are always players (in business as in sports), who think they are just very good (sometimes justified so), and thus believe they have a free pass at doing things.  This often goes at the expense of other members of the team, who then feel unappreciated, and as a result may not perform at the top of their respective game. They feel unfairly treated, as the hero may be able to get away with behaviour that would not be tolerated with other players. Result: disharmony in the team, and disengagement of the rest of the team.

Another problem with heroes is, that sometimes the rest of the team relies and depends on them. This is all good, for as long as the hero is around and plays his / her designated role. If the hero goes missing (in the case of Brazil: due to injury or yellow card), the rest of the team is lost. There are no back-ups, no alternatives, no substitutes that can just take over the ball and run with it. In such cases the strategy is built around a person (the hero), not around a working business model irrespective of the individual. And thus the whole business falls and rises with the individual.

In again other cases people try to be hero. They have seen successful heroes, and how they have been applauded (promoted). They believe, that rather than asking for help, they should try alone to fix a problem or find a solution. They want to be a hero, because they (falsely) believe that this would be in the best interest of the team (or the company). Instead of asking for help, or passing the ball, they just try to do it themselves, even if they may not be the best for the specific job, or may not have the relevant qualifications or training to do so. In the end, the team looses.

It is the role of the business leader or the coach to ensure that the team functions as a team, comprising out of a set of qualified and skilled players in individual roles, who work according to a system, rather than having a hero surrounded by helpers, who don’t know what to do in the event the hero is lost.

Brazil v Germany: Semi Final - 2014 FIFA World Cup Brazil

In this case, Brazil had Neymar and Thiago Silva, but Germany had a team. And Germany won – deservedly.

Fire Your Customers – And Increase Your Profits

You’ve heard it over and over again: the customer is king. Just bend backwards and ensure that every single customer is 100% satisfied and serves as a reference, helping you grow your business. However, blindly following this rule can be a very wrong business strategy.

Instead, try to differentiate between customers, and only treat those customers exceptionally well that you want to keep. No, I am not advocating sending all your customers to the competition. But if you really look closely into your customer base, you will surely find some customers that are a pain in the back. You know, those customers that squeeze you for every possible discount, always want more than what you are prepared to give, and are extremely slow with payments. Those are what I consider the bottom 10 – 20% of your customer base.

In most of the cases the effort required to close a deal, to satisfy those customers and to subsequently collect the payment is significantly higher than with your average customer. And yes, the industry in which you are in obviously plays a role in determining whether a customer is worth keeping or not. What constitutes slow payment and difficult customer for one type of business could very well be an average customer for a different type of business or industry. Even within the same industry there are vast differences in the clients that you attract and keep.

The problem is that if you have too many of those slow paying and difficult customers who take most of your time, you don’t have enough time left to dedicate to you’re A-List of customers – those that do pay on time and are grateful for your business. You spend too much time dealing with customers who are not that profitable, and not enough time with those customers that really create value to your business.

Instead of treating all of your customers equally, you may want to consider to separate your customer base into 3 categories: A / B/ and C Customers.

How you distinguish between them may be arbitrary. You may want to categorize a customer as an A customer because he pays very promptly and you never have issues with payment. Or because the profit margin for specific customers is extremely high – compared to your other clients. Or because they are just very influential and very happy about your service, but you don’t make much money with them. Or all three – how you separate them is up to you.

What matters is that you try to convert those A-customers into raving fans. They should not be satisfied with your product, service and company, but rather extremely delighted and enthusiastic about your business. Having enthusiastic customers is indispensible if you want to continuously grow your business. Those customers act as brand ambassadors and will help you get a significant amount of new business through references.

On the other extreme you have C-Clients. Those are customers that for a variety of reasons you just don’t want to deal with. Those are the customers you may want to consider sending to the competition. This move will not only free up your time (so that you can spend more time with you’re A-Customers), but also allow you to take on more (i.e. other) customers which hopefully will turn out to be B or A-Customers, and thus increase the profitability of your business. In addition, by sending those customers to your competition you create additional work for your competitors with a client you know is not worth pursuing.  This keeps your competitors busy with non-value added work. I actually don’t mind if my competitor spends a lot of time dealing with a particular difficult client that takes up their time – I’d rather have them busy fighting for C-Clients than trying to convert my A-Customers.

In the middle of the scale you have B-Customers, which usually form the majority of your business clients. Those are the customers for which you might just want to continue what you are (hopefully) doing now. Treat them well, follow up, ensure you meet their expectations. You might even want to see if you can convert the one or other B-Customers into a raving fan A-Customer.

It is not a bad thing to tell C-Customers that you may not be able to help them moving forward. Ask yourself: if you would loose this specific customer, would it really be so bad for your business? If the answer is no, don’t be afraid to let them go.

3 steps for sustainable business growth

Every business worth its salt is very concerned about growth. Unfortunately specifically SME’s cant pay the big bucks required to afford world-class sales staff. Good news: you don’t have to, if you already have existing customers. You just have to follow up with them, and grow your business through referrals.

When people think about sales, they think about new prospects, referrals, new leads, marketing etc. Too often one of the most likely potential leads is forgotten: your existing customers. Existing customers have already bought from you. They are already familiar with your sales process, your products and services. And they had been convinced enough to sign on the dotted line and give you the order. Hence your barrier to sell additional products to them is significantly lower than selling to new prospects. Why not just go back to you existing customer base and sell to them?

Unless you have a very unique one-time use only product (like an undertaker) you will most likely be able to continuously sell products to an existing customer. For example, if you sell dog food, you can be assured that every single customer who bought dog food from you before will have to buy dog food again. Why not make a real effort to stay in touch with those customers, update them about promotions, give them the equivalent of frequent flier miles, special deals, etc.? You already know that they need dog food, all you have to do is to make sure they buy it from you instead of the competition.

If you sell websites or any other IT solutions, try to find a way to provide ongoing maintenance. This way you not only have continuous revenue, but you are also always up-to-date on potential changing requirements of your existing customers, and you can provide additional solutions as and when required. And because you have a better knowledge of the customer as a new entrant, you should be able to continuously sell into your existing customer base.

The same is true for almost any other business. Customers will continue to buy TV’s, phones, DVD’s. Even if you have a hardware shop, you will have repeat customers.

No matter what your business is, it pays huge dividends to simply stay in touch with your existing customers. Follow up with them: are they happy? Do they need anything else that you might be able to provide? Do they know of anyone else that could use your product / service?

The solution to building a sustainable, growing business is simple:

  1. Have a great product / service.
  2. Ensure you have a satisfied customer.
  3. Follow up with that customer to get additional business and referrals for new customers.

Most businesses stop at point 2. Sadly, many businesses even stop at point 1: they have a great product or service, but they fail to follow through with the customer until the customer is 100% satisfied. Really happy customers are your best sales people, and make the easiest prospects for follow-up sales. All you need to do is to continuously follow up with your existing customers, and don’t just ignore them once the initial sale is over.

Run an Ironman to succeed in Business – Part 6: Passion

(here is the link to Part 1: Run an Ironman to succeed in Business)

Finish - Source: Wiki Commons

Finish – Source: Wiki Commons

In order to finish an ironman race, an average person will have to continuously train every week between 10 to 20 hours, for a period of at least 1 year. It will be very difficult to see this through if you are not passionate about achieving this objective. You must really want it. Badly. Passionately.

When your friends ask you out for drinks, and once again you decline because you have to get up early in the morning for a long run, you need to have a reason for doing so. You started to train for an ironman for a reason, and you need to hold on to that reason throughout your training. When times get tough –and they will – this reason will allow you to make the decisions required to “do the right thing” up and to continue on your quest. You need to be able to answer that one critical question over and over again: “Why am I doing this?”

So question your motive when you start your business. If you start your own company just because you want to earn more money, you will be in for a surprise and a rude wake-up call in time to come. You need to have an overall goal for your business, a reason for its existence, a desire to build something that you really feel passionate about. Only then will you be able to get yourself through the tough times, and have the answer to the question “Why do I not just give up?”

IM Langkawi 2010 - Finish

IM Langkawi 2010 – Finish

Those 5 attributes are defining attributes for any entrepreneur. They are by no means exhaustive, as starting and growing a company is not the same as completing an ironman race. For starters, once you have completed your first ironman within the allocated time, you have achieved your objective, whilst there is no such clearly defined target for a company. In addition, training for or running an ironman doesn’t necessarily require you to be a team-player. You don’t need other people to succeed, and you can achieve great results while only relying on yourself – try this in business, and you won’t get far.

But if you have those five attributes, you stand a good chance at succeeding in your business.
Best of luck!

Run an Ironman to succeed in Business – Part 5: Flexibility

(here is the link to Part 1: Run an Ironman to succeed in Business)

Natya Yoga - Source: Wiki Commons

Natya Yoga – Source: Wiki Commons

There will be setbacks in training for an ironman and in growing your business. You may have an important business trip on the weekend that you have planned your 200 km cycle, or you got the flu and can not exercise for one full week. Those things happen, and it is important to be flexible and adjust your plan accordingly. In such instances where a change of plan is forced upon you, you need to be able to reschedule certain activities.

A detailed task-oriented plan that you have created initially to support your overall strategy needs to be adjusted as and when required, without changing the overall strategy or framework put in place. Preparing for an ironman is a set of smaller goals and milestones. The task and individual exercises that you plan are there to enable you to meet those interim goals and milestones, but as long as you hit your milestones, you’ll be just fine.

So you need the flexibility to adjust your detailed plans when circumstances demand, combined with the determination to achieve your interim goals and milestones no matter what.

The same is true in your growing business. The business plan that you have created at the beginning of the year is just a plan, and as you start executing the tasks required to achieve the milestones on the way to your overall goal, you will hit obstacles. Your senior engineer suddenly quits, your most important customer cancels his contract, your product has bugs that require a re-call or major modifications. Shift happens.

Look at your overall goal, and see how you can adjust your detailed plan to still meet your interim goals and milestones. Be flexible to adjust what can be adjusted, and have the determination to continue on your journey towards your next milestone, no matter what obstacles are thrown in your way.

(Click here for Part 6: Passion)

Run an Ironman to succeed in Business – Part 4: Perseverance

(here is the link to Part 1: Run an Ironman to succeed in Business)

Desaru 116 - Swim

Desaru 116 – Swim

Giving up is easy. And just taking the short-cut home on a cycle tour or a long run is very tempting – after all you already ran 2 hours. Do you really have to run 2.5? Is that another half hour going to make a difference? Can I just swim 70 laps instead of the planned 80 as stated in today’s plan?

Preparing for an ironman is a set of small steps and small successes over a long period of time – just as starting and growing a building. Every day you need to run just a little bit longer, cycle just those few kilometers more, swim just another couple of laps. You need to have the determination to not give up, and to continue just that little bit more.

Desaru 116 Swim Finish

Desaru 116 Swim Finish

And in business it is exactly the same . If you have planned to make 5 appointments for next week, call as many people as you need to secure those 5 appointments. And unless you have reached your goal for today, don’t stop. Just continue until you have reached your planned objective for the day.

Rome was not built on one day, to train for an ironman takes at least a year, and to build a business does take even longer. But only if you work on your long-term goal every day, and every day put another brick onto the wall, make that one more phone call or e-mail, and take another step forward, only then you have a realistic chance to eventually succeed and achieve your goal.

(Click here for Part 5: Flexibility)

Run an Ironman to succeed in Business – Part 3: Discipline

(here is the link to Part 1: Run an Ironman to succeed in Business)

IM CyclingThere will be days in your training for an ironman, where you just don’t feel like getting up at 5 am to run 20km, or to get into the pool at 7 am to swim 80 laps. It is so much easier to just ignore the alarm clock and give yourself another one or two hours of sleep.

After all, you did train yesterday, right? And one day won’t make much of a difference after all, correct? And you may have many other valid excuses and reasons NOT to train. But that is exactly what they are: excuses and cop-outs, unless you are at risk of an injury through overtraining.

So you must have the discipline to train no matter how much you’d like to sleep in or do something else, as well as the discipline to stop before you get injured – and the wisdom to know the difference between “don’t want to train” and “should not train”.

This discipline is critical in your growing business as well. You have to get up early every morning, work harder than before throughout the day, and continue with business related activities in the evening. You have to have the discipline to “get up and go to work” every day, and do whatever is required and needs to be done. If you golfing buddies ask you for a game, do you give in and come along (after all, nobody will miss you at work)? Or do you politely decline and write that other letter, make that next phone call and just continue to work on your business?

If you want your business to succeed, you must have the self-discipline required to put in the daily amount of work required to achieve your goals, irrespective if somebody is looking over your shoulder or not.

(Click here for Part 4: Perseverance)

Run an Ironman to succeed in Business – Part 2: Commitment

(here is the link to Part 1: Run an Ironman to succeed in Business)

Phuket Pros

Phuket 70.1 2011 – Swimstart

In order to run an ironman you first need to register at an ironman event. Those registrations usually open between 9 – 12 months prior to the event and are usually sold out within a very short time.

The 2013 Ironman Competition in Melbourne takes place in March. The registration for this event was in March 2012, and the event was sold out in 4 minutes.

 

While this may be an extreme case, you need to register for an ironman event (and pay about 800 USD) at least 9 months prior to the event.

So you need to commit to participating in an ironman race between 9 to 12 months prior to the event. In addition, if you want to succeed in finishing an ironman event in under 17 hours you will need at least one full year of  training and a detailed training plan at least for the last 6 months to get there (unless you are already have finished a couple of marathons in under 4 hours, and are used to cycling 5 hours non-stop)

That is one year of training, suffering and putting your social life pretty much on hold. One year is not much to be able to brag for life, and to belong to the very small percentage of people that have finished an Ironman, but that is what it takes. If you are not prepared to make this commitment, chances are you will not finish the race in the 17 hours allocated.

Starting a new business will require at least the same level of commitment.  You will need to put in at least 3 – 6 months of your time on a full-time basis in order for your business to have a chance of success, and most businesses take significantly longer to get off the ground. You most probably will have to work around the clock during this time, unless you have the financial means to outsource or hire enough employees to take care of the various tasks that need to be done when starting and growing your business.

Your social life will suffer (unless your friends are in the same line of business), and you will have to get used to rejection and criticism. You will also have to spend more money on the business than you planned.

Take all that into consideration before you take the plunge.

(Click here for Part 3 : Discipline)