The Cavalry is Coming?

This is a favorite phrase of my favorite TV host, Larry Kudlow, on his daily show on Fox Business.

But, for those of us in the small business community, what does it mean?

First, I think Larry would say that the House and the Senate revert to Republican control.

But, but, but, to use Larry’s favorite phrase, what does that mean? We’ve still got Biden in the White House.

I think we could say there will be a reduction in oil drilling impediments, which will lower gasoline and other petroleum costs, which will slowly take some of the pressure off those costs continuing to rise. Crude prices have dropped a bit in just a week after we announced a cessation of buying oil from Russia.

If you depend on your goods from China, as many retailers and drug companies do, you might continue to have problems; most of our clients have sourced formerly China-produced goods into other countries, such as Thailand, India and Mexico.

I think there will be some decrease in silly regulations, but Dems are still running the agencies such as FERC, EPA, OHSA and DHS that impact your business lives.

What will happen to the millions of unfilled jobs? I find that number rather illusory, since we did a hiring campaign for 12 security guards, and got all the positions filled in two weeks, albeit by offering a somewhat higher wage than others. We’ve written elsewhere of using Indeed and Zip Recruiter, and the fact that we thought the latter was better. There’s another online job board, Monster, from which I’ve received some solicitations to be President of this or that, and that seems to work for higher level positions.

But, you will probably see some unavoidable increases in your raw materials costs, or your service costs, which you might not be able to recoup through price increases, despite what the pundits say. We’ve also written in this blog about how you can mitigate price increases.

So, and we will probably update this blogpost down the road, as we’re updating the one on stagflation, as the way becomes more clear.

 

 

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Indeed vs. Zip Recruiter

We recently did a hiring campaign for one of our clients for security guards, and we used both Indeed and Zip Recruiter.

Of the two, we preferred Zip Recruiter, because it turned out to be cheaper for the client, and we found Indeed a little deceptive in their claims.

First, both sites do offer free periods, and we were able to find enough qualified candidates inside the free period.

However, there was a qualifier: Indeed tried to charge us for each resume submitted, regardless of qualifications, which they didn’t disclose on their website, and $99 per resume passed through to the client. These two charges make Indeed quite pricey relative to Zip. Indeed did, however, refund the per resume charges when questioned, because they agreed they didn’t disclose them

Zip said straight away that their cost was $16 per day, regardless of how many resumes the site found for us. And they stuck to that. Using the same ad on Zip, results weren’t quite as good as Indeed, but there wasn’t enough difference to justify Indeed’s higher price.

As it turned out, our client also recruited from his existing employees, which produced as many applicants as either Zip or Indeed.

So, if you’re using one of the recruiting sites, read the fine print!

Home Depot Horror Story

I’ve been looking around for a bad customer service story for awhile, and Home Depot has provided one.

Back in January, we ordered 14 boxes of wall tile to tile the peeling walls of our garage from Home Depot online.

Tile arrived, but when we examined the packages, about half the tiles were broken, possibly from being thrown onto our front patio for delivery. No one from the delivery service (NDS)  rang the bell and said they had 14 boxes of tile to be delivered, and where would be like it?

Then the wrangling began on the return for the next two months. Home Depot Customer Service actually claimed at one point that they had nothing to do with Home Depot. Meanwhile, our installation is delayed and we’ve got a $790 charge at Home Depot for broken tile.

Finally, an enterprising customer service representative agreed that they whole matter should have been quickly resolved, and took out one of the small Home Depot flatbed trucks and with a female driver, came to our house and loaded the broken tile. Once the store had the tile, they reversed the charge.

Kudos to the employee (Frank) who showed the initiative to take a truck and pick up the tile, but a real brick to the rest of Home Depot customer service for being unresponsive.

As a result, we’ve ordered the tile from Floor and Decor, who has been very accommodative, and we’ll pick it up ourselves.

The morale of this tale is to empower your employees to make decisions in the best interests of the customer.

We hope that Home Depot reviews the recorded conversations of this travesty and fires most of the customer service reps who were involved.

Rethinking Remote

Our local Business Journal had a good article recently about rethinking remote working for your employees.

Our local upsurge in Omicron cases has probably influenced some firms to keep more employees remote or be more lenient in allowing remote work.

It’s a fact that many companies’ workforce decided that they liked to work from home, software could be redesigned to accommodate working from home, and many workers say that if they can work from home, they are less likely to change jobs.

Among our clients, one large civil engineering firm remoted all of its employees to cope with COVID, and has changed to keep employees remote if they want to be.

A large mortgage company allows its employees to go back and forth between working in the office and working remotely.

Employees of an investment firm in New York all want to return to the office.

So, be sensitive to what your workers want before you make any non-reversible decisions about working remotely.

Disrupt Yourself

It’s now late January, and maybe, just maybe you’re still thinking about what you want to do in 2022.

Courtesy of CEO Magazine, one of their more original ideas is to disrupt yourself. And, of course, they have several ideas about what you might do to rethink what you do in ’22.

  1. Think like a new business. Maybe what you’re doing as a company or as the CEO/owner is the same things you’ve done for years (I encounter people like this all the time). What did you do as a startup that you’re not doing now?
  2.   Commit to an experiment, whether it’s a new product/service line of a new way of doing something in your business. Maybe it’s a new service. Set a time line to get the service launched and evaluated.
  3. Be generous with your team, and not just your senior management. Not necessarily with monty, but maybe survey them all to see if they’re happy. Happy people make a happy company, and happy customers which means growth.
  4. Get some of your most enthusiastic employees to lead the rethinking…. it’s not necessarily just your responsibility.  If they know they’re driving the project, they might work harder, better and smarter.

7 Ways to Deny a Promotion W/O Demotivating

OK, It’s January, and everyone is back at work in most states.

I’ve shamelessly purloined much of this post from Ivy, which has good articles from time to time on running your business.

I’ve seen this scenario play out many times among our small business Solutions Forum clients, so I’m passing along their article paragraph headers (you can fill in the paras):

  1. The person who wants to be promoted doesn’t really have much basis for his/her belief, other than Johnny/Susie down the corridor got promoted.
  2. They’re not very entrepreneurial, which means they haven’t bugged you lately about the idea they had about improving xyz.
  3. They’re not a team player, but in a small business that might not be too important, as long as they do what they’re asked to do. Do they do more than asked?
  4. They come to you with problems, not solutions to your challenges. You’re not Dr. Laura.
  5. They ask for a lot of overtime. If they can’t get their job done in regular time, there’s a problem, and you should discuss it.
  6. Conversely, they’ve got track shoes on ready to bolt at 5 pm. Normally, a little overtime should be expected by you.
  7. They do their job exactly as they’re asked, with no ideas for improvement. Everybody has ways to improve their job, even on an assembly line.

 

Why Should Anyone be Led By You?

The title of this post comes from a series of lectures that I and another Navy Captain, Fred Reis, did under the aegis of the Chief of Naval Operations, ADM Frank Kelso.

I was called in by Sen. John McCain’s office, who knew me and my civilian company leadership record, and wanted the two of us to try leadership theories on Navy Captains, many of whom had not evolved their leadership styles since the era of wooden ships and iron men (and proudly in some cases so stated to us).

Fred and I ultimately published a book called ‘Leadership Secrets’, and about 4,000 copies went out to all Commanding Officers in the Navy as well as many middle managers who the Navy thought had potential. It took us three two week tours, plus some admin support, to get it done, but ADM Kelso finally blessed the product and issued a CNO order implementing it.

In addition, we did a one week course for those who wanted more leadership training (including a few hardcore yellers and screamers) who got put in our leadership course, or who faced being cashiered from the Navy.

How these secrets apply to you, as a company owner, is that somewhere around 10 employees, folks might question your leadership qualities and ability, and the ability to demonstrate both is critical to your company going further.

In all honesty, you might decide at 10 employees that’s as large as you want to get, and your golf game needs more attention than your sales curve. Fair enough; I encounter people like you all the time. My Dad, who had started the Heinrich Company, was like this; he’d worked hard since he was 12 or so, and his company provided him and my mother a very nice lifestyle.

But, many owners want to do better by their employees, give them a vision and a career if they chose it.

For starters, you don’t have to keep all your employees happy all the time, but you do need to  listen to them.

If you listen rather than just issuing edicts, and your employees have the feeling that they’re being listened to, you’ll have happier employees, ones that stick around. It doesn’t make any difference if it’s the lowliest warehouse guy or gal, or the production line guy or gal, or your business partner, you should listen.

I often think, in retrospect, that I exercised my 51% ownership of the Heinrich Company too often, and probably had more employee turnover and poorer decisions as a result. We still achieved 25% compound growth rates, and nearly outstripped our financial resources, but we might have done better by listening more.

There are several leadership styles that you can use, such as the command and control (the old Navy model) where everything is written down in orders, to a more modern coaching style of leadership where decisions are reached by consensus.

Personally, I discovered that the command and control Navy way didn’t always work when I was a plane captain of a surveillance plane flying around over Viet Cong strongholds; There were a couple of times when the crew asked to talk over a decision and, after realizing that we had time to discuss it, we did.  And a couple of those people turned up in my commands years later when they found out I was leading a Navy Reserve unit.

You’ve got more time to make a decision on something than you realize. So, take some time. Look for opinions. Wander around on the production line or warehouse floor. Even Alan Mulally, the retired CEO of Ford, used to wander around the Ford production lines. And he was very well thought of by Ford’s rank and file. And he popped up at the Phoenix intro of the Ford Fusion, just talking to the inviteds, no big hoohaa.

Jim Farley, Ford’s current CEO, is much different. For openers, he’s a product guy, having come up through Lexus and Lincoln. But he also turned around Ford of Europe, so he’s got operational chops (no pun intended). And he races Fords of all kinds, which is really different. Farley driving the wheels off a Ford Mach E on the Dearborn test track is a sight. Another sight is Farley asking the Twitteratti of their opinion of a Mach E door handle.

But, both Mullaly and Farley share a common trait: they both work from consensus, although Farley showed a willingness to make major personnel cuts at Ford of Europe while revving up the product side.  Mullaly created the ‘One Ford’ vision to unite the warring units within Ford, which was a major leadership accomplishment, and I know heads rolled over that vision.

Farley and Mullaly also demonstrate a couple of other leadership tenets: leadership is doing the right things  while management is executing on the vision of right things.

We recommend the consensus form of leadership, as long as there’s time to build a consensus. In business, there usually is time, despite one of your sales reps yelling that you should have made a decision on ‘x’ yesterday.

As you become more confident as a leader, you’ll take the time you need to build your consensus and get the buy-in that you need to have successful decision, not just one made on the fly that no one is happy about.

When you have to make a decision, make it. As my wife would say, ‘Don’t sit on the pasture post’.

The key think once you make the decision is execution. You and your team need to execute, and be alert for signs of problems with the decision as you go along.

You might find that there’s a better decision, based on more complete information to be made down the road. Or, you might find that you were just flat wrong in the decision you made.

Don’t waste time agonizing about bad decisions, either. If a decision appears to be incorrect to you, talk to your team and find out what could be better. Don’t be hesitant to admit you were wrong.

You might be right, you might be wrong, but don’t be indecisive.

Lead, follow or get out of the way.

 

 

Who’s on the Bus?

With a little digression into vaccines, which relate to this personnel blog, which will be about what people you need going forward, and some (we hope) good tips on how to find and recruit good people.

If you are growing (and you might decide you want a lifestyle job, so you make enough money to support the lifestyle you want), you will need to hire people.

These people might not do the jobs you formerly did as well as you did them, but having them on board frees you to do other things that are seemingly more important. If you’re doing a lifestyle business, then you might continue doing what you’re doing and be perfectly content.

A convenient way to look at what employees you might have to add is what they’re going do do, how much revenue they can generate (not just in sales, but in even allowing you to do things that are more meaningful to the firm, versus how much the employee is going to cost in terms of pay and benefits. The revenue/cost figure is presumably positive, otherwise, why hire the person?

To give you an example, a client we have decided recently to hire a new person. Their financial calculus was that the person would cost about $50,000 per year in pay and benefits, but the two founders could, through more sales and higher end sales, create another $90,000 in revenue. So, the revenue/cost calculus is $40,000. Now, nine months later, they are about to add another laser cutter and hire another production operator. The calculus is a little different, because the total expenses are $82,000, so the short term benefit is only $8,000, but there is the future benefit of another $40,000. At some point, demand might slow down or the people might be more expensive, but as long as their is a positive profit generator, employees should be added.

It should be noted that, at some point, the $40,000 calculus per employee might be reduced somewhat because a supervisory person has to be hired to look after the operation. This should have a positive return too, because he/she further frees the owners to make more revenue.

We are presuming that you have the financing to hire more people and buy/lease more equipment, but if you don’t you’ll have to subtract financing from your overall cash positive.

And you do a Solutions Forum meeting, either face to face or via Zoom every two months or so to iron out any problems that have arisen, such as maybe not making the best hire and whether to cut said underperformer loose. (The answer is that as long as his/her cash contribution is positive, you keep him her around and look for another, better person and refine your hiring parameters.

When you make the decision to hire, don’t expect to put the ad in indeed.com on Thursday and have someone report bright and bushy tailed for interviews on Friday and work on Monday.

When they show up, you first put them through a DISC test (available on the internet) to find out if they have the ability mentally and emotionally. You might also run them through practical tests, such as running the laser cutter, to see how they do, while making allowances that they should get better by ‘x’ after they start.

All told, if you fire any employee, it will cost you about $15,000 to hire a new person, in terms of training, possibility of firing and management time in getting the person up to speed.

In the present high demand labor conditions, your positive revenue contribution of a new employee might be reduced from where you would like it, but it should still be positive. Don’t be hiring just to be hiring unless you have a burning desire to walk around your plant and see a bunch of smiling (you hope) faces.

KPI’s

Somewhere around five employees, with one or two people in every job function, you can develop KPI’s, or ‘Key Process Indicators’ of what a good employee is and does. Things like attitude, dependability, independent working, creativity and the like could be measured. KPI’s might be different for each positions. You can weight each of the KPI’s in terms of traits you’d most like to see.

And yes, in the current climate, you should use diversity as one of your KPIs. How much weight you give it is up to you, but it does need to be explicitly incorporated.

ARE THE PEOPLE IN THE RIGHT SEATS ON THE BUS?

Again, as you grow, you might find that various people want to do different things from what they were hired for. That’s fine, because personnel satisfaction is key to your success, and not only because personnel might be 30-70% of your total costs.

You have to interview the person and find out why they want to do the new job, and what positive contribution they can make financially that they’re not now making. Yes, you have to be fairly ruthless about it, unless you’ve decided that you’re really running a social welfare agency. You have to make the employee realize that the new job they want may or may not work out, and what the financial consequences of each alternative on their future might be. No sugar coating.

You might also find that a person wants to ‘downshift’ in their corporate career, and take on a job that’s more personally meaningful to them at the time in their life where they are or expect to be going. For example, one of my clients sold his highly successful business because he wanted to focus more on his world class photography, after doing his business for some 30 years. So, he sold a majority of his business to his two sons, who are running it quite well, and he’s photographing things all over the world. One of your employees might want to work less hours for you and more hours for his/her favorite non-profit. That’s fine, too….a greater social good has been achieved.

PERSONNEL RECORDS

OK, no one likes to do or keep them, but it’s a fact of life these days that you’ve got to record all  interactions with your people, because there might be controversy brewing somewhere down the road.

There might be trips to the labor commission to resolve fired personnel grievances, or there might be disputes among people or yourself as to who said and did what to whom. ALL interactions involving personnel should be documented, and the person should sign off on the documentation so they can’t later come back and deny they said or did what they did.

Or, you and a person might come to a parting of the ways. We advocate trying to work things out, but sometimes things don’t work out, and a termination is best for all. Acknowlege the mistake, learn from it and move on. But document that the person is being terminated and why, and have the person sign it, so there’s no misunderstanding.

PERFORMANCE REVIEWS

No one much liikes performance reviews, but, in our experience, if they’re handled with sensitivity and objectively (no harsh words), they can actually be enhancing. People find out what they’re doing right, and what they could be doing better, especially in relation to the job they were hired to do.

Everyone deserves to know how they’re doing, and as objectively evaluated as possible. If you’re using KPI’s, as we recommend, the performance review becomes somewhat more routine and more objective, because you’re rating your people against the ideal, whatever that is.

How frequent should personnel be evaluated? It depends on a variety of factors: complexity of job, time on the job, and time to do a review (there are times you just can’t do a review when one is due, but don’t defer it forever) Point out to the employee that you can’t do it right now, and you’ll reschedule it for next Thursday. Reviewer and reviewee should both be comfortable and relaxed when the review is done.

We think quarterly reviews are about right.

Again, employee and employer should both sign the review. If one of your supervisors is doing the review, they sign it. After all, your supervisor is evaluated by his/her superior, and so it goes up the line.

The CEO, by the way, gets evaluated by his Board of Directors, in case some of your more inquiring personnel want to know. Partners should evaluate each other, too, again in a friendly setting, such as and offsite lunch or dinner. Coupling the evaluations with goals for the next reporting period is a good practice that we’ve used and coached.

TURNOVER

That some of your employees will leave is a fact of life. More money, better job, downsizing, the reasons are diverse. Don’t be shocked, but do interview the ones who left to let them know that you valued their contribution (assuming that you did) and wishing them well. Sometimes they will come back after the new opportunity didn’t work out, and all should be forgiven and a personal growth moment should ensue.

There is no ‘right’ turnover number. For stable organizations, it’s probably about 10%.

In high growth situations, it can be higher, because of the demands that will be placed on people; but then again, if you did your initial hiring ratings correctly, there shouldn’t be many surprises. One of my clients just had about 8% of his workforce quit in one week, all of whom are going to a competitor, and all for financial reasons, so he’s got some rethinking of his compensation plans to do.

When I took over my family business, my first year turnover was about 75%, but it was mostly because of moving from a relatively slow growth, almost paternalistic culture to a high perforumance culture. We tried to forster a sense of family, but we didn’t let family get in the way of hitting the numbers. We could do both, because by the end of the first year of my seven as President, we had most of the right people on the bus.

And, having the right people on the bus makes your job a lot easier.

People in Your Startup

The popular image of the startup entrepreneur is Jobs, Gates or the HP guys slaving away in their garage, or back bedroom,  lone wolfs, trying to get their businesses off the ground. They don’t hire people until the business is off the ground.

The reality today is  different. Startups write business plans, raise money and hire people in various disciplines to do functions like marketing and sales, finance and production.

Odds are you’ve worked with the people you’re launching with. And, presumably you’ve got non disclosures in place for all of them, once they have agreed to their compensation package.

You should strive for diversity, but more important, you want the best people you can find for the price you can pay. COVID status can be one of the screens when you’re interviewing people, but that’s about all it should be. The same with Critical Race Theory but, this topic should be avoided,  because it’s so highly charged politically, and you don’t make politics intruding into the workplace.

You do want your people to be socially responsible, which means in this context that they be proud of the company they work for, and your company not engage in socially irresponsible behavior, such as insider trading or overt or covert theft of competitive secrets.

As one of my clients once said, could you discuss your business idea in a cocktail party?

All the employees should be of good character, too, so they don’t engage in socially iresponsible acts, such as sexual harassments. You don’t need a lawsuit to sink your company as it’s getting started, or cost you dearly in legal fees.

Winnowing out bad behaviors, even in your startup, means that you should test your employees for these behaviors, and for Key Personnel Indicators (KPI) which cover teamwork, creativity and various other attributes.

Also, in the COVID era, where more people are working remotely, and probably will for some time yet, you need to test for independence. One of my clients now has 1/3 working from home, 1/3 working from an office, and 1/3 who go back and forth. This seems like a sensible model you can use.

You as the founder need to look inward, too, to ensure that you’re the leader that the company needs. I’ve worked for more than one startup where the founder wasn’t the best person to work for; the marketing positioning was generally sound, but the founder was just difficult to work for. You want to engender loyalty and trust, so you must have those attributes.

One of the areas that is frequently neglected in a startup among people is sales. Your salespeople, or persons should be able to sell effectively and ethically, and should be graduates of one of the sales academies, such as Sandler or Brian Tracy. They should have a proven record of closing deals, too (this is a trait that is often overlooked in sales)….it should be in excess of 25%..

If you have your product or service positioning right, and your promotion is right, sales ought to be relatively easy. You should have an idea of what your sales cycle (the time from sale to money collection looks like so you have enough money to fund sales.

We should also discuss how much space you will need. You will pay a premium if you lease a small space in, say, and Executive Center, but you don’t have much downside risk.

You should allow yourself growing room, but how much may take an educated guess. Your people should be able to help: when I entered manufacturing with one of my companies, I had no clue now much space I needed, but my production manager (and future business partner) did.

We always made sure that we leased from firms that had lots of different properties, because we regularly underestimated how much we would grow. Try to ensure that your lease has options to renew, and relocate. We moved twice in seven years, despite having allowed for growth (we thought) in each of our spaces.

If you need to raise money, you should base how much you need to raise on your worst case business plan (we have advocated doing a best case, a worst case, the odds of each happening, and that becomes the business plans and goals). But use the worst case to raise money, because you never know what might happen. It’s better to have too much money than too little.

As an example when we started the American School of Entrepreneurship, we did so using standard university classrooms we rented from University of Phoenix. It became apparent, with the advent of online delivery methods, that we could actually record the classes and the PowerPoint presentations, put them on a website and there was an international market awaiting. Home run for about three years, until Harvard, Stanford, Penn and Coursera caught on and ran over us.

We recovered our investment, but the change to online needed more capital. We are still discussing how we’re going to reinvent the School; all I will say is that it comes down to people.

So, in reading the last three posts to Entrepreneurial News, you’ve got everything you need to start a business!

 

Should You Impose A Mask Mandate?

We blogged about this on our Twitter account, some time ago, before we had Entrepreneur News back up and running, and the circumstances have changed a bit, so we’ll have another go at the topic.

  1. You as the owner should probably keep your feelings about masks and the vaccines out of the equation. I have owner clients who are unalterably opposed to the vaccines and I’d be willing to bet that their employees have a lower than average vaccination rate.
  2. There remains some question about the effectiveness of the vaccines, but the media is fond of pointing out the failures, without pointing out what percent of the population is affected. We don’t think anyone in the media ever had to take a college statistics course.
  3. There’s a guy named Joe Rogan, who’s opposed to vaccines, got COVID, and took a cocktail of drugs centered around Ivermectin, and recovered in two days. He’s getting pilliored in the media, as one might expect.
  4. There is also some question about the effectiveness of masks. Opinions are all over the lot. Surgeons and other medical personnel still wear the heavy duty N-95 masks, which are effective, but aren’t exactly a fashion statement.
  5. There is also the question of what your state policy is, and whether it’s law, or rather a guideline on the wearing of masks. Here in Arizona, we have no mask mandate, as of a couple of weeks ago, and we’re not likely to get one. I was just in a veterenarian’s office dropping off my dog, and they have a mask mandate, but I walked in without on and no one said anything. But, I’m large person, and get the benefit of the doubt.
  6. Mask mandates seem to be the province of large liberal states, such as New York, California and Illinois; the rest of the country seems to have moved beyond them.
  7.  In our humble non-binding legal  opinion, we don’t think mask mandates are constitutional, but they haven’t come up for discussion in the courts yet, which is a little surprising, given the widespread use of masks and some opposition to them.

So, what are we to conclude on mask mandates? We wouldn’t impose one on our employees, but would point out the plusses and minuses of wearing one Probably worth a Friday town hall among your people.