The Open Door Policy (stuff you already know)

The Open Door Policy (stuff you already know)

By: David Van Rossum

                Many executives describe part of their management style by announcing to their staff, new hires, or colleagues that they have an “open door policy.” I guess that means that they are approachable. Maybe it means they have nothing to hide. I find it amusing that an executive would have to actually say this out loud. Communication is a key ingredient of success. If you walk the walk, that is communicate with your team, you shouldn’t have to tell anyone about it.

                An open door is a wonderful thing. The best thing about it is it allows you to walk out of your office and visit your operation. Take your open door with you. This isn’t anything new. MBWA. Management by Walking Around. It really works. I worked at a plant that established a manager of the week program. The idea was to walk the factory floor and other support areas to be visible. It actually made the operation more visible to me. We were encouraged to come in on evening and night shifts as well. I met a lot of people and saw a lot of things. I made a lot of friends. I didn’t like all the people and I’m sure the feeling was mutual. I didn’t agree with all the things I saw, but I tried to understand them. It taught me the valuable lesson that one really needs to try and put oneself in another’s shoes to see their point of view. Then you can evaluate what you would do given similar circumstances. I was surprised at how often I came to the conclusion that I would do the same as another when I took their perspective. If something needed to be fixed, I had a better idea of how to go about fixing it. I know there is a TV show that takes this concept to an extreme. The boss goes undercover into his operations and his eyes are opened wide. If you have to go incognito into your own organization to find out what is going on, then you are losing.

                We get bombarded by email and data by the hour. Take some time and respond to an email in person. If you see data that puzzles you, go ask someone about it who is closer to the source than the person that delivered the data. I bet you will learn more through these direct conversations then you would through an email exchange.  Some may see this as “going around” the hierarchy or “skip-leveling.” That is ridiculous. Obviously you shouldn’t make a habit of getting all your information from those who are not your direct reports but if you want to be approachable then you better learn how to approach others. Of course you don’t have to have an open door policy at all. You can communicate with your trusted lieutenants and let them carry your flag to battle. People have been successful doing this. If, however, you want to be recognized as someone who has an open door, then honestly do something about it. Walk out of it.

Back to Basics (stuff you already know)

Back to Basics (stuff you already know)

By: David Van Rossum

I have been in several meetings over the last few years that focused on the need to address the younger market in today’s society. This consumer constituency has grown up with computers and smart phones. They have embraced social media. They are used to instant responses. This group is different from the Greatest Generation, the TV Generation, the “Latch-key” Generation and Generation X. Their exposure to the real world is extremely broad. They are gamers. They get immersed in reality programming that depicts the unreal. The ability of this generation to search for answers, both important and trivial, is much greater than ever before because of the internet. Reaching this market is paramount for businesses to survive through the next decades as their earning power grows. Employers have become cognizant of creating work environments that combine the companies’ expected productivity with the expectations of this generation that has been raised in a “softer” world than that of their parents. These people are deemed to be different than our parents and rightfully so. Are they different as consumers? Mulling how to address this market has been a boon to consultants. In my view it isn’t as problematic as we sometimes make it out to be. The truth is that today’s young people are not the only ones who utilize internet searches, post on Facebook, publish with Twitter, watch reality shows, and play video games. If you didn’t grow up in the personal computing age it doesn’t mean you don’t avail yourself to the wonders that it has brought. Consumer needs and tastes change over time. Entertainment vehicles and business tools progress. Consumer expectations, however, may not change as much as we think.

How to reach a newer audience is a continuing challenge. Advertising on social media is a relatively new concept, but is truly just an evolution. Newspaper and magazine ads were augmented by radio spots and eventually television commercials. My generation grew up with TV, but our parents watched as well. Our kids are immersed in social media, but social media is used by people of all ages. Advertising has always been tailored to different age groups, but it would be a mistake to ignore the opportunity to reach multiple audiences by believing that is only the younger generation who use the latest technologically generated vehicle of access. We need to be aware that modern mediums reach broad markets.

A couple of years ago a consultant addressed a group that I was involved with in the financial services market. His main theme was how to capture the young consumer base. His presentation concentrated on what was most important to this group. Research data was provided that came to the conclusion that what this group wanted the most was to be treated with respect. I remember musing that this shouldn’t be a surprise. Doesn’t every consumer group want to be taken seriously? If you are trying to sell to a constituency, then you had better treat them right. This is nothing new, just a basic tenet of business. Addressing the most important want of the younger generation should be a piece of cake.

The next thing that this new consumer group was looking for was speed and ease of use. Once again, I don’t believe this is a different want than most of the rest of the market. Good businesses have survived and thrived by developing new services that utilize emerging technologies and concepts to make the consumer experience easier and faster. Years ago banks invested in drive-through stations to accommodate a  more mobile society. Then came ATMs and kiosks that can be placed in convenient locations. Then internet banking boomed, allowing individuals and businesses to bank from their desks. Twenty four hour service is expected. Today, services can be accessed through smart phones, allowing for transactions and even deposits while on the move. Young consumers may expect this, but consumers of all generations use them. Consumer respect and speed and ease of service don’t seem to me to be generationally driven.

Advertising on social media is a relatively new concept, but is truly just an evolution. Newspaper and magazine ads were augmented by radio spots and eventually television commercials. My generation grew up with TV, but our parents watched as well. Our kids are immersed in social media, but social media is used by people of all ages. Advertising has always been tailored to different age groups, but it would be a mistake to ignore the opportunity to reach multiple audiences by believing that is only the younger generation who use the latest technologically generated vehicle of access. It is important to reach audiences through the mediums that they access. Today’s mediums reach broad markets rather easily.

           The fundamental building blocks of a successful company cannot be ignored. Create a good product, price it competitively, reach your market and service both the product and the market to build loyalty and repeat purchasers. Change in generational social environments shouldn’t alter that basic cycle of thinking. It is apparent to me that most consumers want the same things from their vendors. They want quality. They want convenience. They want good pricing. They want post purchase service. In other words, they want respect and speed and ease of use. It doesn’t matter if you are 23 or 53. Reaching target audiences is the art of marketing. Good marketers design campaigns that target groups with relatable themes or personalities. Good marketers also realize that it is not only the young that use the youngest inventions. Good companies realize that every customer is important and the best way to convey that importance is to give them what they expect. The basic elements of what a consumer expects haven’t changed in generations.

Don’t Be Too Afraid of the Other Guy

Don’t Be Too Afraid of the Other Guy

By: David Van Rossum

I have done business with firms from different industries and in different regions and countries. I have been cautioned by internal experts, outside advisors and potential customers, suppliers, and business combination candidates about the nuances of doing business with each of these diverse groups.  I have been told how difficult it is to be successful in the “oil patch.” I have been told that is hard to do a deal in Asia. I have been told to let Europeans control the pace of a deal. I have been told not to press a deal or enforce a contractual remedy because of cultural considerations. Sales executives would inform me over and over again that “It’s tough to do business with these guys.” Supply management would sometimes echo those thoughts when we were the customer. I have been told how difficult it is to be in the hospitality space. I have been told that it would take me years to understand how to do business in the consumer electronics arena. I have been warned that high tech companies, big and small, are a different breed. In all of these examples it was made clear to me that dealing with these groups is so unique or difficult that I needed to either curb my expectations of deal outcomes, or be patient with the pace of talks, or remove myself from the internal discussions entirely because I couldn’t possibly “get it.” Many times I have wondered aloud whether the other guys were telling themselves that my company was “tough” to do business with or that they must work hard not to offend us.  Sorting through what is real and what are excuses can be a frustrating exercise.

I believe you should always be respectful when doing business. It is important to be cognizant of cultural differences so as not to offend. I think it is good practice to treat the other party as guests, deferring to their customs no matter if I am home or in foreign territory. I believe it is my job to create a comfortable deal environment no matter who is hosting. I also agree that it is tough to do business in some locales because of trade laws that need to be navigated in foreign countries and/or because of our laws that rightly prohibit some local customs (real or invented) such as kickbacks to individual representatives of companies. I also understand that each business space has differences from others. Companies in the “oil patch” do operate differently than those in other industries, just as executives in the high tech arena are different than those in municipal government. I get all that. Everyone is different. That is not an excuse to be less successful than planned.

When you are looking to do a deal and find a willing partner, it is important to understand how they expect to move forward. You need to establish where the decision authority is and whether you are dealing at the appropriately empowered level. You need to establish a mutual time table to get a deal done. You have to have solid intelligence regarding possible competition. You and your company need to be aware of any regulatory issues, stability of governments, stability of economies and applicable tariffs. I believe you should be respectful of individuals and possible cultural differences. You cannot forget, however, that your aim is to do a business deal that is a win for your company. You cannot allow excuses of company culture or national dynamics to settle for less or ultimately do a bad deal. You definitely cannot allow those cultural dynamics to harm your position once a contract has been signed. If you believe in your products and your ability to deliver them, then you shouldn’t be afraid to negotiate with anyone.

I once worked for a company that was owed a very large overdue payment totaling several hundred million dollars. The party that was late was an Asian company, well known, and certainly a prized customer. The money that was owed was to be disbursed by a banking entity under a project financing agreement with the Asian firm. The bank was also Asian based. The customer had to issue a certification that work was complete before the bank was authorized to remit payment, which of course would start the clock on interest accumulation to the customer. My company had completed a milestone and submitted an invoice in accordance with our agreement. There was some discussion as to the completion of the milestone, a normal occurrence in this type of project. After a period of time, our engineers and project managers were adamant that we had met the milestone. We had incurred significant costs toward the completion of the milestone but were dependent on the release of funds to reimburse our efforts. More time went by and it was evident that our customer was not willing to pay until they received concessions from my company, and was able to “turn on” the product that they were receiving from us, and resell that product to their market. When I was completely assured that we had met our performance burden, I began to formulate a plan, based on the contract terms, to effect payment. That’s when it became difficult. Not because of our customer, but because of our interpretation of what was “a right way to do business with them.”

We all are aware that concessions are made for many reasons, especially to very large or influential customers. We might give in to preserve a relationship that could result in future business. We weigh pros and cons and negotiate amendments or new agreements that ultimately work for both sides. This was different. This was a huge payment and it was to be released through a third party. I suggested in our internal meetings that we put the customer in default and take steps to not allow them to utilize or product until it was paid. Our sales and project management team argued against this approach. If we issued a default notice, then the bank would find out. Our customer would ”lose face”. That is their culture. We couldn’t embarrass them. If we turned off service then they would lose face with their customers, and that too was unacceptable. What we needed to do, according to our group that was in charge of the account, was to have high level discussions with their executives so that we can come to an agreement. This was the same internal group, mind you, that clearly felt we had met our contractual obligations! Recognizing the size and influence of the customer we agreed to have those discussions. We accommodated the customers work schedule and had the calls in the early morning hours stateside. We were cordial and spent many hours on these calls, investigated all of their claims and tried to collect on our receivable. This went on for many weeks. My frustration was growing and I continued to advocate taking contractual steps to effect payment. Our sales and project teams arranged more talks so the customer could explain how putting our customer in default would hurt their relationship with the bank and how it would be untenable for us to shut down service. No kidding. Nobody seemed to be concerned about our relationship with our shareholders! I listened, argued, and got more frustrated. More time went by and we were still not paid. Our cash flow projections were severely affected and we had no visibility if and when the customer would authorize payment. We were approaching the end of another quarter and we were no closer to collecting payment then we were months earlier.

I was finally able to get an internal buy-in to serve the default notice and give a deadline for service shut off. A call was arranged and I explained our decision. The customer asked for another call in a week so they could assess their options. We gave them two days. Our sales and project groups were horrified. The follow-up call was held. There was nothing new. Still our team begged not to take the action. We did anyway. The notice went out. We did not turn on service. Then we got paid. Several hundred million dollars. I have no idea when we would have been paid if we had not enforced contractual remedies. We had been more than patient. The nonpayment went far beyond a reasonable concession for a good customer. The Asian company survived this episode. It is still a large company. I’m sure it was embarrassing for them to have their bank release payment under a default scenario when they couldn’t defend their position. I would guess that they still have a significant working relationship with the bank.

The point of that story isn’t that we made the right decision. We really didn’t. We protracted talks way beyond what was reasonable for customer deference. The point isn’t to say that customer deference due to culture or relationship is wrong or that deals in Asia are problematic. The point is that a company must balance customer relationships against the need to recover the consideration promised for performance. We cannot be intimidated by companies, business segments, or regions that are “tough to deal with.” If an agreement is reached, then the agreement needs to be enforced. Both ways. Once the agreement has been signed, then each party is obligated to perform. It is important to hold your customer or supplier to the terms of an agreement. If your counter party falls short and looks to negotiate, then make sure you obtain equal or greater benefits than those you give up. A company must regulate this activity at the executive level. It sounds so easy, but I have been unpleasantly surprised at the disadvantages we can artificially create. We can see it on a national trade level. We are sometimes slow or unwilling to balance terms with some trade partners. We should always work to understand the point of view of our trade partners, and show respect for their culture. We should also expect the same from the other side.

I Am Confused

I Am Confused

By: David Van Rossum

                I am confused. Why do so many people get angry at companies that become successful and make a lot of money? Why is it unfair? America has long been self described as the land of opportunity. How come when individuals exploit opportunities and become rich, many people think that those same people are selfish and maybe even evil? I do not want to get into the “fair share” argument over taxation here, but I wish I could understand the mindset of those who begrudge individuals who have done what most of us dream of doing? I am a fan of those corporations that generate profits for their owners and also give charitably. Virtually all of them give.  I am not complaining about the right of the “occupiers” to protest. It is our way to be heard. I am concerned about our legislators that take up the anti-business, anti-rich sentiment. They should know better. The concepts of free market and free enterprises have sparked national success, yet it would seem that these concepts are forgotten when people are protesting that they aren’t getting their fair share. It is fine with me that people want more of the pie. How some want to attain it puzzles me.

                Our government is alternately accused of being too business friendly and being too restrictive. Elected officials are caught between protecting the republic, its constitution, and economic foundations versus enforcing the will of their constituents. That is the way it should be. That balance is what makes our concept of governing great. Balancing the creeds of our nation with the wants of the populace is what we are all about. Temporarily abandoning either side of this well thought out system in order to garner reelection is what gets us in trouble. Most people are not wildly successful. That is no reason to disdain those that are. Most of us want what they have. Most companies don’t reap huge profits. That doesn’t make those that do evil.  

                I believe that our country has done a decent job evolving business regulations throughout our history. Anti monopoly laws to protect the public from unfair pricing and accessibility for those products that are deemed to be necessities were, and are, prudent. Legislation to protect worker’s rights and safety are also important. We have a mixed bag on negotiating trade agreements with other countries. The ideas are good, sometimes the agreements are not. Consumer protection is important but we shouldn’t legislate individual risk out of the picture. Disclosure laws should be adequate in most cases. Government intervention to protect the public interest is sometimes necessary. Oversight is good, but excessive oversight is disastrous. The bailout of a couple of years ago was well intentioned. Should the government restrict businesses from being too big to fail? I don’t think they should, but the track record of some of those in charge of these entities has been atrocious. It is their job to identify and mitigate risk to their investors, and some obviously did not. Those failures should not, however, lead to regulations that restrict companies from doing business by introducing expensive and time consuming reporting rules that ultimately get paid for by the people that the government intends to protect. Onerous restrictions make it harder for our businesses to compete in the world market and consumer prices invariably rise at home.

                A company generally needs to increase in value to attract and reward investors. Growing year over year profits is the aim. When a restriction is placed on companies or market segments that results in rising costs or declining revenue, the customers will surely bear the brunt of the pain. For example, Congress passed a regulation that limited how much money large financial institutions could charge for interchange fees on non-cash transactions. Merchants complained that the rates were too high. Those institutions inevitably will have to replace the lost income by introducing more fees or increasing borrowing rates in order to deliver successful year over year results. The consumers will have to bear those increases and the jury is out on whether the merchants will pass along their decreased costs. I doubt it. Our system isn’t supposed to work that way. If the merchants think that the interchange costs are too high, they should take their collective complaint to the marketplace, not Congress. New options generally materialize to address disgruntled markets. Competition for the merchant’s business should be sufficient to solve construed unfair pricing on services. Remember the outcry from the public when B of A tried to impose a monthly $5 fee for debit cards? They eventually caved but they will find other ways to increase revenue that will fall on their large business base. That doesn’t make them evil. It is what they are chartered to do by their owners. The public can look to other options for their banking needs. Once again, the government should intervene if there is a collusive effort by an entire industry to fix pricing for needed products, but it shouldn’t legislate pricing when there is plenty of competition (anti trust laws are there for a reason). The government sometimes helps to perpetuate the divide between the public and business by reacting in ways that are contrary to our free market system. Business is not evil. Business provides goods and services, and oh yeah, jobs.

                The free market spurs competition. Competition spurs affordability and innovation. Rewarding companies and individuals for building wealth should not be vilified. Those who look for a free piece of the pie that others have earned are subscribing to a viewpoint that is counter to the system that has helped make us great. Following their dissatisfaction to the end would result in nationalizing our businesses much like Castro did in Cuba. Is that really what they want?? I hope not. Not only does that system stunt individual economic well being, it also dissolves individual hopes and dreams of attaining a much better standard of living. I don’t want that, do you?

                I applaud those that have attained success and wealth. I want to be a part of a system that allows me the opportunity to do the same. Professional athletes and team owners are criticized for their enormous wealth. They should be admired for building such an interest in their products that allows them riches. That is the American way. Develop a product or service that the public is willing to pay for, and then find out how much they are willing to pay. The wealth that is generated doesn’t go into a mattress. It goes back into the economy so that those who have can continue to have, and hopefully have more. That investment is used to provide capital to grow other business sectors, providing jobs. Why are so many complaining about our system? Why would a successful country that has been built on individual freedoms and a strong free market be asked to change? Let us applaud those that give, but let’s not boo those who achieve. I love our system. I want a chance. Many in Congress appear to want to curb the ability of our enterprises to thrive and change the way our system works. I am confused.

The Three T’s of Early December-Tebow, Tiger and Trump

The Three T’s of Early December-Tebow, Tiger and Trump

By: David Van Rossum

I became a Denver Bronco fan when I was a kid living at The Air Force Academy.  My dad was stationed there and my love for sports blossomed in those fabulous years between ages 5 and 9. Through the four subsequent moves that my family would make until settling in New England, I remained a Bronco fan. Thirty five years later I still am. So, yes I screamed for Tim Tebow to get a chance. He couldn’t make things worse than they had been in the past two years. I have watched every game he has started, all but one an emotional ride that have resulted in exciting, sometimes improbable wins. He is sure getting a lot of media attention. Some doubt his abilities, some don’t like that he wears his religious beliefs on his sleeve, and some think that he is getting too much credit for Bronco victories. Others believe he has “it”, that elusive intangible quality that lifts his performance level beyond explainable human feats. Whatever he is, he is an entertainment story that sells. I’m ok with that; it’s not a big deal to me. I just like the wins. If the Broncos win with him at the QB position then he is my guy. If they begin to lose and his poor performance is a big part of that slide, well then he can be added to the junk pile strewn with all the pretenders since John Elway retired. It’s all about results.

                Tiger Woods was a great golfer. He was a huge media story before he became what he was supposed to be. Woods handled it all well. He would win or play well, yet he would still talk about having to continue to work hard at his game. Then he would work hard at his game. He was amazing. He was exactly what his dad wanted him to be. Unlike the sad story of Todd Marinovich, he embraced it and achieved. Tiger had some injuries and then the stories of his infidelities became public. He was reviled. He didn’t play well when he entered tournaments and he didn’t enter many. He won a tournament this past weekend. The golf public seems to be happy with that. Whatever he is, he is an entertainment story that sells. I’m ok with that; it’s not a big deal to me. He may return to his earlier phenomenal success. Good for him. Not because he deserves a second chance after his disgusting behavior as a husband, but because he continues to work hard at his public sport, and he just got the ultimate result- a win. It’s all about results.

                Donald Trump is and has been a successful businessman. Just ask him. He kinda started a presidential campaign and kinda stopped it. He has lots of news and commentary shows vying for his on-air time. He has a very public life and a lot of buildings and enterprises that bear his name. Whatever he is, he is an entertainment story that sells. I’m ok with that. I am not ok with his undeserved media pulpit from which he is perceived as a political guru. He is a ratings getter. That is why he is on everywhere. He has not subjected himself to the scrutiny that those who are running endure. I wonder if he would survive such vetting. He does not deserve status as a political oracle and we should not be foolish enough to give his opinion too much weight as we move through our draining political selection process. It’s all about results, and I believe it would be a shame if Trump is granted too much influence toward the results of the 2012 elections.

                Trump is obviously good at creating wealth and fame for himself. I do not believe that is a qualification to command the amount of time he gets to spout his political opinions. A lot of his views may be spot on. He is big on telling us all that he saw everything coming years ago. He would be tough to China. Good, then run. If not, then go back and fire people on TV. I believe we should all be able to express our opinions, especially regarding the government of our country. I don’t think, however, that because Oprah or Bono or Trump thinks something, that their fans should be unduly influenced. I think too many of us are.  I have no problem with the republican candidates visiting with The Donald to hear his thoughts on trade. I think that is good. I do not like the fact that Trump is acting like and being portrayed as a Kingmaker. You need the evangelicals, you need the independents and you need The Donald. Sadly, he may very well be a kingmaker.

 I wish more of us would seriously consider the issues of today and the future. We should ask ourselves if we think we are taxed fairly. We should consider, thoughtfully, the arguments of both sides regarding increasing the tax rates of the “rich”. We should question how wisely the government spends our money. We should hear clearly both sides of the energy vs. environment debate as it relates to increased drilling. Most of us don’t. We hear the arguments and rebuttals from one point of view. If we are liberal then we seek commentary from the left. If we are conservative then we seek commentary from the right. If you don’t think media has an agenda then ask yourself how Newt Gingrich (whose politics I admire) is getting a free pass from all major media outlets regarding his past personal baggage. The right likes his policies and doesn’t want to stifle the primary debate, and the left would love for Newt to be Obama’s opponent next November. If Mr. Gingrich garners the republican nomination, the left leaning media will surely bombard us with stories that could be run now. Maybe I am just a cynic, but I believe we get and absorb political information the same way Congress operates- from one side. We as a nation need to do a better job of seeking both sides of the political debate, weighing them equally and then deciding issue by issue how decisions affect us, our families and our community. I know some do, but I don’t think enough of us try to obtain enough information to make an informed choice. I believe voters in 1800 did a better job of forming their opinions with much less and a much slower flow of information. They read the pamphlets that were printed from both sides. Sure, those were nasty elections too and partisanship wasn’t invented in the twenty first century, but folks could take the time to read and absorb.

                So, the three T’s of early December are all over the television and the internet. I hope Tebow takes my Broncos to the Promised Land. I hope our interpretation of Tiger’s redemption is confined to his future success on the golf course. Most of all, I hope we can all dismiss Trump as a serious political figure and we see and hear less of him as we mull our political choices. It really is all about results.

The Best Places to Work

The Best Places to Work

By: David Van Rossum

We have all seen lists of the best companies to work for. These lists are sorted in various ways as is the practice in publishing business lists. They are sorted by region, size and industry. They are voted on in polls or identified by media based on research.  Organizations use high rankings in these lists to recruit and tout their employee focused corporate culture. I recently saw a job posting that described how the CEO had pizza parties every Friday. I like pizza but it’s not on my top ten list of employment concerns. The way we dress in a business setting has changed drastically over the last couple of decades. The prevalent theory is that a comfortable work environment spawns creativity and increased production and I don’t doubt it. Job titles have morphed as well. I have seen postings for Chief People Officers and Head Cat Wranglers. Organizations have become flatter or, in some cases, claim to be. Flex time, telecommuting, virtual offices and the ability to earn sabbatical time from a business are in vogue. Many young people expect their work environment to include these less rigid settings since they have not experienced different environments. Companies can attract top performers from competitors and the general labor market if they are perceived to be one of the best places to work.  The military-like labor hierarchy of our old manufacturing based economy has changed as our business landscape has evolved toward service and software generated products. A happy employee is a good employee. It makes sense. I want my fellow workers to proudly wear company apparel. It’s all good.

                Companies need to provide employees with a safe work place. They should pay a competitive wage. They should be fair in disciplining, promoting and financially incenting their workforce. They should have clearly communicated goals at all levels. They should have internal communication structures that allow information to flow appropriately.  They should try to be a good corporate citizen in their community. They need to implement strategies to attain shareholder wishes. The employee owes the company sustained hard and effective work. What makes a company a great place to work, in my opinion, are those listed above in this paragraph together with another important element, a sustained success in the market place with promise for future growth. Employees should work hard to achieve that sustained success. That success provides job security (always important, but especially in today’s marketplace) and hopefully individual career growth and increased compensation. I do not mean to exclude start-up companies from my description. Obviously they would have trouble meeting my sustained success threshold. They can, however, have a solid plan for future success and executives and other key employees who have “done it before” or the backing of PE firms or others who have expertly gauged their chances.  A successful company that provides a fair and safe work environment, market based compensation, and community involvement is the kind of place where I want to work. The perquisites listed in the first paragraph are welcome by me, but they are secondary to the basics of business. If the focus is slanted too much toward employee comfort and the development of a “cool" corporate culture, hard times may be difficult to navigate.

                I admire successful companies that have adapted their culture to be employee-centric without losing customer focus. I can remember the evolution of dress codes from business suits, to casual Fridays to only wearing a suit when deemed appropriate. What you wear doesn’t correlate to success. The New York Yankees had strict grooming and travel attire rules under Joe Torre. They were successful. The Tampa Bay Rays under Joe Maddon enjoy a completely different culture. They are successful. The company culture doesn’t always insure success or failure. Everyone having a voice is ideal. Everyone having a vote can be slow (see Congress). Someone has to be the boss. A young company would do well to concentrate on developing a sound business foundation based on solid products, cash flow and growth. It’s great if they can do this from the beach. If they can’t then they should not be at the beach, but in the office.

The goal of being the best company to work for is admirable if it is combined with the primary goal of attaining shareholder expectations. A company should never abandon safe, fair, and consistent work rules to achieve those expectations, but they shouldn’t promote relaxed work environments over the value of good, hard work ethics and focusing on overall company results. I worry sometimes that our fresh, newly educated college grads expect a casual environment where their happiness is the number one priority of their employer. Companies do not owe employees free pizza and flex time. They are luxuries. If you are lucky enough to work for a company that provides these luxuries, count your blessings. If you don’t, but you are doing well financially and have a stable future, you are still lucky. If I had my druthers, I would like to work hard in a “cool” company culture for a successful firm. Have my beautifully frosted cake and eat it too. Most importantly, I want to eat and know I can next year too if I do my job well. The rest is gravy.

Company Waste: Some Companies Too Slow to React to Downturns

Company Waste: Some Companies Too Slow to React to Downturns

By: David Van Rossum

Take care of the small things and the big things will take care of themselves. Ever hear that? A nice adage designed to remind us to keep an eye on detail.  A company in the midst of a downturn would do well to reverse that thinking.

                Many of us have worked for firms that have been forced to cut costs because of declining sales or sharply rising costs. Meetings are held to figure out how to eliminate waste. Forecasting the length of decline is always a problem. Ideas that percolate during these meetings are numerous. Adjust the thermostats to lower heating or cooling costs. Use less paper. Use the backside of documents for notes. Turn off lights. Maybe reduce the lighting by removing half of the bulbs. Get rid of the coffee service. Have the cleaners come in less often. Eliminate certain expenses such as paying for lunch locally when there are no outside participants. Reduce magazine and newspaper subscriptions. Cancel a holiday party. Adjust the intervals for landscaping services. All of the above could have been done long ago, but weren’t because things were good. The list grows and after the meetings we are satisfied that these changes will both save money and instill a sense of urgency in our workforce as we all share in the pain. It also signals that more drastic measures may follow, unsettling many and perhaps incenting others to pitch in with more ideas or greater productivity.

                Time passes and the decline continues. Reality hits. The company needs bigger savings. More ideas are put forth. These are the tough ones. Headcount reduction, changes in healthcare benefits, shutting down locations, terminating production commitments, pay cuts or schedule reductions, forced shutdowns. Numbers are run. Reality sets in. Time passes. The firm waits another month just in case business picks up due to price changes or specials that are implemented.  When they don’t work, they decide that they have to pull the trigger on these draconian measures. Lists are formulated as to who goes and who stays. This gets hashed out over time. Then the decision is made. The company will implement these measures in two weeks. This gives them time to craft separation agreements and consult with labor attorneys. It gives them time to negotiate with suppliers. Secrecy is paramount, but everyone knows. The need for resources is debated and adjustments may be made. The plan finally goes into action. The survivors take a big breath and acknowledge the hardship of maintaining the operation with reduced resources. Executives congratulate each other for making the tough decisions. Valuable employees cast an eye toward other opportunities as people tell each other that they are “lucky to even have a job.” The message is sent out from the CEO that the regrettable actions are necessary but if everyone pulls their oars the company will rebound and grow to be bigger and better in the future. The C levels drive their company cars home and worry. The cuts are two months too late.  Sound familiar?

                When a company is forced to significantly reduce costs, they are almost always too slow to respond. Should they implement small savings programs such as those described in the first paragraph? Of course. Should they be implemented before attacking the larger issues? No. When the demand for goods or services decline, or the market isn’t able to absorb price increases for products that have been rocked with higher costs, it is generally due to one of two basic issues. The products or services are not a necessity, or the competition has built a better mousetrap. If your output isn’t a necessity to your customers, you better have a plan to implement before the decline starts. Staying ahead or current with competition should be built into your corporate culture. That is a subject for another day. When profits erode, place an emphasis on taking care of the big things first.

                 

                When profit declines or decline is predictably imminent for a company, management should look to protect the investment of the shareholders as aggressively as possible. Financial service companies have detailed disaster recovery plans. Most companies have succession plans. All organizations should have a plan to deal swiftly with a downturn. For example, supply chain management should have a ready list of the costs of slowing down or cancelling vendor commitments.  All managers should have a reduction plan including headcount, facilities or other resources and their consequences. Executives should have an idea of possible partnering arrangements with friends and competitors alike. These arrangements could include sharing shipping containers, rebranding excess inventories, sharing back office support, and possible business combinations including merger or acquisition. The finance department should be well versed on debt covenants. These are all big ticket items that need already be identified when the decline begins. Your company probably has some unique costs. Most companies don’t have these possible actions outlined and updated. Some do, but probably because they had to go through a cost reduction recently and they are now faced with further cuts. It would be dangerous to act on many of these ideas prematurely.  It could be devastating to suddenly be unable to meet demand if the downturn was merely a blip. If, however, you are in a meeting that discusses getting rid of a coffee service or reducing office cleaning intervals, trust me, you better have large cost saving plans available and ready to be enacted.

                If your company is beginning to struggle or is in the midst of a downturn, chances are so are its customers. Those customers will be looking to roll back deliveries or slow down payment for your products. They will probably look to negotiate changes in their buying commitments. Your company better be attempting to do the same with their suppliers. Reducing headcount is a very hard thing to come to terms with. Keep in mind that it is much easier to recall laid-off workers if business picks up then recover the capital spent for an unnecessarily large workforce.

                My message is simple: Be prepared to reduce your large costs when a down turn forces you to turn down the thermometer!

An American Somebody

An American Somebody

By: David Van Rossum

    This fall is different somehow. When you ask a New Englander what their favorite time of year is, you shouldn’t be surprised that autumn is an oft received answer. The weather is generally suited for outdoor activities and the home provides a comfort at night. The foliage is spectacular and the combination of football, hockey, basketball, field hockey, and golf is hard to beat for an active sports fan or a doting grandparent watching youth programs. Halloween announces the coming of the Thanksgiving season with the joy of beaming small faces dressed to scare or impress at your door, lighting up the darkness that begins to encroach on our days. Thanksgiving gatherings, though sometimes filled with family strife, end with the beginning of the colorful season of Christmas where the newly bared landscape comes alive with bright reds, greens, silver and bright whites that the holiday brings through natural and artificial sources. Tourists are confined to weekends and the snowbirds haven’t begun their migration to their homes in Ft. Meyers or Daytona or Phoenix. The community is alive with those that call here home. But this fall is different.

     The news of this fall isn’t good. The economy isn’t providing job growth. Worldwide unrest and revolution seems so much closer now than it did when I was a kid. The political campaigns are filled with finger pointing and outlandish criticism from those brave enough to enter the fray and those who get paid to tell us what we should be able to discern for ourselves. The tragedy of the goings on at Penn State rock our faith not only in what was once a Rockwell portrait of a college town bound together by the love of the school, the Nittany Lions and Joe Paterno, but  also in the makeup of our day to day population. The dreamer and the cynic are both dead. Apple will survive, but network TV as we know it may be dying as well. Wall Street is occupied because some have and many don’t, but are the demise of capitalism and the redistribution of wealth going to make things better? I want my children and their children to keep the incentive to succeed in a free market that we have enjoyed for generations. We are closer to each other thanks to social media, but in many ways we are further apart. We don’t need to see each other. That is a shame.

     I have walked the beach here on the coast of New Hampshire more times than I can count. Generally I walk down the road to the beach access, then south toward Jenness Beach, stopping for coffee at Rye General or the Sandpiper during the months they are open. Sometimes my wife and I walk together, sometimes we have a dog or two with us, and sometimes I walk alone. It is rare that I don’t run into a friend or acquaintance along the way or at the store. The number of people along the way change with the seasons but the surfers are always there, seemingly in increasing populations. The fall is a wonderful time for these walks. This is when almost everyone you encounter is home. This fall has not changed in that regard but still it is different.

     A lack of a lucky streak is unsettling to me. I am out of work and have been for a long time. Trying hard to put on a brave face and search the internet and personal connections for a position where I know I can contribute and can sustain my family is a daily ritual. The years of good living that we have enjoyed due to past hard work has deteriorated into the uncertainty of how to heat the too big house that has been for sale for three years, now priced at 75% of the tax assessed value. I worry about food prices. It is wearing on me that the head start I was able to give my children versus what I was able to get from my hard-working parents has come to an end. Though this is a different perspective for me, it is not what sets this particular season apart for me.   
                                   
     Lately my walks have changed. I see the tracks of bare feet and shoes and wonder who they belong to. I appreciate the fact that I live in a beautiful place. I have the same number of dreams but their duration is shorter. I don’t know if that is because of age, circumstance or the strangeness that has abounded the past couple of months. Not Stephen King scary strange, but eerie nonetheless.

     A few weeks ago I walked down the beach among groups of small shore birds. I am no expert on wildlife. They were birds I have seen many times scuttling toward the shallow waves and retreating at a quicker pace. Sandpipers maybe. I know we have plover in the area. This particular morning their behavior was changed. As I walked, a group of these busy birds skittered around me. This circle moved with me for many yards, then fell back. Shortly I met another group and they too circled my path for another distance. Never before and not since have I experienced this peculiar procession. I imagined, perhaps foolishly, that they were forming some sort of protection against the unknown or they were looking for the same from me. Days later my wife and I were walking the sands and came across many dead seagulls and the washed-up carcasses of baby seals. This phenomenon persisted for days up and down the New England coast. Scientists investigated, but no answers have been found as of this writing. The Halloween that we look forward to never really happened. A storm blitzed the region with a wet snow that knocked power out for days and caused many communities to postpone trick-or-treat night to early November. I’m not even sure when it was held in my town. Then warm weather arrived, livening-up the coast in a way that seemed unnatural. The moon shone bright as the days shortened. Our dogs were reluctant to stay outside for long. Fall was different somehow.

     Yesterday morning I walked home along the beach with a mild wind at my back. Coffee in hand I strolled with no purpose as I gazed at the few surfers that were out in relatively calm waters. People were walking their dogs as usual, but not as many as I would have expected on this sunny day. I saw no one I knew. I noticed large shells along the way and tried to recall if this was normal. My mind was full of worry as I contemplated the job search that I would continue upon my arrival to my study. I paused per usual at the water end of the short beach access road that would take me to Old Beach Road. I was studying the motion of the small waves when I noticed some activity to my right. A woman had come out of her very nice house that abutted the sand. She began to lower our flag from the pole that rose from her patio. Recalling some deep seated protocol I turned toward the descending flag, removed my ball cap and stood as much at attention as I know how. While I was performing this show of respect for the emblem of our great country, I realized that my actions were meant to be noticed by this stranger of a lady who had no idea I was even there. I was doing it for the acknowledgement of doing the right thing not for truly heartfelt pure patriotism. Maybe I needed that reinforcement, but I was ashamed of myself. I paused a moment more then started up the access road, thinking about what the flag represents to me. I can’t say my heart grew ten times bigger like the Grinch, but I know that my reflections brought me back to what was fundamentally important.  Of all the events and sights that were seemingly foreign to me this season, the ideals that should never wane in importance were the same as when I was first aware of them.  Life, Family, Community and Country. I am blessed to be a part of all of them, and it is my duty to protect and try to make better those basic elements that make up my being. I hope I can.

     Thanksgiving looms in just a few days. I now know what to be thankful for. This fall feels different somehow.

Company Waste: The Mission Statement

Company Waste: The Mission Statement

By: David Van Rossum

                 Walk in to any company today and you will be sure to see a mission statement posted prominently for all to see.  These statements are used as a tool to help bind employees toward specific ideals and to show customers and the market place that the company has a guiding theme. These statements are revisited from year to year by in-house focus groups sometimes aided by consultants. Many times they are joined by sister statements of various names that focus more toward the execution of the mission statement. These sessions are often valuable as forums to exchange ideas and provoke lively discussion, a worthy use of time. Their intended products, however, are not as useful as those discussions.  The mission statement often talks about being innovative, or providing the best product or service. They may extol the company’s aim to be community oriented and to provide a healthy workplace. Some  may speak to the environment. They are all short and to the point. Few employees think of these statements as they go about their daily business.

                These statement are a little like going to church once a week, though as stated previously they are visited less frequently. Organizations are seeming to  fulfill a responsibility to tell themselves and the world what they are striving to be. Different thoughts emerge in different sessions separated by time and changes in the company or marketplace.  They change the same way quality programs do. They have different names. Quality programs are meant to ensure and improve quality. Some programs teach you how to measure quality consistently and uniformly. They teach you how to measure processes even if it means merely depicting what you did wrong again and again. They do not remediate, they report. Consultants and specialized companies make their money by designing and showing how to implement their programs so the company can proudly proclaim that they have become certified on how to measure the quality of their operation.  The real challenge, I have found, is not figuring out how well you do something, but concentrating on how to improve on what it is you do. Mission statements do none of the above.

                Too often management gets embroiled in discussing mission and purpose without injecting the reality of why they exist at all. A business is incorporated to make money. The money they make is to either be distributed to shareholders or put back into the business to generate further return. For a nonprofit this return may be in the form of providing more services or reaching a larger population.  For profit companies may reinvest in order to increase future income, adding to the worth of the company for its owners. It’s that simple. Those ideas should be the focus of a mission statement.

                The words in contemporary mission statements, if adhered to absolutely, can enhance or impinge on the concepts of growth or increasing profits. Many  companies have statements that talk about being environmentally sensitive. They may change packaging or choose “green” energy to power their operations. These practices invariably increase costs. This rise in cost will result in lower margins if the company is in a price sensitive environment. If not, they may be able to increase their prices to their customers and not take a hit for their social awareness. Mission statements that call for “the best” product or service do not take into account that providing such may require significant additional resources that would cost them right out of the market. Companies that tout community service and are true to their pledge, lose productivity when employees are not available due to “service days” that are paid for by the community and do not add to the productivity of the company.

                Don’t get me wrong. I’m all for community involvement, striving to be the best, and being sensitive to the environment. They are qualities that I admire greatly in companies that actually implement programs that make them “good corporate citizens.” Those elements of a company’s makeup are, to me, part of a definition of what the company is as it moves toward its real mission of increasing shareholder value. Community involvement and green energy can be an effective part of an advertising program. Firms that donate money or employee time are, more often than not, rewarded with signage and local media coverage that makes the commitment a cost effective tool in reaching customers. Altruism is not, it would seem, free in these circumstances as ink space and banners are dedicated to trumpet the donor and not the cause. That’s okay. Again, I see this as a tool toward the real mission of a company. I don’t think that organizations in decline will make the same commitment to being green and participating philanthropically that they would when profits were growing. That doesn’t make sense if it’s in their mission statement, does it? Shareholder value trumps charity, and it should. It is why the company exists in the first place.

                So I ask, why spend money and time over and over again in order to define the company’s mission when it can be summed up in ten seconds? Some of that money can drop to the bottom line and maybe some can go to a solar panel. Replace those framed words with framed results and defined business goals. Safety programs do this well. They advocate a goal such as number of lost days in a period and then report on the progress. The idea is to promote and provide safety. Simple. We should stop spending money and energy on poetic statements and instead channel that energy and time into increasing the value of our products, services and corporate value. If management needs to gather and figure out what the mission of their company is, then something is probably broken. Why do they do it? They have been told by experts that they should. It is wonderful to want to provide “an employee friendly” workplace. Why do it? They want to attract and retain the best talent. Why? To increase shareholder value. Would those talented employees work for free? No. Let’s not kid ourselves that the comfort of our employees beyond what is legally required is our mission. It is our means to be successful.  (Did I mention that employees rarely pay attention to the mission statements posted prominently in their workplace?)