If Mergers & Acquisitions Tempt You, Consult HR Pros

 

If you’re contemplating a merger, be very careful about your human capital – whether you’re in government, a small business or a global company.

Investment bankers will probably salivate over the prospect of new mergers when economic conditions improve, but senior finance executives need to listen to human resources experts to insure success.

Yes, any financial decisions about mergers should be based on input regarding human resources. There is precedent for this precaution.

Actually, when I was contemplating this topic, I was reminded of my 2002 column warning about the unproductive merger of Hewlett-Packard and Compaq when I spotted online videos by the Carly Fiorina campaign for U.S. Senate in California.  

Her videos:  Her biography and her attack spot, conservative in name only ad.  

One spot touts her business experience at HP, but it did not mention her dismal record, especially her merger of HP with Compaq. The merger was highly controversial because she merged two cultures that were not compatible. She was eventually fired.

Later, it was difficult for me to refrain from writing a “I told you so” piece in 2004.

Merger fever peaked in 2007. But the next year mergers plummeted to $1.97 trillion.

Finance pros are naturally concerned about money. Also at-risk are credit ratings and the improbability of profits after a merger.

But that’s not stopping Kraft from acquiring Cadbury or Comcast from trying to acquire NBC Universal.

If you’re contemplating a merger – it doesn’t matter how big or small or whether you’re in the public or private sector – there are several precautions to take.

Yes, crunch the numbers. Perform forecasts. But conduct an HR risk analysis – strengths, weaknesses, opportunities and threats. If you decide to proceed, plan and execute your strategy.

The big five pitfalls

There are at least five questions to consider:

1. Are the cultures compatible?
2. Will senior managers be compatible?
3. Will you lose key talent?
4. How can you be sure about financial sustainability?
5. What about productivity?

Note: 60 percent of these pitfall questions are HR-related.

People-related issues are paramount. Employees are your human capital and should be treated as assets. If you don’t pay early attention to human-capital issues, you’re risking failure. There are many elements to investigate, such as employee morale, benefits and payroll management. Not to mention information technology issues.

Remember, your customers buy from you because of their relationships with your employees. If your employees are uncertain about their future, then your customers will become apprehensive about their relationship with you.

That’s because all customer-buying decisions are made on five value-motivating perceptions. My research shows 53 percent of customer buying decisions depend on what customers think about your organization’s leaders and employees, and their attitudes. (For more on these perceptions, they’re included in this column, “The Seven Steps to Higher Sales.”)

Thwart your competitors who will be savvy predators in recruiting your best workers.

And understand when and what to tell your employees about possible layoffs.

Fiorina case study

HP’s difficulties after merging with Compaq include:

Its stock price dropped significantly despite good revenue and market share. It served one billion customers in 160 countries worldwide. Ranked no.14 among the Fortune 500, it employed 145,000 people and budgeted $4 billion for research and development.

HP was proud of its No. 1 market share in several products: Laser jet printers, disk storage systems, ink jet printers, UNIX servers, Windows servers, storage-area network systems, Linux servers, and notebook computers. Its printer market share was 47.1 percent. It ranked No.2 in handhelds, external RAID storage systems, and desktop computers.

But HP’s share price had dipped about 25 percent and the company did not appear robust.

Prior to the controversial merger, Ms. Fiorina was exposed to red flags. Along with director Walter Hewlett, a son of one of HP’s founders, and 49 percent of HP shareholders, this column raised questions at that time about the merger’s feasibility.

The concerns: Merger opponents were extremely vocal, the HP and Compaq cultures were vastly different, and the latter’s reputation for quality wasn’t strong as HP’s. I had products from both companies and that was my assessment, too. In fact, my firm has had a myriad of printers – black and white, and color – the two 15-year-old HP printers still work well with any computer.

As Forbes’ top-ranked businesswoman, HP CEO Carly Fiorina was a charismatic salesperson. She had her ups and downs, including criticism for purchasing a $30 million corporate jet and her unsuccessful bid to buy the consulting business of PricewaterhouseCoopers for $18 billion a few years previously.

Pundits complained HP had lost its focus in competing with Dell and IBM.

HP’s $586 million profit for the fiscal third quarter ending July 31, 2004, which was announced on Aug. 12, was below Wall Street’s expectations. As Dell began its larger foray in the printing business, HP’s profit in its core strength, printers, dropped.

Ms. Fiorina made another misstep: She was openly critical of Dell’s approach in not investing in research. Ms. Fiorina touted HP’s niche as being between Dell’s so-called low-cost products and IBM’s emphasis on costly consulting and information technology services. However, Dell’s profit jumped 29 percent and IBM was also growing and announced plans to hire 18,800 workers in 2004.

HP was vulnerable because of its broad strategy in taking on such venerable foes, especially when corporate and consumer spending on technology, in general, wasn’t robust. Plus, Dell had hired away Alex Gruzen, a HP senior vice president, responsible for HP’s notebook, tablet personal computers, and personal digital assistant division.

Merger Solutions

Here are the three A’s for merger success:

Awareness. Properly assess the risks. As in the merger of HP and Compaq, it’s important to note it isn’t feasible to achieve success after launching such endeavors for five reasons:

1. Strategy and focus – public agencies and companies lose focus when the merging cultures aren’t compatible.

2. Synergy – firms at the opposite ends of the spectrum culture-wise, don’t function well as a unit, no matter how much overtime the CEO works. This also means employees don’t respond well to new leadership, which leads to a breakdown in communication and infrastructure.

3. Apathy – such internal challenges lead to ennui in company initiatives; nothing great has ever been achieved by a lack of enthusiasm or passion.

4. Decrease in competitiveness – marketplace forces seemingly weaken a company, such as HP, as it learned in facing its opponents, Dell and IBM.

5. Effects from macroeconomic events – terrorism and recessions, for example, hover as challenges. As a result, consumers and businesses will spend less on technology. Ask any government agency or business about 9/11 and the impact on their revenues.

Acceptance. Just as analysts were adamantly opposing HP’s focus and its inability to discern challenges accurately and to adapt accordingly, customers will likewise become indifferent about a merged company’s products and services.

The concept behind the principle of acceptance also requires resourcefulness in creating solutions to deal with reality, hidden or not.

Action. To sustain performance, implementation of an action plan requires a checklist of six key elements:

• Analysis by an astute analyst to ascertain strengths, weaknesses, opportunities, and threats
• Close monitoring and participation by top executives, especially during periods of change or unrest by stakeholders
• Prudent assessments of strategy and tactics combined with implementation by an outside participant – an assertive, objective traffic cop – to monitor and insure success in sustaining performance
• Due-diligence and patience so that not even small details are overlooked
• Accurate anticipation of the needs of customers
• Performance-based compensation

The three A’s for merger success will insure any company adapts extraordinarily well in a climate of change and uncertainty.

Oh, if you’re contemplating the possibility of joining such employers, do your due diligence.

From the Coach’s Corner, whether you’re an employer or job-seeker, caution is also advised in the use of social media such as FaceBook, LinkedIn or Twitter.

Employers should be careful in using social media in checking the backgrounds of applicants. If you find derogatory information and use it as justification of not hiring a worker, you will face legal hassles if applicants learn about it.

The protected classes: race, gender, religion, disability or sexual orientation.

Conversely, if you’re looking for work or networking for customers, a post showing any sign of unprofessional behavior will haunt you when decision-makers spot it.

Management and HR for higher performance

Part three: How to grow your small business

In analyzing the growth rates of small businesses – every great entrepreneur has one salient quality – the ability to be an effective manager.

An effective manager efficiently allocates resources for achieving goals. Quality management usually results from an independent SWOT analysis – assessing internal strengths and weaknesses along with evaluating external opportunities and threats.

Self-employed people need to carefully inventory their own strengths and weaknesses as business personalities. They should also assess how to maintain their good health because they’ll suffer if they don’t. Larger companies should focus on several factors in a strength-weakness analysis of their human resources, such as recruitment, training and development, compensation, culture, leadership, reliability, and salespeople.

Once a business owner looks in the mirror to assess management strengths and weaknesses, then he or she is ready to analyze opportunities and threats for a strategic plan.

Even if a strategic plan is well-written, beware: Management practices that work well in the early growth of a small firm often cause problems later, according to a series of articles in the Harvard Business Review (HBR) by Dr. Larry E. Greiner. He believes such managers fail to take into account “present events or market dynamics.”

“Creative activities are essential for a company to get off the ground. But as the company grows, those very activities become the problem,” Dr. Greiner wrote in a 1998 HBR article, “Evolution and revolution as organizations grow.” His thesis is still accurate.

Red Flags

Business expert Neil Delisanti agrees that managers often fail to solve red flags: “There are forces inside the organization that they control; forces outside the organization over which they have little, if any, control; and probably most important, red flags in themselves, about which they may or may not be aware. A good manager must be constantly aware of the impact of all these forces. One of the common failings in managers is that they blame all sorts of things for their failures, rather than admitting they didn’t have a good handle on what’s happening.”

Mr. Delisanti has gifted insights because he speaks from both an academic and solid mentoring perspective. He was a faculty member at both the University of Puget Sound and The Evergreen State College. As the guru for the Small Business Development Center in Tacoma, he counseled more than 2,000 companies.

Mr. Deslisanti believes too many small business owners micro-manage: “Many folks start a business and believe it is their inspiration that made it a success. Although this is sometimes true, what we find on closer inspection is that it was their perspiration and natural management ability that was more responsible. They have invested a lot, money, time, and sanity, in their enterprise and find it hard turning it over, often even small parts, to someone else to possibly blow it. Any business can grow to where the owner just cannot physically, mentally or emotionally, do it all.”

Does he believe managers limit their business growth by poor human-resource management techniques? “Often, yes. This is particularly true of a company that starts with an owner and spouse sitting at the dining room table. Not only are there innumerable government restrictions on what is legal, we have to look at what the workforce expects from employers today. The management of people isn’t as simple as the old my way or the highway anymore. Diversity in all areas requires that SBOs have to look at differences in age, gender, race, ethnicity, education, background and experience – just to mention a few facets that have to be considered.”

When to start HR function

“I strongly recommend that as a business gets above the 15-20 employee range, the owner set up some sort of human resource function, and get some assistance in designing job descriptions, recruitment policies, pre-tests, application forms and very importantly – interview policies and procedures,” he suggested.

To underscore his concerns about HR precautions, I agree. I’ve been called upon to help two businesses:

1. A cable TV company was fined $15,000 by U.S. District Court for sexual discrimination of an applicant. The company’s law firm asked me to provide a three-hour seminar on Equal Employment Opportunity laws as part of the sentencing to close the case.

2. An interstate trucking firm was fined $100,000 and required to design a new wage and compensation plan (Note: the company’s pay system worked fine when it was smaller).

In both cases, the bosses were nice people unaware of the dangers in a litigious society.

Because small businesspeople often seem to feel they’re under siege, Mr. Delisanti suggests: “Have a vision or goal and incorporate it into a strategic plan, which is different than a business plan. This can come in many forms, but it should be organized and written. Identify your vision and then develop a list of goals that will let you succeed, quantify them, put some time frames on completing them. Most important – assign some responsibility to someone to get it done. This will have you on a course of your choosing and let you become proactive instead of reactive.” 

Premature growth

He says some companies grow too fast: “This happens when growth gets out of control when you can’t fill the orders, due to a lack of materials, equipment, people or cash. This can also happen when the company gets too big for the owner to handle.”  

Others grow too slow to cover added costs and expenses: “Usually, this is a result of overly optimistic forecasts that bring about expenditures that far exceed revenues. Many reasons cause this, such as an SBO’s enthusiasm; level of success with business on a smaller scale; and non-credible or insufficient marketing research,” he said.

Mr. Delisanti warns about unforeseen situations in the external environment: “Even the best forecasting can’t predict a tsunamis, earthquake and the level of destruction that natural disasters can wreak upon an industry. Consider skiing in the Pacific Northwest some seasons – there can be a bad time to open a new ski shop.”

He says challenges result from miscalculating factors in what he calls an “uncontrollable” industry environment: “When a business conducts an opportunity-threat analysis, it should look closely at a number of factors and make its decision, based on what it thinks will happen and how the chain of events will impact its goal attainment. If the business thinks incorrectly, it might lose the competitive advantage over somebody thinking correctly. Remember: Everybody can’t win. If you look at all the data and think that interest rates will go up 9 percent and take the actions that will best help you achieve your goals under those conditions, but if they only go up 2 percent, other companies will probably have an advantage over you.”

So, there you have an overview – how to grow your small business – in a three-part series.

The two previous columns:

Marketing Essentials on a Shoestring Budget

10 Scholarly Solutions for Selling More Products

From the Coach’s Corner, for more free counsel, he suggests that you contact the nearest SBDC office.

Stunning News: Eliminate Sales Quotas to Make Profits

 

In every industry since the Great Recession began in December, 2007, it’s become twice as hard to make a dollar. But as a sales manager, you already know this, right?

All things being equal, there are four reasons for your sales demise:

1. The economy – there are no more boom times – markets aren’t expanding. Competition is tough. You really have to hustle.
2. There are simply too many products chasing too few dollars. Most of your sales come at the direct expense of your competition.
3. Technology and social media. If your salespeople are not harnessing social media – for customer research and word-of-mouth sales – they, and by extension, you, are behind the times. Web sites, radio, TV, newspapers, direct mail and the telephone directory to a certain extent no longer suffice to create a buzz. The Digital Age has created a mega consumer and businessperson information-overload. Not only are companies expected to brand themselves, so are salespeople. Generally, that means getting on MySpace to create sales opportunities if you sell inexpensive products and Facebook for higher-end inventory. And don’t forget possibly using Twitter, LinkedIn, Digg, Flickr and YouTube.
4. Not enough face time and customer appreciation. You need to ramp up the in-person exposure to customers. Too many salespeople do not see enough of their prospects and customers. And they commit a bigger sales-sin by showing too-little appreciation to customers. Seventy percent of customers buy elsewhere because they feel taken for granted.

For these reasons, sales have become a zero-sum game. In this downturn – more than in any other economic cycles – you can only gain when your competition loses.

So how do you motivate your sales team?

Unless you hand them sales leads, you need top performers to prospect and convert leads into profitable business relationships, and continually develop solutions to solve customers’ business problems. That can only come when they find needs to fill, target the right prospects, and create a happy buying environment while showing enthusiasm for their customers.

There are two other important considerations: How do you compensate them? How do you set goals?

All of these factors make sales forecasting more challenging.

OK, you’re thinking, “Tell me something I don’t know.”

New Sales Research

Sure, let’s consider research by a pair of marketing professors: Harikesh Nair of Stanford University and Sanjog Misra at the University of Rochester. Their research concludes that profits come easier if you end sales quotas. What? That’s tantamount to blasphemy in sales management, right?

The professors’ 2009 research at an unidentified Fortune 500 company – a contact lens manufacturer – shows a compensation plan sans quotas “resulted in a 9% improvement in overall revenues, which translates to about $1 million of incremental revenues per month,” according to a press release from the Stanford Graduate School of Business.

“The fundamental problem is that managers never know exactly how much time and effort their salespeople are putting into their work,” says Stanford’s Dr. Nair. “In the absence of such knowledge, they can only base payment on agents’ output, not their input.”

The school says an aggregate $800 billion is paid each year in sales compensation – nearly 300 percent higher than companies spend on advertising. But is it a good investment? Perhaps not. The professors’ test-subject company enjoyed a $1 million a month increase after dropping sales quotas.

You have been paying commissions and possibly bonuses based sales-quota performance. The idea, of course, is that salespeople are incentified to work harder to achieve goals.

But let’s face it: Salespeople sandbag – they game the system, and often postpone sales to look good later. So do sales managers.

Sales Confession

Yes, I also sandbagged in the 1970s as a young field representative for a group insurance company in California. I recall being the company’s No.1 producer in the northern California sales territory for nine consecutive months. One month during that stretch, I sensed my sales would be slower the following month. So I held off in submitting some car and home insurance policy applications. I turned them after the first of the following month, and led again. Why? I felt pressure to meet sales quotas.

My sales track-record earned the attention of two other well-known insurance companies that recruited me, and I quit seeking to climb new sales mountains.

As a new insurance agent at a competing company and despite a sterner sales quota system, my enthusiasm helped me to sell a surprising large number of policies in my first month on the job. My two managers were beaming. Then, I was very pleased when my regional boss bought a $100,000 whole life insurance policy and gave me credit for the sale by naming me the agent-of-record. The commission would be huge. I naively thought he was rewarding me for my first month’s sales achievement. I was overjoyed and salivating over my anticipated commission.

But I soon plummeted toward earth. I forgot the company was in the middle of a life-insurance sales contest. When the contest was over and within the 30-day free-look window, the manager canceled the policy. Then it hit me: Even C-level executives sandbag. But this time, it disillusioned me because it hurt my pocketbook – one of my early lessons in “what goes around comes around.”

Also, I learned too late about the quota differences between the two companies, and the impact on my performance. With a lower morale and reduced respect for the company, my sales decreased.

In the Professor Nair and Misra approach, they developed models in relation to the behavior of the manufacturer’s salespeople. The mathematical models determined the design of the compensation plan to forecast sales while evaluating the costs of inefficiencies associated with sandbagging.

The net result was the 9 percent increase in revenue. Whoa!

Motivating Salespeople

A side-benefit: Salespeople loved the new compensation model. “Most salespeople do not like quotas,” says Dr. Nair.

Amen.

But he admits the elimination of sales quotas may not work for every business. “What managers need to do is evaluate more carefully how the system is functioning for their own organization,” says Dr. Nair.

He suggests companies research the salespersons’ responses to various facets of the compensation plan and that they determine the impact on sales. “That can give a company a good base by which to evaluate what can happen if they do change the compensation system,” he explains.

“Dynamic programming” is what they call their mathematical approach in increasing profits.

“Firms now operate in an increasingly complex and data-rich environment,” says Dr. Nair.  “Those that understand how to harness the power of this data to cut through this complexity will enjoy a lasting competitive advantage.”

Agreed.

From the Coach’s Corner, ever wonder why your customers feel like a number?

Here are some Biz Coach strategies on compensation and motivation techniques:

1. Keep your compensation plan simple.
2. Make it easy for your salespeople to track.
3. Keep an open mind – test, test, and fine-tune your sales program’s effectiveness as conditions warrant.
4. Instead of a set quota for sales numbers, emphasize footwork. That’s right, emphasize footwork over quotas.

In requiring a certain number of sales calls each day along with a high-level of customer service, there has always been a noticeable difference whether I was in sales, management or as a consultant to clients. That’s been true in different economies – good or bad. Specifically, 15 sales calls a day – in-person as much as possible – have always improved morale and dramatically increased sales at the expense of competitors.

Related reading: The Seven Steps to Higher Sales, a link to the Biz Coach secrets for sales success.

This includes seven steps to higher sales, five value perceptions that motivate customers to buy, and the three-step process for overcoming sales objections.

Leadership Strategies to Profit from Employee Respect

 

Even though Wall Street is ecstatic over productivity growth, merely slashing costs and jobs to create profit is not sustainable for profits. I know investors mistakenly believe the earnings for such publicly held companies are good, but it will not last.

Workers are realizing they’re not sharing in the wealth. Poor morale will cause profits to plummet, and consumer demand will continue to plunge. What will investors and CEOs do when it gets much worse?

So try a new strategy with a vision for growth.

The key to long-term profits is organizational cohesion. Some businesses are profitable simply because employees trust and implement management’s vision. Let’s consider how to increase worker productivity and reduce labor costs.

If you want to increase worker productivity and reduce labor costs, here’s a question: Are your employees buying into your vision for growth?

Leadership style is important. Earning respect is paramount.

In fact, mutual respect is the first step in getting employees to share your vision. That results from implementing strategies for healthy worker satisfaction, which might seem like an impossible dream for some employers in this economy.

When a company underperforms, do employees blame managers? In all probability, the answer is yes. At a lot of businesses, the workforces are unhappy with management. And the majority of employees want their bosses to invest in them.

Is your business suffering from poor morale? If so, take steps to increase your profits by communicating better with your employees. Generally speaking, employees who are satisfied with their jobs perform at higher levels, which is really a result of their satisfaction with their employers.

A study from a 2006 Biz Coach column confirmed this supposition. That’s when I reported Deloitte Consulting concluded that the 56 public companies included in Fortune’s list of “Best Companies to work for” had a 78-percent higher stock performance than the S&P 500. And I’m betting a similar study about profitability would have the same result today – in either big or small companies.

So what do workers want monetarily? They want what is probably impossible for cash-poor firms.

The top worker preferences:

• Competitive wages
• 100 percent paid health-care
• 100 percent company-funded 401(k) plans
• A compressed work week
• Flexible schedules
• Bonuses

Great profits or not, you can tap into other worker emotions that satiate them. Do your workers respect you? Do they feel treated with respect? Companies failing to take the necessary employee-motivation measures can expect employee turnover – whether or not the economy improves.

Here’s a leadership checklist for success with employees:

1. If you’re new to the job, earn your stripes and demonstrate humility. Unless it’s a crisis turnaround situation, take several months before implementing changes. New bosses inherently intimidate workers – give them a chance to like you or least feel they know you.
2. New or not, be accessible. Walk the floor twice a day. Spend five minutes a week with each employee whenever feasible. Show interest in them. Ask open-ended questions to get them to talk with you. If you do, they’ll conclude you’re a brilliant conversationalist.
3. Actively listen to your employees. When you’re approached put down the pen or turn away from your computer. Employees rave about bosses who give their full attention.
4. Encourage workers to suggest ideas for business success. If an employee makes a suggestion – even if you’re not in full agreement – look for reasons to be accepting of the idea. The worker will give 1000% to make an idea work, and the person’s morale will skyrocket. If it doesn’t work, the employee will endeavor extra hard to fix it in order to save face.
5. If you’re not the top person in the company, use your influence to help employees to achieve their career goals. If you are the top manager, do whatever you can.
6. Recognize top performance publicly. Praise immediately.
7. If you must criticize an employee, try to use the layered-sandwich approach – two positives, the negative and a positive.
8. Avoid criticizing an employee publicly.
9. Ask questions before you start reprimanding. Sometimes there are good reasons for negative surprises. So avoid unnecessary embarrassment for your employee and you.
10. Consider the Pareto principle when you honor workers – the top 20 percent deliver 80 percent of top performance.
11. Maintain a steady disposition. Otherwise, when you’re under duress about a business matter, many employees will take it personally and mistakenly think you’re unhappy with them.
12. Try to get key employees to buy-in to your new initiatives before implementation.
13. Use good technique when implementing instructions. That means being direct, low-key but firm and maintaining strong eye contact. Explain the reasons whenever possible, but don’t be tentative or apologetic.
14. For complex projects, be careful in how you give instructions. Take adequate time to list and document your wishes and deadlines. Recap in memos or emails. Like good meetings, everyone should know who will do what and when they’ll do it.
15. Follow up and inspect your employees’ work or deliverables. Show your interest.
16. Be courageous, especially in unpopular positions, but be cool under fire.
17. Give your employees freedom – don’t micromanage. Make certain your subordinate supervisors do the same.
18. Assess your strengths and weaknesses as a leader. Take appropriate steps to alleviate weaknesses and hone your strengths.

If you execute these ideas, you will profit from good labor relations and you will be in a position to leverage the perspective of your company’s human capital.

From the Coach’s Corner, here’s a question from a reader about proper etiquette:

Q: Lately I’ve attended several business meetings where I have already met the other attendees, but my bosses have not. When introducing the vice-president or president of our company, (I am a manager), should I use his title, “John Doe, President of ABC Company,” or simply say “John Doe, also with ABC Company?” 

A: That’s an excellent question. It’s refreshing that your company employs such a conscientious person. It’s proper protocol to introduce guests to your boss first, such as: “This is John Doe, president of ABC Company.” Then, introduce your boss to the other person.

Human Resources: 12 Errors to Avoid in Evaluations

 

What now? Now that the recession is technically over but your company continues to cope with the sour economy, you might need to re-think approach to human resources.

A series of questions about what to do in human resources may be swirling around in your thought process. Bear in mind that wisdom and courage will be your best friends.

For example, there are four typical questions about HR in this uncertain economy.

So in this column, we’ll address the four typical questions plus include the 12 typical errors to avoid in employee evaluations:

When do I commence hiring?

The answer will not come for a while. The official word on when a recession starts or ends comes from the National Bureau of Economic Research. We will not hear from the organization for a long time. They are charged with declarations, not forecasts. The board did not timely and officially announce the last recession – after many of us in business had already been feeling the harmful effects of the downturn for more than a year.

We can conclude, however, consumer confidence will be a factor. Consumer demand will account for at least 50 percent of the anticipated economic expansion. But consumers – weary from being laid off and from all the unemployment reports – are likely to be very cautious. All indicators show it will be a jobless recovery.

If I have to lay off workers, can I include undesirable employees?

Well, to avoid any legal hassles, it is generally feasible with some provisos; so, consider these questions:

Do you have documentation explaining the business reasons for a layoff? Can you defend your process for selecting employees to layoff? Do you have written performance reviews or records of disciplinary actions?

Make sure your reasons are solid, especially if you want to refill a position, in order to avoid a potential claim of wrongful termination. Make certain that you properly deal with performance issues. You will also have to take precautionary steps to avoid morale issues with your retained workers.

Here’s a human resources case study from an economic downturn:

It was a complicated situation. I once had a public sector client who was forced to lay off 10 percent of the agency’s workforce. My client, who was nearing the end of the term office, was in turmoil facing an uphill battle for re-election. My client also was trying to cope with several poor performing employees including one worker with a history of being disciplined and who was particularly unproductive with a difficult personality. The employee became the opposing candidate.

My recommendations: Implement an empathetic-based reelection campaign, management training for supervisors, teamwork training for the staff, and include the troubled worker among the employees to be laid off. Before my client could implement the last recommendation, the troubled worker walked into my client’s office asking to be laid off. And what were the re-election results? A six percent winning margin.

What do I do if the economy suddenly improves?

Be prepared. Historically, many employees who do not have reasons to be loyal to an organization will want to work elsewhere. That’s mainly the workers who bide their time until the economy improves. So it is critical to evaluate what will motivate employees to stay and become high performers. Then, implement the appropriate measures to show your workers you care about their welfare. In addition, I am a big believer in employee development and training programs. If you fail to retain great workers, it will cost you in the long run.

How do I properly evaluate employees?

Short of providing you with my firm’s recommended employee-performance appraisal form, make sure you are careful to avoid errors in evaluations.

Here are the 12 salient errors to avoid:

•  Insufficient information about employees and insufficient evaluation time. It is best to get to know employees well enough to accurately evaluate their strengths and weaknesses. Also, it is recommended that you to take the proper amount of time in the evaluation process for each employee.
•  Inconsistent standards of excellence. Ineffective managers permit personal feelings to bias the evaluation process. Lack of uniform criteria from manager to manager can be detrimental to the organization and is why some employees are promoted when they should not – that is an indicator of The Peter Principle. Additionally, without safeguards, it is possible to become too friendly with some employees in making evaluations while being too critical with others.
• Failure to evaluate the entire performance period. Some employees, who are aware that a performance evaluation is due, will suddenly improve their work. In such annual reviews, many managers unfortunately look at the most recent behavior instead of the entire performance period. Throughout the year, when an employee does something noteworthy, immediately write it down; when the employee fails in a responsibility make note of it, too. Use good discretion in deciding whether to enter the information in the employee’s personnel file.
• Fear of bosses’ disapproval. Some managers are afraid to reveal derogatory information about employees to their bosses. They don’t want to admit that subordinates are ineffective. They often write or say what they think bosses want to hear about staff members, not what is accurate.
• The rainbow effect. When employees are popular, they are viewed as competent in their work. On the other hand, when employees are unpopular, they’re evaluated as inadequate.
• People-pleasing of employees. Apprehensive about possible confrontations, managers are often afraid to include unfavorable comments about employees – even when justified.
• Empire-building/maintaining job security. Such managers overlook employees’ weaknesses to gain favor with inefficient employees in order to develop allies among department staffers. To save their jobs, other managers will unfairly criticize workers as scapegoats and sacrificial lambs.
• Justification for employee wages. This is the practice of using unwarranted evaluations to justify decisions about employee salaries, such as giving complimentary reviews in advance of promotions and pay increases.
• Weak analytical ability/indecision. Some raters lack analytical ability. Others, because of favoritism, simply are unable to make objective judgments about some employees.
• Middle-curve analysis. There is a tendency by some managers to stick to the middle or average and they do not accurately evaluate employees – they erroneously stick to the middle – average performance grades in every category.
• Denial syndrome. Some managers make excuses and remain in denial about worker performance.
• Irrelevant factors. Bias of non job-related factors, such as physical appearance or social standing, sometimes erroneously influences evaluations of employees. Beware that some employees are good at selling themselves. Well-intentioned bosses also often give shy people too much benefit of doubt for fear of hurting their feelings.

From the Coach’s Corner, in essence, remember that every employee is entitled to hear the following:

1. What’s expected of me?
2. How am I doing?
3. What’s in it for me?

15 Tips to Improve Your Odds for a Job

 

If you are unemployed, you are probably feeling desperate. Your lifestyle is threatened. You are reevaluating your spending, where you shop and comparing prices on private-label food products.

Even if employed, many Americans been living paycheck to paycheck, and they are fearful about unemployment. In addition to spending all they earn, millions have been victimized by those predatory 38 percent interest rates and exorbitant fees charged by some credit card companies for frivolous excuses. With the negative-savings rate, the U.S. has been piling up consumer debt – published reports indicate at least 36 percent of Americans’ expenditures are regularly made with borrowed money.

So, countless others have problems, too.

If it is any consolation, before becoming The Biz Coach with prior experience as a manager, I also endured trials of unemployment and involuntarily helped coin the phrase, “corporate downsizing.” I worked for companies from the Fortune 500 to small businesses and I was laid off 14 times. So, I write from experience.

Here are 15 strategies:

1. Lean into your pain from being laid-off or being under-employed. Understand grieving is part of the process for growth and it takes time to heal. The three stages of healing: Shock-denial, anger-depression, and understanding-acceptance.
2. Get out of the house daily. Continue to exercise and perform community service. Both will increase your morale. The reward of high morale, alone, is worth it.
3. Assess your strengths and weaknesses. Be sure to analyze your interpersonal skills, too. Employers prefer teamwork and soft skills.
4. Market yourself effectively. By building on your strengths, you will be prepared to tell prospective employers how they will benefit from hiring you. They want to hear how you will save them time and money while helping them to make a dollar.
5. Polish your resume. Your contact information should be at the top of the page and then followed by a realistic objective, and a summary of why you’re qualified. Think like a recruiter – why should someone hire you? Employers want to know your skills, experience, and successes. Mention specific achievements that would be important to your prospective employer. Subdued, easy-to-read font on white or off-white, good quality bond paper is preferable.
6. Hone your career-management skills. Make a list of people to see and include your public officials at all levels. They are great centers of influence and are cognizant about economic development efforts. Personally visit each office to make an appointment. Seek the opinion of managers two levels above your skill level. They are not intimidated if you have great skills and your worth. If they hire you, they likely will take you with them up the employment ladder. As a college student and disc jockey, I once called the program director of a TV station seeking career advice. He immediately invited me to audition for an announcing job. Be sure to treat each receptionist with maximum respect. You’ll be amazed by the power and influence of a receptionist. (And make networking a lifelong career practice.)
7. Be open-minded and consider all options. If you are mobile, consider working abroad. In this age of globalization, future employers will be impressed that you know how to conduct yourself in a foreign country.
8. Consider a new field. The best available jobs include information technology, medical and retail sectors. And great employers can never get enough good salespeople. I went from being a disc jockey and broadcast journalist to sales, marketing and management in multiple industries.
9. Make it easy to contact you. Take advantage of wireless e-mails at coffee houses and libraries, but be security-minded. Don’t use a device containing personal information and make sure it isn’t ever connected to your computer with sensitive information. Forward calls to your cell phone.
10. Use the Internet. Get online – not to search job boards, but to go on offense. Applying at job boards is probably a waste of time. The competition is too great. Create an edge by building a Web site, blogging, and leveraging social networks from LinkedIn to Twitter.
11. Consider temporary employment services or freelancing. If you can avoid collecting unemployment, take work either at a temporary service or freelancing gig – you will be better off emotionally. Not to be gauche, but standing in line at the unemployment office will only put you in a position to network with other unemployed folks. Benefits will include networking, building your resume, maintaining your work ethic and best of all – earning a paycheck. Even after a college education and broadcasting experience, I once worked between jobs for a temporary service as a day laborer. It was a lot of fun getting exercise and having a place to work in fresh air. A short time later, after I landed on my feet as a newscaster, I won two awards.
12. Accept any opportunity until you get the right job. You will attract options you never thought possible. Once, when out of work, I called a former colleague who became the director at a state agency. She shared about her problems about coping with malingering union employees and getting enough funding from the state legislature. So we met over coffee and I was able to share my experience in similar circumstances. Unexpectedly, one day after returning from a six-mile run, there was a telephone message for me: “We want to hire you to solve our problems.” 
13. Get a mentor. Find someone who has the success you want for personalized one-on-one strategies.
14. Body language. When you land the big interview, remember the employer thinks you’ve got the necessary tools. It is your opportunity to assure the company that you will solve its needs and that you’ll fit into the culture. You only have a few seconds to make a favorable first impression with a warm voice, direct answers, a smile, and good body language. To err in being too formal is preferred over being too casual. Sit erect, feet on the floor, comfortable hand-placement in your lap, and maintain good eye contact.
15. Attitude of gratitude. A well-written thank you letter will help you stand out in a crowd. Write anyone who helps you. Mail a thank you letter immediately after each interview so that the employer hears from you the next business day. Mention a specific topic from the interview and include a bonafide compliment for the company. Reiterate the benefits of hiring you. Thank the interviewer for her or his consideration. Prevent buyer’s remorse by reassuring the reader you will provide the necessary results the company expects. If you have not heard from the employer, it is businesslike to make a follow-up telephone call in five business days. Your odds will be enhanced once the company has had five positive contacts or interactions with you.

Being unemployed is not easy, but as long as you make an effort to stay productive and keep open to new opportunities, you will be fine – you might even come out stronger.

The moral: Layoffs are really stepping stones as opportunities for personal and professional growth.

From the Coach’s Corner, if all else fails and if you always wanted to be the boss, consider entrepreneurship. Some people are destined to be entrepreneurs. Start a business by filling a need.

21 Tips on How to Start a Business in a Recession

 

Conventional wisdom probably indicates a recession is not the best time to start a business. But if you have ever dreamed about it, there might be good reasons why the seed to start a business in a recession was planted in your mind.

Good ideas are worth a lot of money, especially in a recession. Many successful companies were launched in economic downturns. They range from General Electric to Hewlett-Packard.

A recession can be a good time if you have a great idea and have entrepreneurial instincts. Entrepreneurial personalities do not let fear run their lives.

Think of fear as an acronym: Frantic effort to avoid responsibility. Entrepreneur-types see a good idea as a responsibility to act. Plus, a recession motivates them to work harder and smarter on developing and executing their ideas.

True, consumer confidence is down, home foreclosures are increasing and the business climate is tepid.

As many companies cut back, new business opportunities appear. But you’ll have to hustle. Successful entrepreneurs do their homework and work as hard as dedicated athletes who train for high performance. Yes, there are numerous pitfalls for startups, and it will probably be the most difficult undertaking of your life.

Here are the 21 tips on how to start a business in a recession:

1. Pick the right niche. You’ll need to enjoy your work and be passionate about it in order to succeed.

2. Take baby steps. Strategize now while working at your present job. Don’t quit or wait for a layoff. If you’re out-of-work, money is problematic but you might not have a choice. Consider all your options.

3. Develop your vision. Write a one-page vision, which explains where you will want to be. Then, consider a business plan for a roadmap. Do your research and become an expert in your industry. Know your competition.

To determine where you are business-wise, conduct a SWOT analysis to assess your strengths, weaknesses, opportunities and threats. Some firms then develop and implement a strategic plan. A business plan is a management tool vis-a-vis a strategic plan, which is a leadership tool.

This also means learning accounting techniques, forecasting your cash flow, and considering buying good bookkeeping software.

4. Seek expertise. Read about successful entrepreneurs. Look for a mentor and a qualified sounding board.

Also, contact a Small Business Development Center. The organization has countless offices throughout the country.

Here’s the link: http://www.sba.gov/aboutsba/sbaprograms/sbdc/index.html

5. Get a head start on marketing and selling. Line up customers before you launch. Always remember: Cash flow is paramount.

You might want to read my column, “The Seven Steps to Higher Sales,” http://www.bizcoachinfo.com/archives/27

6. Market and sell every day. Establish a marketing budget and stay with it. Many companies lose market share by cutting advertising and promotion. Implement strong public relations.

Make yourself known to your local public officials and news media. Suggest to reporters that they consider interviewing you when they want an authority in your niche. Look for ways to multiple sales with your customers.

Consider networking with larger companies – many outsource to micro-businesses.

7. Make customer service a priority. When customers take their businesses elsewhere, my research shows 7o percent of the time it is because they feel taken for granted.

Practice great customer service for referrals and repeat business. Survey your customers. When a customer pays you a compliment, ask a question such as this: “What are the names of two people just like you who might appreciate my company’s services.” Be sure to follow-up with the referrals.

If you plan to free-lance or become a consultant, consider my “60 Ground Rules for Effective Client Service,”  http://www.bizcoachinfo.com/archives/106

8. Harness the power of the Internet. Learn blogging and search engine optimization techniques, and how to develop online press releases. A strong Web presence is paramount.

9. Line up your resources. Seek references from trusted associates for a good accountant and lawyer. Plan your policies and procedures. Learn to manage your books.

10. Arrange your financing. You’re unlikely to get a bank loan without a track record. Besides, it’s more economical to use your own resources and start from scratch. Avoid reliance on credit cards and home equity.

If you are seeking investors, consider another column I wrote: “What No One Tells You about Raising Investment Capital” in an interview with leading consultant Joey Tamer: http://www.bizcoachinfo.com/archives/1177

11. Appearances matter. Look professional – pick a good business name, logo, memorable tagline, and a branding-benefit statement that adequately tell your story. That also means quality business cards and stationery, a Web site, and email address using your domain name.

12. Understand legal requirements. That includes business license and taxes at the local, state and IRS. If you’re planning to hire employees, check with your appropriate state agency.

13. Consider buying a micro business. Avoid buying a company that’s losing money unless you’re certain you’ll succeed. Consider proposing owner-financing in a leveraged buyout. But do your due diligence. Walk away from a prospective seller who shows even a hint of bad practices.

14. Develop backup plans for equipment and operations. You’ll never know when bad weather or misfortune will strike. Fortune favors a prepared mind and business.

15. If you plan to hire employees, learn best practices in human resources. Hire the best workers, who demonstrate the 3 A’s – attitude, appearance and ability. (Note a good attitude is most important.)

Motivate them to be productive and to make your business look good in the marketplace.

16. Location. Just as in buying a home, there are key points to remember about where to locate (scroll down to the last paragraph for a link).

17. Keep sources of inspiration handy. Bone up on slogans and quotations to keep you motivated.

18. Community service. In addition to your regular routine of hard work, recreation and exercise, you’ll find it gratifying to devote time, talent and/or money to a worthy cause to lessen the misery in your community.

19. Network and join your local chamber and industry associations. Develop relationships and become a spokesperson for your industry. Become known as the “go-to” person.

And get involved in public policy when events adversely affect your industry. Government agencies are not known for enhancing or even protecting entrepreneurs’ economic and political liberties.

20. Budget time for continuous improvement. It’s vital to regularly reflect on your business and how to evolve in the marketplace. Review your SWOT analysis annually, and fine-tune your planning.

21. Remember to play and rejuvenate your mind. That means you should exercise, engage in your hobbies and do whatever works for you to stay mentally healthy.

Again, if you start a business, it will be the hardest thing you will ever do.

Yes, it’s a lot of footwork. But if you start with these rules, you’ll enjoy a competitive edge.

From the Coach’s Corner, to help you determine your entrepreneurial capabilities, here’s a link to a Small Business Administration site:

http://www.sba.gov/assessmenttool/index.html

For more insights on starting a business, I was honored when New York Times columnist Brent Bowers featured me.

Here are links to the columns:

•  ”Been There… Done That… Here’s How”   http://www.nytimes.com/2008/02/26/business/smallbusiness/26hunt.html? _r=1
•  “Advice on Taking an Entrepreneurial Leap” (including tips on where to locate a business) http://www.nytimes.com/2008/03/26/business/smallbusiness/26hunt.html

The 3 Keys to Turbo Charge Your HR Program for Higher Profits

 

For most companies, recruiting and hiring processes are challenged whether the unemployment rate is either high or low.

Obviously, low unemployment rates are considered full employment. The full-employment syndrome puts companies at a disadvantage as they’ve tried to hire the best prospects in an environment favoring job hunters.

On the other hand, high unemployment usually accompanies worker stress and low morale. Workers are stressed about their friends being laid off and they fear being laid off themselves. Conversely, given the opportunity to vent, employers complain the most about employee performance and associated labor costs. It’s particularly frustrating for bosses when they learn employees aren’t appreciative of their jobs and benefits. It can be lonely at the top.

So, consider three strategies in human resources for corporate settings, which are also applicable for micro firms.

They include:

1. Entrepreneurial, customer-focus by human resources professionals.
2. Stronger recruitment and retention initiatives.
3. Fostering a healthier environment.

Entrepreneurial, customer-focus by human resources professionals. Let’s face it; you’re entrepreneurial in your focus. HR managers usually aren’t. So don’t be surprised by a pre-recession study by Human Resource Planning Society (HRPS), www.hrps.org, in conjunction with the Institute for Corporate Productivity (i4cp), www.i4cp.com. It indicated that about 66 percent of HR managers found it difficult to stay abreast of companies enjoying expansion.

Further, the study concludes many such HR professionals lack expertise in key areas, which means companies suffer from growing pains.

“Those firms are not only scrambling for the talent they need to keep growing, they tend to have a strong focus on issues such as meeting customer needs, delivering quality products and staying innovative,” said Jay Jamrog, i4cp’s senior vice president of research. “A lot of HR pros don’t have much expertise in these areas. It requires a different kind of strategic HR to help drive growth.”

Here’s more: “The survey data strongly suggests that, in addition to talent acquisition and leadership development targeted to growth, HR leaders must dramatically increase their external focus – on markets, customers and new ways to serve them – if they are going to be strategic players going forward,” said Ed Gubman, HRPS special issue editor.

Stronger recruitment and retention initiatives. Workers focus on pay, benefits and balancing their jobs with their personal lives. Employers, meanwhile, are concerned about health care and other labor and operating costs along with challenges in their competitive marketplace.

But many companies should be more cognizant that they can’t afford to lose talented workers and their intellectual capital. The replacement costs are too great.

A good place to start: An employee survey. You’ll get insights on where you are and what you need to do in human resources to create opportunities for growth.

Even if you have a terrific benefits package, that may not be enough. Successful companies are launching more effective communications regarding their compensation packages in both the recruitment and retention of workers. In that way, employees become more aware of how they’re benefiting from their companies.

Use the same three tactics used in marketing to consumers: Tell prospective workers what you’ll do for them, remind them what they’re receiving when they’re hired, and periodically reiterate what you’re doing for their benefit after they’re hired.

Fostering a healthier environment. Successful companies thrive from productive teamwork and an external, customer-driven outlook. Leadership at every level is a must.

Enthusiasm, of course, is a key driver of sales success. Quality business relationships result when each employee has healthy self esteem, a sense of purpose, pride and trust in the company, and an accommodating demeanor. And leadership cultivates such trust and quality relationships to promote a healthier workplace environment. That means budgeting the time to be a coach and being accessible to employees.

Good managers are visible to their staffs twice a day. If an employee states he’s taking his family camping over the Labor Day weekend, soon after the holiday a thoughtful manager will ask: “How was the camping trip?” Without getting too personal, good managers spend five minutes a week chatting with each of their employees – asking them open-ended questions about their work, families and hobbies. Managers are viewed as being empathetic when they listen to workers 80 percent in such conversations.

Perks, such as workplace flowers enhance the mood of employees. Other activities include involving them in cause-related marketing and community events, and breaking bread with them at company breakfasts or lunches. It’s important they view the boss as a calm, astute and dynamic leader.

Employees appreciate public recognition for strong performances. They enjoy hearing the boss talking about the direction of the company and how they as employees fit in the overall picture.

Finally, you can help turbo-charge your human resources as a profit center by making certain to include both your HR and marketing professionals at the decision-making table. It’s best if they work cohesively. Both are typically excluded as participants. And for good measure, you should have strategic marketing consultants; include them, too.

From the Coach’s Corner, here’s another tip to avoid growing pains:

Update your customer follow-up program. Point out to your employees – if  you fail to keep customers, remember about 70 percent of the time it’s because your customers feel that your employees take them for granted.

Customer follow-up is vital in maintaining loyal relationships and customer satisfaction, generating referrals, increasing revenue and triggering long-term business growth.

How Productive Meetings Will Improve Your Company’s Performance

 

Q: Mr. Corbell, my Northwest company is in two cities. I am having trouble with employee meetings. I’m feeling like a milquetoast. Some of my employees complain about having to attend and they don’t see my vision for the company. How can I best manage my meetings?

A: Indeed workers often complain about company meetings. I’m not a betting person, but my sense is that your company is missing opportunities for growth. About half of a company’s performance is driven by employee morale. Morale is aided by good communication. So, good communication via meetings will help.

However, before your next meeting: If some of your employees aren’t effective and they don’t get your vision, it sounds as though you need some one-on-one discussions. Getting employees on your page will hinge on talking with them individually, beforehand.

Many managers make the mistake of thinking they can whip up enthusiasm by holding meetings. That’s not always true. Employee motivation is a big job and it must be primarily addressed privately in an ongoing manner.

Once that’s accomplished, yes, a key is communication with employees in relevant meetings.

As a business-performance consultant, I don’t necessarily have to look at firms’ books to see if they’re profitable. Usually, all is required is to watch the interactions of people before, during and after staff meetings. The body language, level of politeness, enthusiasm and the degree of employee participation in staff meetings often illustrate how profitable companies are.

That’s important because highly motivated employees will drive brand equity. Employees with healthy self-esteem and morale will be collaborative. They’ll deliver strong performances and will be more enthusiastic with your customers.

While regular staff meetings are imperative and depending on the size of your company, consider all alternatives, such as conference calls, videoconferencing and e-mails.

Evaluate your communication during meetings. Do you vary your pitch, volume and rhythm? Do you use engaging facial expressions and eye movement? When an employee-participant is talking, do you look at the others so that the speaker will do the same?

Meetings are a golden opportunity to listen to employees to review and analyze their accomplishments, problems and solutions. The most interesting meetings are usually chaired by a personable boss and have participation from everyone.

Effective meetings feature binding decisions and consensus of action. A meeting will be far more productive if matters are resolved and deadlines are set for action and if it’s determined who will take the action.

Seven keys to making sure meetings are the best use of your human capital:

• 1. In advance, prepare and circulate an agenda with appropriate background information.
• 2. Stay focused on the main topics.
• 3. Be in control of the meeting.
• 4. Discuss the salient issues.
• 5. Ensure everyone participates in contributing ideas and information.
• 6. Determine who will do what and when.
• 7. Be as brief as possible and set time limits for discussion of each agenda item.

Once the meeting starts, your responsibility is to keep a tight rein on the discussion. The chairperson always determines who will talk, when they’ll talk and how long they’ll talk.

Stay on schedule and keep the group focused.

Don’t let dominant personalities run the meeting. If participants are having their own private meetings or are passing notes, stop the disruptions by asking employees if they have something important to share.

Summarize the points at the right intervals.

Use visual aids, such as a flip pad, whiteboard or slides. But keep them simple.

Make certain everyone is mindful that you want to expedite the discussion as much as possible without rushing too fast. A good meeting starts on time and ends on time. If people are late, don’t wait for them to start the meeting.

Unless you need a lot of feedback or if you simply want to update your employees on relatively minor matters, do it in an e-mail instead of scheduling a meeting.

Don’t expect to improve employee morale by using a staff meeting to reprimand workers. That calls for a one-on-one meeting.

If you have numerous topics on the agenda, use an odd number for each of the time limits. For example, set a time limit of 25 minutes instead of a half hour. Employees will see that you’re serious about productive meetings.

If you have strong personalities in the room, take charge, and let them know you intend to be timely and relevant. Set a tone for productivity. Write your meeting topic-goal on the whiteboard.

Reschedule the meeting if participants are unprepared and haven’t done their homework. Make certain to follow up with them privately.

On the contrary, you want passionate participation. You don’t want employees to feel intimidated to say what they feel. Motivate shy employees to talk. Try to keep track of all ideas, even if they’re dumb. Then invite others to add to the discussion. You want every person to feel like they’re being heard.

Look for opportunities for fun, such as mentioning birthdays or employee anniversaries.

Be mindful of opportunities to reiterate company values or goals. Develop a system to keep track on assigned tasks. Make certain that each employee knows the next step before adjourning.

Such measures will improve your meetings and your company’s communication.

From the Coach’s Corner, to improve productivity and reduce losses, here’s a reason to work on internal communications: Good communication with non-exempt workers on your company’s firing lines can help identify risks from political environments to customer satisfaction.

A Protiviti, www.protiviti.com, survey showed about 50 percent of surveyed executives admitted their companies are less than “very effective” in risk management.

Sports Offers Lessons on Strategic Management and Planning

 

Lessons from sports – strategies by legendary Yankee manager Casey Stengel and outstanding football coach Bill Walsh – serve as great metaphors for business success via innovation and strategic management.

Stengel was quite the innovator and taught us wonderful lessons about human resources, especially the tactic known as platooning in baseball when he managed the Yankees for three decades starting in the 1940s. He is the only Major League manager to win five consecutive World Series and he won seven championships from1949 to 1958. Stengel and his influence were as well-known as his legendary players, including slugger Mickey Mantle.

Stengel said it best: “Finding good players is easy. Getting them to play as a team is another story.”

Stengel, perhaps unknowingly, provided another insight about management strategy: “If we’re going to win the pennant, we’ve got to start thinking we’re not as good as we think we are.”

Innovation is also a lesson from Walsh, the visionary Hall of Fame football coach, who guided the San Francisco 49ers to three Super Bowl titles.

Two of Walsh’s keys to success:

1. Daily, he relentlessly assessed his team and personal-coaching performances.
2. He knew talent and he was close with his players, but he was clinically objective. Walsh knew when his players were through in their careers. For the overall good of the 49ers, he’d rather see a player retire too early instead of waiting too long to hang up the uniform.

There was a motivational benefit to his innovative approach: His players were aware of his philosophy and played more efficiently to keep their jobs.

Innovation in Business

Such sports examples in innovation and strategic management compare unfavorably with study results by the Boston Consulting Group, www.bcg.com. The study is entitled, “Innovation 2007.”

Even though the 2,500 responding business executives considered innovation to be a key to success, only 46 percent were happy with their returns on innovation spending.

Stengel and Walsh would have been dissatisfied, too, with the study’s results, which also revealed these obstacles to success:

• Thirty-eight percent of respondents cited their risk-averse culture.
• One-third identified problems in selecting the right ideas.
• Twenty-six percent admitted they did not know the desires of their customers.
• Twenty-two percent acknowledged their inability to measure performance and 19 percent failed to connect compensation with innovation results.
• Nineteen percent concluded they were lacking in management support and leadership.
• Eighteen percent admitted they had unsatisfactory marketing and communications.
• Seventeen percent said they didn’t have enough good ideas.

To solve these quandaries, a business needs to change its risk-averse culture, develop a more efficient HR program, implement strategies to get-to-know their customers, establish benchmarks and tie them to salesperson/sales management performance, develop a leadership program, hire better communicators and innovators.

That means hiring a Casey Stengel or a Bill Walsh for strategic thinking, a state-of-the-art human resources program, and strong marketing focus.

Textbook on Strategic Management

Such executives might also want to read a college textbook, “Strategic Management: An Integrated Approach,” by University of Washington’s Dr. Charles W. L. Hill and Texas A&M University’s Dr. Gareth R. Jones.

Just as consumers like one-stop shopping at Costco or Fred Meyer, the book is a good source for learning a host of business solutions.

Its 647-pages are chock full of case studies of well-known businesses on customer satisfaction, efficiency, innovation and quality. In fact, dozens of authors have cited the book for solutions. They range from developing trends in performance and competitive advantage to business strategy and technology.

For example, the authors wrote:

“The major components of the strategic management process are defining the mission and major goals of the organization; analyzing the external and internal environments of the organization; choosing a business model and strategies that align or fit an organization’s strengths and weaknesses with external environmental opportunities and threats; and adopting organizational structures and control systems to implement the organization’s chosen strategy.”

Do you capitalize on your organizational wisdom where your proverbial tires meet the road? If not, talk with your customers and lower-level workers.

“A revision of the concept suggests that strategy can emerge from deep within an organization in the absence of formal plans as lower-level managers respond to unpredicted situations,” wrote the authors.

“Strategic planning often fails because executives do not plan for uncertainty and because ivory tower planners lose touch with operating realities,” they pointed out.

My sense is that strategic management often fails because companies fail to successfully answer this nagging question: Are the right managers in place?

Many organizations fail to reach their potential because they’re guilty of ignoring The Peter Principle. That’s the theory first introduced by Lawrence Peter, who received his doctorate from Washington State University in 1963.

In 1968, Dr. Peter wrote his book, “The Peter Principle,” in which he theorizes: “In a hierarchy every employee tends to rise to his level of incompetence.”

Consider your own career: How many times have you worked for incompetent bosses?

Just because an employee is adequate in one capacity, does not mean the person is competent at a higher level. Often, companies will promote salespeople into management without adequate education or training.

In essence, violation of The Peter Principle leads to the downfall of organizations.

As Biz Coach, I regularly hear complaints about poor management. As a business-performance consultant, I’ve seen it many times in both the private and public sector.

The temporary solution in medium to large organizations is what Peter calls “lateral arabesque.” That means moving the incompetent employee laterally to another position to prevent further damage to the organization.

The long-term solution is two-fold: Hire the right people and conduct tactical performance reviews to lay a foundation for up-to-date strategic management.

Stengel and Walsh would be impressed.

From the Coach’s Corner, from my bookshelf, you might wish to consider reading “Perspectives on Strategy.” It’s also from the Boston Consulting Group. It has many terrific insights.