Archive for May, 2010

Tough Talk from a Micro-Managing Business Advisor

Friday, May 28th, 2010

employee screening, background checks employeesGeorge Cloutier is the author of a popular business book, Profits Aren’t Everything, They’re the Only Thing. The book came out of a series of business training seminars he was doing for small-business owners.

The Turnaround Ace’s Tough Advice
So named by Business Week, some of Cloutier’s advice is unusual, if not controversial. A few examples:

  • Cloutier says you should love your business as much as you love your family. (And he used to say, “Love your business more than you love your family.”)
  • He says it’s fine to have a plan—but that’s the easy part. The hard work is the hard part. Work on weekends. Give up golf, because you’re not going to make money on the golf course. The people who say they do are making an excuse to be lazy.
  • Take responsibility for your failures—don’t blame the economy, the recession, the bank, or your employees. If the bank doesn’t lend you money, it’s your fault. If an employee fails, it’s your fault. If a customer drops you in favor of another product, it’s your fault. Taking responsibility is necessary to be successful.

The Business Owner Comes First
Cloutier espouses that business owners take care of themselves first—ahead of the employees, process, team—or anything else. He says that without focusing on profits, your business will fail. When business owners allow employees and popular wisdom to run the company, instead of focusing on cash and profits, they will fail.

You’re Not in Business to Pay Your Vendors’ Bills
Cloutier advises business owners to not pay vendors on time. When it’s difficult to obtain financing, the only place you can get more credit is from your vendors. If you’re getting 30 days, ask for 60 days. If you’re getting 45 days, ask for 75 days. He does not advise business owners to be unethical, or to not pay taxes on time, but to be upfront and conserve cash as much as possible.

Teamwork is Overrated
Cloutier thinks teamwork is vastly overrated. If the team takes over your business, they will protect their failures. They will not hand out harsh penalties. Better to have one person in charge—the business owner.

Embrace Your Inner Control Freak
Coultier says that if your employees fail, it’s your fault. You must take responsibility. You hired the wrong person, failed to train them properly, or failed to correct their mistakes. And what about delegation? He says, don’t do it. Instead, micromanage your business. Look at everything, every single day. Who’s calling? Who was that customer who just left? What did they buy—or not buy? How are your employees dressed? How much cash is in your bank account?

Getting good help, Cloutier says, is “100 times more difficult” than we think. Many people are mediocre—so it makes sense to have procedures in place to follow up on them and see how they’re doing. Monitor closely, and intervene earlier, rather than later, when they’re going off track.

Fear is the Best Employee Motivator
But it’s okay to like your employees. In fact, Cloutier says that business owners must treat employees with respect, follow the law, help them with personal problems—but coddling employees is off the mark.

Stop Whining and Get to Work
The recession, Cloutier says, is a big excuse for poor performance. Failure to build a strong sales organization, strong financial reporting, and strong profits and cash flow are the real reason businesses fail.

And Fire Your Relatives
According to Cloutier, says a family business with more than one family member is a bad idea. The entitlement family members usually feel is a morale killer and bad for business.

I Need to Hire An Employee—Now What?

Thursday, May 20th, 2010

Congratulations—your business not only survived the economic downturn, but it’s growing—and now you need to hire your first employee. You might be a great pastry chef, shoe shop owner, or candlestick maker—but if you don’t know a W-2 form from a can of WD40, you might have a big problem.

Relax—hiring your first employee is not as tough as you think. There are plenty of resources on the web, as well as at your nearest state and federal tax offices, where the staff will supply all the proper paperwork and manuals. They want to make sure you are completely compliant with all the taxes you’ll be responsible for.

You’ll need to obtain an Employer Identification Number, set up a payroll system, file withholding taxes, and report the new employee to the federal government. You’ll also need to register with your state employee office for their disability or worker’s compensation program, or obtain your own disability insurance.

But first, you need to get through the hiring process. Determine exactly what you need from your employee. Make a list of every single task you want the employee to perform. Write down all the things that are not being done well—or at all—because you cannot get to them. The list may be longer than any single employee could take on—but write them down anyway. You’re going to cut the list to a manageable number.

Write a quick job description, based on the list. Think of it as the goals you need help reaching and the tasks required to meet them. Keep the job description flexible enough to change it to fit your needs and the employee’s skills after he or she has been in place for a month or so.

Think about the education and skills needed to perform the job you’ve just described. Don’t forget physical requirements, like standing for several hours, reaching, bending, or lifting 25 pounds. These are all important aspects of your job listing.

Next, determine pay and benefits. Your local Economic Development Office and Small Business Administration are great places to research local pay rates. Or, check a site like PayScale.com, and you can find out what your job title average pay is, nationwide, or narrow your search by geographical location.

Now you’re ready to advertise. Most employers advertise online through local newspapers and Craigslist.com or use large online job boards like Monster.com and CareerBuilder.com. Yahoo, Facebook, and Twitter are also great ways to get the word out that you’re hiring. And don’t forget word of mouth—you’re more likely to find a great employee through someone you already know.

Once the resumes start coming in, weed out those that don’t meet your qualifications. Of the qualified applicants, some may no longer be interested (if they accepted another job, for example) and others may expect a higher wage than you can pay. How to find out? Conduct a telephone interview, and ask a few pointed questions about availability, ability to perform the job, and interest in the position at a certain wage range.

Call in the finalists for in-person interviews and have them fill out applications. You can find templates online or create your own. Be sure to have a separate permissions page for background screening and credit check. Pre-employment screening should be part of your new hire process. You don’t want to subject your business to an employee with an arrest record for embezzlement or who lies about her employment record.

The last step is to choose the best-fit employee, based on background screening results, your impressions, and qualifications. Personality has a lot to do with choosing the right employee, but don’t let emotions get in the way. Even if you really like a person, it doesn’t mean they’re the best employee for you!

Increase Productivity through Better Employee Communication

Thursday, May 13th, 2010

Even as the economy shows signs of strengthening, many companies haven’t yet seen business rebound. They still need to do more with fewer employees. Perhaps you’re a hiring manager or business owner who is not able to begin hiring—but needs to keep existing employees motivated and more productive.

You might be thinking, “Haven’t I analyzed productivity enough over the last couple of years?” Perhaps you think there is no way to ask for more efficiency from overworked employees. What if you want to give them a break without affecting productivity? And you know you can’t hire more staff just yet. What to do?

Analyze Again

One answer is the one you might not want to hear: start at the top and analyze your business again. Look at your processes and procedures with a fresh eye—not an easy task, id it? So, why not get some help from the people on the front line? Seek input through an employee survey. Solicit their ideas for increased efficiency.

Fewer Steps, More Efficiency

If yours is a production-based business, efficiency can make or break it. Again, start with your front-line employees—like Mike, your shipping clerk. Look at Mike’s flow and setup. How many steps does each task take? Which can be eliminated or streamlined? How can Mike reduce travel time required for his job requirements? The higher the number of steps his feet take, the more time and energy he’s wasting. Encourage Mike to work with you to redesign his work station, eliminate wasted time and materials, or redistribute his tasks to others, if that makes more sense.

Decrease the Layers of Authority

If your business is sales-related, listen to your phone operators. How can they better balance customer service with efficiency? Are they wasting time waiting for approvals for services they are not authorized to give? Can you empower customer service staff to take care of issues on their own level, decreasing the layers required to handle a problem?

Be an Undercover Boss

Not sure if these areas are problems in your company? Your employees do! So ask them. Spend time with them. Get out of the office and shadow a few employees for a day. Take a cue from the new reality show “Undercover Boss,” where CEOs go undercover in their own companies, working alongside the lowest-level employees—and learning how their businesses really work.

Employees often follow procedures they are trained in, whether or not they are the most efficient use of their time. They do what is expected. But when given the chance to change things, many will jump at the opportunity to contribute to an improved workflow.

Give Mike a Promotion

Perhaps your frontline employees, like Mike, are capable of taking on some management duties. If you’ve downsized your management team, it may be that they already are—and if that’s the case, recognize them for it. Sometimes a change in title helps employees shine in ways you didn’t expect—and it can be real morale booster, too. So make Mike the Shipping Manager if he deserves it!

Talk to Your Staff

As with most management challenges, the key to increasing productivity lies in staff communication. Talk to your workers, learn how they do their jobs every day, and solicit their ideas for improvement. If they are willing to take on more responsibility, start on a plan to make that happen. And if they are at the point where another task will send them out the door—you need to know before it happens.

Employment Update

Thursday, May 6th, 2010

For the third month in a row, the private sector added jobs in April, according to a report from ADP. Jobs increased by 32,000 from March. March’s number was revised as well—and the news is even better: rather than a loss of 23,000 jobs, there was an increase of 19,000.

With employment from January 2010 to February 2010 increasing by 3,000, April’s numbers seal three straight months of increases. And this Friday, the U.S. Bureau of Labor Statistics will release its jobs report for April; analysts predict total job growth (pubic and private sectors) will be between 180,000 and 189,000. (March’s increase was reported at 162,000, which will be adjusted on Friday’s report.)

April’s expected increase will include the temporary jobs added by the U.S. Census Bureau. Still, the manufacturing sector is expected to add about 29,000, and service sector about 50,000 in Friday’s report.

Another bit of good news is that the Consumer Confidence Index increased to 57.9, 18 points higher than April 2009, and 5 points higher than just a week prior. The Conference Boar Consumer Research Center, which issues the Index, reports the reading is higher than it’s been since September of 2008 because consumers’ concerns about business and job markets are easing. The Conference Board also reports that online job openings advertised in April jumped to 4.15 million, an increase of 222,700 over March.

So hiring freezes may be starting to thaw. What about the employees who managed to keep their jobs throughout the economic downturn? How are they faring?

There are indications that wage freezes are starting to hit the road, too. The Wall Street Journal reports that large employers like BASF, the chemical company, and Rockwell Collins, an aviation electronics firm, are distributing raises to their employees. Retaining key employees, rather than cutting staff, has become the priority.

BASF was scheduled to pay out raises in April, but decided to do it a month earlier—and employee morale was instantly improved. Even the buzz surrounding the early raise announcement helped loyalty and allowed employees to recommit to the company.

And employers might soon need that commitment from their people. A January survey by Towers Watson showed that 15% of respondents were having difficulty keeping their best talent. Employers are seeing more poaching and defections of key employees. One way to keep them from going is to increase salary—and that’s what is happening. AT&T gave 100,000 managers significant raises in November of 2009—four months ahead of the rest of their employees.

We will report on Friday’s job numbers as soon as they are announced, so check back!