CategoryManagement Archives — Page 4 of 4 — C. Lynn Northrup, CPA, CPIM

Complacency

I thought it would be useful in this troubling economic environment to explore complacency. Linked together with complacency is a false sense of urgency. These are the two biggest issues that I wrestle with in my consulting practice and in dealing with clients.Complacency emerges from a sense of success or perceived success. Hey, I know what I’m doing because I built this successful business. The wagons might be circled and the bank has shut me down, but I know what I’m doing. Perception might be nine tenths of the law, but here reality is a different story.

Then the urgency level starts to spike. The trouble is this is a false sense of urgency because the complacent paradigm has these people doing the same things they’ve always done except they’re doing it faster. All they are doing is digging the hole deeper when they should stop digging.

I try to invoke the unvarnished truth and get them out from under the covers and feel how cold it really is out there. Maybe it is time to slow down and really think through the business and what we need to do going forward versus the same old things that aren’t going to work anymore. We need to change.

This is the challenge for CPAs in today’s economic reality. Stop doing what we have always been doing and start dispensing real business advice to our clients. It is going to be tougher and it’s likely that the same products and services won’t get the job done. It’s time for innovation to kick in and start thinking different about what to change and how to change.

Making It Happen

Here are seven simple management concepts that will help keep you on track and get things done. I thought it was appropriate as we get ready to celebrate another Thanksgiving.The seven steps are:
1. Know your people.
2. Insist on realism.
3. Set clear goals and priorities.
4. Follow through.
5. Reward people who get the job done.
6. Expand people’s capabilities.
7. Know yourself.

Have a great holiday, rest, and recharge your batteries so you’ll be ready to look for new opportunities behind those rocks of resistance.

Work Simplification

In these days of uncertainty and tough economic conditions it is critical to take all the necessary steps to keep costs under control. Usually the first step most companies take is to wield a big sharp axe and cut their payroll, often without thought or consideration. I have a better approach. How about work simplification.

Here’s how it works. Gather each supervisor and employee and have them challenge every detail of their jobs. Here are a list of questions they should ask:

• What is its purpose?
• Why is it necessary?
• Where should it be done?
• When should it get done?
• Who should do it?
• How should it be done to get better results?

This is a simple process that can pay big dividends. It will also give you good feedback on which supervisors and which employees are really thinking. Give it a try and my guess is that it will pay dividends.

In the long run it might be a sharper tool than the unwieldly axe.

Evaluating Current Reality

I was working on my BBV Program and thought it might be good to share some thoughts and even some questions to ask. Evaluating performance on a regular basis is critical. The key is asking the right questions before taking corrective action in the wrong direction.

There are three categories of conditions to consider. These conditions include:

1. A Business Tune-up
2. Turnaround situation
3. Are you in a crisis?

Tune-up questions should include the following:

1. Have earnings deteriorated?
2. Are sales leveling off or declining?
3. Is your workforce less inspired?
4. Are you satisfied with recent product or service introductions?
5. Have you developed a plan to maintain your rate of growth in spite of new competitors entering the market?

Now let’s review some turnaround questions:

1. Are you starting to lose money after years of profitability?
2. Do you have too much inventory that’s not moving?
3. Are you able to recruit new employees?
4. Do you have too much debt and not enough equity?
5. Do you know where you are making your profit?
6. Do you know why you sell the products in the markets you are in?
7. Have competitors taken business away from you?

Now for some crisis questions:

1. Is making payroll a problem?
2. Will your bank lend you more money?
3. Have you lost any key employees?
4. Have any vendors stopped shipping goods to you?
5. Have you had time to think about strategy?
6. Have customers who are slow pays stopped ordering?

Based on the answers to the above questions you will gain a sense of what action you might need to implement. These questions are the first steps of our Building Business Value methodology. From here we establish the scope of corrective steps a business will need and how to re-orient the business. In these times of uncertain economic conditions we thought these questions were appropriate. Asking the right questions is usually the first step in solving the problem. Don’t panic and take measured action to address the current reality of your business.

Some Thoughts About Processes

Management is largely getting processes to achieve the goals and objectives of the organization. Managing processes and having them achieve high levels of effectiveness is like herding cats or pushing wet spaghetti noodles. It can be pretty tough. Here are some thoughts on processes that might help.Almost all processes are evolved and not designed. They sort of happen over time and are initiated with the inception of the organization. Processes were developed initially to address a specific problem and then became modified and enhanced over time. Additional controls are then put in place as errors occur. The process tends to get divided among departments as the organization grows and then losses its external focus over time.

Processes are people based and are geared to achieve the entity’s mission. They should evolve based on strategic thinking and planning. However, this doesn’t happen because strategic thinking and planning fails to get done because fire drills in most organizations have a higher priority. There is a critical failure to understand and communicate. This is a prevalent occurrence in every organization. Further, people fail to perform consistently and individual uniqueness gets injected into the process, each with different needs and priorities.

These factors make managing processes a tough job. It is critical to make processes more effective producing the desired results. Processes have to be more efficient which helps to minimize the use of our resources. Processes also need to be adaptable and adjust to changing customer and business needs. This attribute is absolutely necessary in these difficult recessionary times. We need to have the right output at the right time at the right place. We need to be totally focused on meeting and exceeding customer expectations.

Here is an interesting perception relative to the efficiency of processes. The time required for taking an input and transforming it into an output with no wait, transportation and/or checks and balance time is approximately 5 percent of cycle time. Instead of spending effort on eliminating the 95 percent of non-value activities, most effort is instead devoted to speeding up value added activities.

Good enough is no longer good enough. It is absolutely essential to exceed customer expectations. We need to empower people and go beyond the basics of meeting expectations to exceeding them. This requires us to adjust and adapt to changing conditions and be fanatical over the pursuit of continuous improvement.

Why measure? If you can’t measure it, you can’t control it. If you can’t control it, you can’t manage it. If you can’t manage it, you can’t improve it. We have a lot of work to do. The good thing is that we can do it if we plan it and are focused on setting goals and objectives. This sets the bar of excellence for all us to excel and just not be satisfied with good enough.