The Entrepreneur's Mentor

Tough Choices

What to do now? You have been cutting cost everywhere you can and you are still losing money. If you are going to make it, you have to do something more. You have never had a layoff before, and you don't want to now, but what else can be done?

This is a tough scenario, one that many will face soon, if they haven't already. No matter how employee oriented a business owner is, there may come a time where this hard choice must be made.  So, how do you do it?

It might be worthwhile taking a moment and reviewing your company strategy and values. You want to act consistent with your values. People will remember any major inconsistency after all is said and done. Your stated values may give you a clue as to how to act. The idea of a layoff is to keep the company running as well and as lean as possible until things pick up. So those who remain behind must be providing valuable services for the company and the customers.

Some options, with associated pro and con arguments are:

• A cut in benefits across the board as a first step.
  • This could be a good stopgap measure but when employees have to pay their own medical insurance, car insurance, etc. they will be reminded of what they have lost and they will feel the impact in their checkbook.
• A cut in everybody's hours or pay rate.
  • This has the advantage of keeping everyone working (at least for now). If your workforce is a true team, they may appreciate this one and rise to the challenge.
    
  • It has the disadvantage of making everyone unhappy with a pay cut. A few unhappy characters can be toxic in the workplace and turn everyone sour. Gratitude for keeping their job becomes a memory, replaced by anger at having a pay cut.
• A straight percentage cut across the board in each department.
  • This shows "equality" of treatment and the employer's willingness to lay off even in "favored" areas.
  • The problem with this method is that it does not take into account where the company needs to maintain its strength. In retail it may be customer facing employees, in a service business it would be those providing the service (unless they are sitting on their hands because there is no business)
• Using a first in first out policy.
  • Offering early retirement to long time employees is an option. This clears out any "dead wood" that may have accumulated. It cuts what might be the highest wages. It makes room for the younger, aggressive employees to move up.
  • The down sides to this method are major. First, is the possibility of an age discrimination lawsuit. Second, you may be ridding yourself of organizational knowledge that does not exist elsewhere in the company. Do you have a sufficient knowledge base that you can afford to lose your old timers? Can those left behind carry on the company business with sufficient expertise?
• Using a last in first out policy.
  • This may seem like the most logical to many people. The newest get cut first. Termination costs will be relatively cheap. Entry level positions are typically held by young people who theoretically have less to lose and perhaps an easier time finding some kind of job. The company is giving up less institutional knowledge.
  • On the down side, you are leaving the higher earning employees alone, so you have to remove many more new employees to get to where you want to be. Does this leave you the right people to get everything done? Will the higher earning employees be willing to perform all of the required lesser tasks? You might be losing youthful enthusiasm and innovation.

There is no right and wrong. Each company may have a different solution. Consider what steps can be taken before a layoff is considered. Take them first. Then choose how you want to handle a layoff in a way that you and your company can best live with.

What Do Entrepreneurs Want from Santa?

I know, I know. Entrepreneurs are supposed to be cynical, worldly wise, street smart folks. We know there is no Santa, no free lunch. We know the check is not in the mail. We know when our employees call in "sick" rather than coming to work and pulling their weight. We've heard most of the excuses out there and recognize new ones when they come our way.

Nonetheless, we love pleasant surprises just like everyone else. We love to dream - it was our dreams that made us entrepreneurs in the first place. So, why not accept, at least for a few moments, the existence of Santa Claus. What would we want him to bring us?

Of course there is the usual crew- world peace, an end to hunger and poverty, good health for all. After those we are usually pretty well covered, but not this year. This year, I would add the following:

• A US government focused on getting us back on the right track internationally and domestically.
• More concern for the planet on which we live and the environment in which we live.
• A steadily recovering economy
• Common sense from the banks in making money available to the entrepreneurs with ideas that will help society.
• A common sense, transparent, efficient and effective health care system providing affordable and high quality care
• Realistic confidence
• Business leadership with a social conscience, focused on the present and the future.
• Wisdom that will enable us to take the experiences of 2008 and put them to use in our future thinking,
• Thought leadership
• Continuous innovation
• Renewed passion
• Less partisanship and contentiousness and more cooperation and collaboration
• Patience, which entrepreneurs as a group need

There is so much more, but we can't be too greedy. Okay, one last thing. We need to surround ourselves with the right people- friends, allies, strategic partners, advisers, mentors, suppliers and customers. We need to understand how to use this social and business network to achieve results. We have much to offer each other.

So Santa, did you get all of that? You can spread it around to everyone. We all need these things.

Happy Holidays to all.

Critical Thinking, Part 2

Critical thinking is multi-layered, multi-dimensional. It is not simply considering more than one solution to a problem before making a decision. It is also looking at the problem through multiple lenses.

What is our vision and mission? Which solution is most consistent with them? Will get us closer to them? Which one will help us achieve our goals, or at least getting closer to achieving our goals?

What organizational values come into play in this decision? Which solution is most consistent with our values?

What behaviors will be exhibited under each alternative? And what do those behaviors say about us as an organization?

What about short term vs long term? Which interest do we pursue?

What about when different solutions each support competing priorities?

Every year hospitals look at their relatively small bottom line (relative to revenues anyway) and have to decide how to allocate those funds. Do we get an MRI machine or spend on a new cardiac treatment center? Do we hire more nurses or bulk up our emergency department? How do we decide?

One filter may be to look at things strategically and not tactically. Which alternative, if any, best fits our strategic plan?

Which will have the most positive impact on our culture?

Decision makers are not just going through alternative solutions and picking one. They need to run them through a checklist of filters; look at them from different angles and make decisions based on the most relevant factors.

Nobody said it was going to be easy. And after all that, you still may not be right. But your chances are better using a solid decision making framework.

Check Your Ego at the Door

Often times, small business people become obsessed with getting their name well known. And as a rule, that is not a bad thing. But sometimes it pays to keep it under your hat.

Subcontractors may need to remain anonymous and allow the contractor to reap the glory. This can pay off in more work from the contractor than you could get from others by putting your name out there. Some contractors want to give the appearance that  they can do it all, so their subcontractors or vendors publicizing their involvement in a project can be a source of embarrassment. Be strategic- and be about getting the work and making your client happy. Check with the client before announcing your involvement in a project.

Even as a consultant, I very often work under another consultant's name. And I am thankful for the work and don't need to have my company's name splattered all over it. I have business cards and e-mail addresses of a few other companies. Many of those same people have them for my business.  When you have limited internal resources and you have to go outside of your company to service a client's business, there is no need to confuse the client with three or four different company names. Clients look for simple solutions, not complexity.

The point is to stay busy and do good work. If you do good work, there will be more where that came from. Your company name does not have to brand the work.

The same can hold true in pitching a big piece of business. You can put together the pieces needed from a number of different companies, but do the presentation, proposal and contract under one name.

Sometimes you should check your ego at the door, and then you can go put the check in the bank. Other times, when you land a piece of high-profile business, you can beat the drums and blow the horns. Follow a strategy for when to publicize and when to not. Respect relationships and the needs of your clients and colleagues. If you do well by them, your ego will be intact.

Accountability

One place where many organizations really fall down is in the area of "accountability."  You can have a world class team and a killer strategic plan but if people are not held accountable, you will fail.

Accountability starts with accountability to self.  I need to do certain things in order to fulfill my own personal goals and to feel good about myself.  This should be a good enough reason on its own.  But accountability to your boss and to your peers is just as important, and perhaps more so.  If everyone needs to fulfill their roles in order for the group to succeed, then the success of all depends on each individual.  This should be a very strong force.

There must be a culture of accountability for it all to work. If some do not do what they are supposed to and there are no negative consequences, then what is the incentive for anyone else to finish their work?  The culture has to instill the need for accountability and for consequences when it is not achieved.

How do you create a culture of accountability where one has not existed before?