Sunday, May 30, 2010

Ethics in Business is so Important

"Live with integrity, respect the rights of other people, and follow your own bliss." ~Nathaniel Branden

One of my favorite shows on TV is the reality series, “Survivor.” Since it has been on the air, the show has sent people to 20 of the world’s most remote locations to survive, compete and gradually vote one another off. It is a very interesting game that teaches you quickly that honesty and integrity are easily traded off when a million dollars or winning is at stake.

In the last two seasons, there was a player by the name of Russell Hantz, an entrepreneur in the Texas oil tanking business. He competed viciously with no regard for the feelings of his fellow players, and absolutely no concern for his integrity and honesty. Basically, he would lie constantly to advance his position by way of the elimination of one of the other players, with no regrets at all. Throughout these two seasons, all he said over and over was that everything was “strategic” – in essence, that the ends justified the means.

While no one player was completely truthful, Hantz took his deception to such an extreme that it amazed me. He would swear on the lives of his children and say absolutely anything to promote himself and his agenda.

In both seasons, Hantz lasted long enough to become one of the top three finalists. The winner is selected from among the top three by a jury consisting of the last 10 contestants to be voted out. In neither season did he win the million dollars, and in the last season, he did not even receive a single vote. Obviously, he was a master at manipulating people to promote himself, but all this amounted to nothing in the end since the jury did not care for his style of playing the game.

What I took away from this show – which, incidentally, I think I am addicted to – was that on “Survivor” and in life there is a cost for bad behavior. While the ends are important, the means by which you achieve those ends are infinitely more critical.

Some might be thinking, “Clearly, ‘Survivor’ is a great show, but what does it have to do with business?” I think the lesson for every entrepreneur is that while success is fantastic and worthwhile, the measures you take to achieve success are really what count. The old cliché, “What goes around, comes around,” springs to mind. If you abuse or take advantage of people on the way up, they are going to do everything in their power to make sure that you fail.

Most entrepreneurs have the opportunity to be less than honest in so many ways. However, every entrepreneur that I have ever known, realizes that the outcome is not nearly as important as acting with integrity in the pursuit of it. Being strategic is important to the success of every business, but doing it without integrity and honesty is a road to disaster. The entrepreneurs that I have seen follow this path just about always fail.

Now go out and make sure that you operate your business with integrity and honesty in the pursuit of your strategic goals.

You can do this!

Sunday, May 23, 2010

Establishing priorities for Customer Service

“Look through your customer’s eyes. Are you the solution provider or part of the problem?” ~Marlene Blaszczyk

During my recent trip to South Florida, a colleague of mine was checking out of the hotel that we were staying in. The morning that we were due to check out, the hotel somehow neglected to put a bill under her door, and she had to go up to the front desk to request a copy.

Just as she began speaking to the front desk attendant, his phone rang. He answered the phone, leaving my friend standing there while he dealt with the problem – a guest needed directions to a restaurant. As soon as he hung up, another call came in. This time it was directions to the airport, and my friend was basically ignored while the attendant helped the caller. Believe it or not, this happened a third time with a guest who wanted to leave a wake-up call! Each minute that passed, my friend got angrier and angrier, but she managed to maintain her composure in spite of the incredibly bad customer service.

I have no idea why so many staff members believe that they have to deal with the telephone first rather than the client who is looking them in the face. I cannot tell you the number of times this has happened to me in doctors’ offices, and I have found this to be one of the rudest things possible. I have made an actual trip into the office, and then the priority is given to someone who calls in, regardless of the purpose of the call. This is just bad business.

I believe the best policy is to always give the priority to the customer who is physically present in the business. However, this is not to say that staff should ignore the telephone if they are with a customer. If an employee is dealing with a live customer and the phone rings, the employee should ask the customer if he or she could answer the phone quickly. They can then answer and say something along the lines of, “Thanks for calling XYZ Company. I am currently assisting another customer. Would you mind if I put you on hold for X minutes (however many they think the delay will be)?” This way the staff member acknowledges the customer on the phone but gives priority to the person in front of them.

While this sounds like such a simple concept, it really needs to be said over and over again with some sort of monitoring.

We have gotten this point across very successfully by using role-playing scenarios, after which we observe staff to ensure that the training worked.

Now go out and make sure your staff has been trained on how to assign priority when serving customers.

You can do this!

Tuesday, May 18, 2010

Never trust your staff too much!

"Trust everyone, but cut the cards." ~Finley Peter Dunne

There is an ongoing story in our local paper about a bookkeeper who allegedly stole over $500 thousand from an organization. When the authorities began investigating the matter, they found that this bookkeeper had been convicted of stealing funds from her former employer. In fact, when she was hired, she was serving her jail time at night while she worked during the day.

Obviously, this organization failed to do any due diligence to verify her background. And while this oversight was bad in and of itself, the real problem here was management's complete trust in this employee.

This employee was able to write checks and make the park's books look great since she was the one who reconciled the bank statements. In our consulting work we run into this often, and I warn every entrepreneur against it. I tell owners that the checks need to be returned to them, and they need to look over them to verify that there has been no impropriety.

Why did all this happen? I believe that as people, we want to trust others and see them in the best light possible. If we looked at every person we know with a suspicious eye, life would not be any fun. Our fundamental belief is that people are basically good, which is a philosophy that I certainly subscribe to.

But while we need to see the good in everyone, particularly employees, we need rules and procedures in place to ensure that dishonesty is caught and punished. Just making staff aware that you are checking on their honesty is frequently enough to prevent theft.

So often, businesses that install video cameras near their cash registers and back doors are surprised to see the incidence of theft decrease. After all, most theft in a business occurs internally. Removing the temptation to steal is the best means of eliminating theft.

While you need to trust your staff, never trust blindly. Have procedures in place to guarantee their honesty. As bad as it may sound, this is the most effective way to deter theft.

Now go out and make sure you have policies and procedures that eliminate the temptation to steal. And never completely trust any staff member, no matter how long they have worked for you.

You can do this!

Tuesday, May 11, 2010

Should the government intervene in how businesses price their goods?

"Every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good."
~Adam Smith

For the last 10 years, I have been aware of the additional regulations and restrictions that our government has put on small businesses. It has troubled me both because of the cost as well as because of the way it limits a business’ ability to compete effectively.

In 1776, Adam Smith, who is considered the father of economics, wrote the classic book entitled The Wealth of Nations. In this book, Adam Smith argues that if left unfettered, businesses will compete to provide the maximum value at the minimum cost to consumers. He called this the “invisible hand of competition.”

The “invisible hand” is the force of competition that ensures goods are delivered at a fair and reasonable price. After all, if one firm charges $10 for a product, and another firm charges $8, it is only logical that customers will go to the $8 vendor until the more expensive firm lowers its price.

When I had to read this classic text in graduate school, I had no idea that it was written the same year that our country earned its independence. Obviously, Adam Smith understood the role of competition, as did our founding fathers.

With only certain exceptions (e.g. regulated utilities), when the government tries to influence the price of products delivered to consumers, it tends to destroy the way our free markets operate. And free markets, of course, are the basis of capitalism.

What really caused me to blow my gasket was Spirit Airline’s announcement that they would begin assessing a $45 charge for carry-on luggage. I was actually not upset that Spirit wanted to do this. In fact, being a frequent traveler who has been hit in the head with flying luggage too many times to count, I would like to see a decrease carry-on luggage. Additionally, I have seen how often the TSA line slows significantly – or even stops completely – because someone with carry-on luggage did not know the rules about liquids or some such issue.

I, myself, always check my bags so that I do not have to deal with the hassle of TSA or force-fitting the luggage into the overhead bin. Of course, what I like or do not like is really immaterial. I just had to vent a bit here as this is one of my pet peeves.

What does trouble me about the luggage charge is that the government is saying that Spirit should not implement this fee and is looking for ways to legislatively stop them from doing so. In my opinion, the government should stop meddling in this issue as well as in so many others. Unless there is collusion or price-fixing, Adam Smith’s invisible hand of competition will control how successful Spirit will be with this carry-on luggage charge.

Ordinarily, one of two things can be expected to occur as a result of this new pricing strategy. The first possible outcome is that customers will stop flying Spirit, making it necessary to repeal the charge. The second is that customers will be willing to pay this price for a whole variety of reasons – lower total prices, for instance. The bottom line is that businesses operate best when that invisible hand of competition is permitted to function as it forces them to operate in a manner that ensures customers are receiving the highest value.

Too often, entrepreneurs tend to sit back and let governmental regulations hamper their operations. However, there are many ways to become active in limiting the number of these regulations. Chambers of commerce and lobbying organizations for each individual industry are just a couple options. Additionally, running for office is a great but difficult way to influence the government’s ability to impact businesses.

You can do this!

Monday, May 3, 2010

Managing Generation Y

Hire the best. Pay them fairly. Communicate frequently. Provide challenges and rewards. Believe in them. Get out of their way, and they''ll knock your socks off. ~Mary Ann Allison

In so many businesses, the preponderance of staff now comes from Generation Y. Also known as the Millennials, Generation Y consists of those staff members that were born after 1980 and were the children of the Baby Boomers.

Over the next seven years, 50 percent of our workforce will retire, and the largest number of college grads will enter the labor force. What this means is that more and more members of Generation Y will be entering the workplace, and every manager must understand how to motivate and manage this group.

In order to understand this generation you have to first understand how they were brought up. They were raised in an environment where parents did all they could to give their children almost everything they ever wanted. Their parents went out of their way to make sure that their ego and self worth never took a battering. Most of their emotional and material needs were met unquestionably.

I have talked to so many managers and entrepreneurs that just do not know how to manage this generation as they are so vastly different from the Baby Boomers. These managers just do not get what motivates and retains Gen Y’s. Obviously, if you want to be a great manager and leader, then you must understand what makes this generation tick.

First, this generation wants to feel as if they are doing something that is worthwhile and of value. They will not just follow orders blindly, but must be shown how what is being asked of them fits into the larger picture. If you ask them to get new training, it is imperative that you explain how this training will be of value to them as well as to the company.

When asking this generation to work on a project, you cannot just tell them how to do it. If you tell them step by step how to do something, they will rebel and leave your employ. Instead, it is best to just let them know what outcome you want. For example, you would not tell one of your Generation Y staff how to modify part of your website. Rather, you would tell them what you want the final product to look like and let them make it happen. Micro-managing this generation will not work. You just have to let them figure out a way to get the job done.

Making the workplace fun is so important to this generation. They fully understand that they spend more time at work than they do at home, and as a result, they almost demand that their workplace is a fun one.

The best types of fun are things that are not planned, such as taking a break and having ice cream brought in. One entrepreneur that we work with holds a Nerf basketball shot competition and gives away cash. Another manager comes to each staff meeting dressed in a different costume.

When I had an office (I now am semi-retired), I had a marshmallow gun that I had acquired from a company we were assisting. I used to go out of my office and shoot staff just to break up work, and I can promise you that they loved it when I started shooting. I was just worried about what was going to happen when they found out where they could buy these guns!

Loyalty is not one of Gen Y’s greatest attributes as they are much more concerned with their work life experiences and will move without much motivation. After receiving his MBA, my son went to work with Hewett Associates in Atlanta. He stayed there four months before he went to work with Home Depot. He did not see any problem with changing jobs that quickly, nor did Home Depot have a problem hiring him knowing that he only stayed four months on his last job. The real reason he left was bad management. He just did not feel challenged.

You really have to challenge this generation as they have such a low tolerance for doing repetitive work. Their attention span is very short, and I would imagine that this is from all of the multi-tasking that they have done all of their lives. As a great manager, you must find work that will constantly challenge this generation, or they will leave.

Throughout their early lives, Gen Y’s were constantly coached in everything from sports to music. As a result, they just expect to be mentored. While they are very independent, they are still looking for a great coach. It is so important to have coaches for these Gen Y’s.

Managing Generation Y is different, but if you really understand what motivates them, it is easy to draw so much value from them.

Now make sure that you have a plan and strategy for managing Generation Y, and that this plan and strategy are shared throughout the organization.

You can do this!