Small
Business, Media Advertising, Marketing and More 04/09
Starting
and Managing a Business in Tough
Times
03/09
Starting
and Managing a Business in Tough Times II,
02/09
Managing in Really Tough Times,
12/08
Reactive Errors, and
Proactive Solutions,
10/08
Managing Sales and Marketing,
09/08
The Two Worst Mistakes a
Manager Can Make in a...
08/08
Appreciative
Inquiry: A New Tool for High
Level...
07/08
Managing
in Tough Times: What To Do - That is
the... 06/08
Monitoring
For
Effectiveness
05/08
Seven
Key Steps in Effective
Planning
04/08
Small
Business, Media Advertising, Marketing and More
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Question-How can a small business owner/manager remain viable in an
economic downturn when marketing budgets are being cut, and customers seem to be
motivated solely by the lowest price for their purchases.
Answer-Businesses remain viable to their clients by providing constantly
increasing value, not lower price. Value is measured not by cost but by the
problems it solves for customers. What is required is to develop close
relationship marketing with your clients by which you learn of the issues they
face, and then you provide solutions for those issues.
Question-We
can't afford media advertising and other high cost promotional efforts. What
else can we do to promote our business in the recession?
Answer-There are many low cost and high impact strategies that can be utilized
in the recession. Social Networking Marketing is one, using such sites as
Linkedin and Facebook. Blog Marketing can create buzz for your products at
little or no cost. Experiential Marketing is another tool, in which the company
provides a venue for customer experience with products in a favorable setting.
Low cost tools such as Constant Contact can provide the means for staying in
close touch with customers. Website marketing should be used also, and can be
made more effective with tools such as SEO (search engine optimization).
Question-What
are some of the ways that an organization with a large client list, including
current customers, prospects, and past customers can develop an ongoing contact
relationship with each group aimed at maintaining current clients, converting
prospects into paying customers, and re establishing lost business with former
customers.
Answer-Each group must be treated differently. The most important group is the
current customers, and the main effort with this group is regular contact to
ascertain satisfaction or problems and fix what needs to be fixed while
maintaining a mutually beneficial relationship. The next group to concentrate
upon is the prospects. Converting a prospect to a customer is a time consuming
job with a large payoff potential. Prospects must be shown the value of the
product or service being offered by the firm and how it compares with
competitive offerings. The firm must be in constant contact with this group
during the process. The last group is the former customer. Here the process
should focus on the improvements and other changes the firm has made to make its
products more valuable to the user, and it should be communicated to the former
customer on a regular basis.
Question-How can I use a Marketing/Sales Plan to help guide my efforts in
recession marketing and sales?
Answer-A Marketing/Sales Plan is essential at all times, and in a recession it
is more important than ever. A good plan will clearly show the firm's efforts,
as measured in costs that will be incurred during the life of the plan, and must
also show the results that are anticipated from the efforts. Every area of
expense must have a target result, and result outcomes must be measured on a
regular basis. The plan should have a variety of outcome measures, not just
sales, but also inquires, quotes (whether won or lost), customer retention
statistics and, of course, profitability both by customer and product. Another
area, often overlooked, is the need to maintain accurate contact records. This
may be provided through contact software packages such as ACT!, or
Salesforce.com. Free Marketing Counseling is also provided by such organizations
as SCORE (Service Corps of Retired Executives)
Richard Walton, Counselor for SCORE, and President, Enterprise Resource
Management Associates, Inc., of Hagerstown,
Maryland . Cell phone: 301-462-9850, email: richard@ermacorp.com.
Starting
and Managing a Business in Tough Times
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Question:
Can I make use of the down economy to build up my workforce. Should I?
Answer: You not only can but you should. There are many individuals who have
been downsized by other firms who are seeking new employment. They may be
available at lower than market rates in view of the recession. You can find them
on www.craigslist.com, www.monster.com, as well as the social networking sites.
It could be your best investment.
Note: This process is known as countercyclical hiring. Social Networking sites
include Facebook.com, and linkedin.com.
Question:
What are some no cost ways to build up my current employees' knowledge, skills,
and abilities during the downturn?
Answer: You can provide self paced computer assisted learning, have other
employees give training sessions in their special skill area, develop a
temporary job trade with other employees and departments to gain additional
expertise, (i.e. swap jobs for a day) and even temporarily outsource employees
to other firms. This way we can prepare for the eventual upturn in business with
increased employee skills.
Note: Knowledge, Skills and Abilities are often referred to as KSAs
Question:
How can I reduce costs both in operations and administration, without resorting
to layoffs?
Answer: One way to reduce both administrative and operational costs is to ask
for new quotations from your vendor or vendors. Bartering is increasingly being
used to conserve cash. In operations, reducing costs can be facilitated through
employee involvement in cost reduction and process improvement initiatives.
Employees can voice their own ideas through such systems as Quality Circles and
TQM.
Note: TQM (Total Quality Management) is based on continuous improvement in all
processes. Quality Circles are small informal groups of employees which meet to
discuss cost reduction options.
Question:
How can I link individual employee performance with organization wide goals and
objectives?
Answer: You can design organizational job descriptions and performance reviews
to support organizational goals and bottom line results by structuring work
processes for maximum efficiency and maintaining a continuous process of
monitoring performance against goals. Appreciative Inquiry can be used in
problem solving and motivation.
Note: Appreciative Inquiry (AI) is a concept developed by David Cooperrider. It
is a tool used in Organization Development to focus on what an organization does
well rather than what mistakes have been made. It therefore sets the stage for
an affirmative way to deal with problems and solve them creatively.
Question:
How do I allay people's fears of layoffs and keep them motivated during 'tough
times?'
Answer: There a number of ways in which managers can do this, and it is very
essential. What is most important is to be candid and honest with employees
about the current situation and what can be done about it. Asking for help in
building revenue and reducing costs can lead to good ideas, and a sense of
participation by employees. Managers need to maintain close and supportive
contact with employees, using such techniques as MWA (Management by Walking
Around).
Note: MWA (Management by Walking Around) is a technique that helps build
confidence in employees by interacting regularly with managers.
Concluding Note: Many of the ideas contained in the Q&A are expanded upon in
the publication: Best Practices and Practical Tips for Effective Small business
Management (2009). For more information, email the authors, richard@ermacorp.com,
or mmattare@frostburg.edu.
Starting
and Managing a Business in Tough Times II
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In this series, we will present a number of topics that
represent the issues and questions that are typically raised in our business
start up and operations management counseling.
We will present these topics and questions in a Q&A format. Further
information on any of these issues is available by contacting SCORE.
Question-Is this a good time to start a business?
Answer-Businesses are started up in all types of times. Good times are no
guarantee of success, nor are bad times (like today) always going to result in
failure. Success in business is dependent upon the quality of the central
business idea and the quality of its implementation.
Question-How
can you evaluate the quality of the central business idea?
Answer-Evaluating a business idea should be made by researching the market to
determine potential (or actual) customer interest. Business ideas that address
significant problems existing in the target market are more likely to stimulate
interest and future purchase.
Question-Is
it possible to fail with a great business idea is it is implemented poorly?
Answer-Both the idea and its implementation are central to success. The key to a
great idea is always in the value the potential customers can understand and
accept. The key to great implementation is the entrepreneur's ability to execute
the business plan effectively and efficiently.
Question-What
are the tools that business entrepreneurs can use to ensure success?
Answer-Market Research tools include surveys, interviews, sampling and test
marketing, as well as promotional material welcoming further inquiry. For
implementation issues, the key is a well written business plan that contains
milestones that require periodic review of 'progress to date', both as to effort
and results. Project Management software is ideal for this purpose.
Question-How
can a business manager effectively navigate the tough times?
Answer-Managers have to initially assess their vulnerability through financial
analytics. Normally this process begins with a current operating statement
(accounting speak for a Profit and Loss statement) that is reviewed both from
the top down and the bottom up. Top Down analysis compares current results with
plans as well as earlier results (last year, for example). The objective of Top
Down analysis is to pin point overall positive results and attempt to replicate
them while avoiding negative results, while at the same time projecting cash
flow for the coming year. Bottom up analysis starts with individual products and
customers and attempts to pinpoint where the potential exists to develop
profitable business either by expanding the production and sale of profitable
products and/or services and/or developing new products that address new market
needs.
Question-What
is the single most important thing to do in tough times?
Answer-The single most important thing to do in tough times is maintain a
reality based outlook of both the opportunities and threats facing your firm,
and its strengths and weaknesses in avoiding the threats and taking advantage of
the opportunities that may be present in today's environment.
Summary: Remaining positive when everything around you is negative takes courage
and commitment.
Written by Richard Walton. Richard is a counselor for SCORE as well as President
of ERMACORP, a small business research and consulting firm. His latest
publication is "Small Business Tips and Strategies for Managing in Tough
Times", co authored with Dr. Marty Mattare of Frostburg State University.
Managing
in Really Tough Times
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Managing in really tough times requires a mix
of theory and practice that can make all the difference between merely
surviving, and prospering, no matter what happens. We can divide the mix into
five compartments for easy reference. They are customers, internal processes,
innovation, finance, and people-culture. Let's take each on in turn.
Customers are the lifeblood of any business. In theory we
should learn what the customers want, and provide it to them. But in practice,
customers do not always know what they want and often are not aware of what your
firm can do for them. In really tough times, managers have to be more vigilant
than ever to seek out customer issues the solution to which can save your
clients money or increase their revenue.
Internal processes provide the customer solutions referred to
above. In theory processes should run smoothly with entirely predictable
outcomes. In practice this rarely happens. Processes are subject to interruption
and unpredictable outcomes. In really tough times managers have to dovetail
marketing and production processes so that what is marketed and sold is what can
be produced efficiently and effectively, that is at a profit.
Innovation in theory involves the creation of new products and services based
upon research and development processes. In practice innovation occurs
everywhere at all times within the firm, assuming it is encouraged. In really
tough times, everyone has to be an innovator. It is not just products, but
processes as well. Everyone has to be alert to ways in which productivity can be
improved.
Finance is both the enabler of business operations and the
score keeper. In theory finance provides what capital is needed for profitable
operations. In practice, particularly in really tough times, finance is
scrambling to provide funds for mere survival. What should happen in really
tough times is that finance should operate at both ends of the operating cycle,
through budgets ahead of time, and results afterward, and action should be taken
to correct any anomalies that occur in between times. Budgets must be viewed as
the most important planning and control documents in the firm, and carefully
adhered to in really tough times, both as to revenue and cost.
Finally, people-culture. Employees and the culture in which
they work, theoretically, should provide for meaningful work and job security.
In really tough times, job security is constantly threatened, and the culture
becomes one of constant worry about one's survival in terms of employment. What
should happen is that employees engage maximum effort toward improving
productivity through constant attention to the ways and means by which they can
increase the value they bring to the firm. This can be done through the culture
of continuous improvement and group incentives.
In summary, what needs to happen in really tough times is a
blending of theory and practice that takes account of the need for total
commitment to survival and ultimate prosperity and enlists the full court press
of every employee and manager toward its attainment.
Richard Walton, Counselor for SCORE, and President, Enterprise Resource
Management Associates, Inc., of Hagerstown,
Maryland. Cell phone: 301-462-9850, email: richard@ermacorp.com.
Reactive
Errors and Proactive Solutions
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Being proactive in Management is presumed to be more effective than reactive.
There are good reasons for this, however there are times when unforeseen events
force managers to react. We believe that the current economic slowdown is a time
when managers must react to events, and stabilize their operations before
becoming proactive.
To demonstrate this paradigm, we have developed a step series
from one to three in order to illustrate the ongoing processes of a declining
economic environment and how it could affect managerial actions. The intent of
this program is to show how Management may react initially to unforeseen events
and later develop a proactive action set for improved results.
Step 1. Sales Decline
The reactive Stance. The first indication of impending
difficulty shows up normally in a sales decline. The decline is seen initially
from a macro perspective, that is the sales total. Given that the normal
planning process in an ongoing business projects increasing sales, this anomaly
gives rise to a reactive stance made up of increased exhortation of the sales
staff to pressure their clients into giving the firm more orders. This reaction
usually fails to produce the desired results.
The Proactive Stance. Macro data such as total sales conceals
more information than it presents. Immediately upon realizing a decline in
sales, Management should become proactive in searching the micro data set, such
as sales by market segment, and sales by individual product or service line.
Superimposed upon that data should be the amount of effort that is devoted to
that product line or market segment. Management can then see where effort is
concentrated and what the direct relationship is between effort and results.
Furthermore, effort can be divided into the various components of marketing and
sales activities, such as brochures, advertising, sales promotion (the activity
set of Marketing) and field sales rep contact data, number of calls, lead
conversion statistics, etc. (the activity set of Sales). The two can then be
combined proactively to reinvigorate the firm's product and service offerings
and turn a sales decline into a sustainable increase.
Step 2. Increasing Costs.
The Reactive Stance. The typical reactive stance to a cost
increase and/or a cash flow slowdown is to reduce costs through layoffs,
curtailment of purchases, and an attempt to cut administrative costs by an
across the board reduction. Layoffs reduce payroll costs and also reduce
productive capacity. Curtailing purchases also can have the effect of slowing
production, which of course will also be felt as a sales decline. Cutting
administrative costs across the board is almost always a bad move, unless they
are seriously over inflated through past managerial decisions.
The Proactive Stance. A better result outcome is achieved by
initially concentrating upon costs as a function of gross profit margin, the
cost of production deducted from the sales price of products and/or services.
Maintaining and improving gross profit margin is the best technique in improving
costs. Also, the gross profit margin is the key to developing a breakeven point
analysis, under which the firm posits through its operations sufficient income
to defray the costs of administration. It is then possible to utilize the
proactive measures identified above in Step 1 to improve profit margins and
decrease costs.
Step 3. The Organization Culture and Transformation
The Reactive Stance. When an organization sees sales decline
and increasing costs, the usual reaction is to try to fix blame on either people
or operations, and demand more output, and less input. This usually has the
effect of creating culture wars under which relations between Management and the
employees suffers as the blame game goes on.
The Proactive Stance. A proactive stance calls for the
development of a positive culture as a part of any effort to build a successful
business. Cultural changes are transformative in that they will act as the glue
that holds the organization to its goals and will energize employees and
Management as well to 'buy in' to the new paradigm of higher sales, lower costs,
and ongoing company success. The artifacts of culture can be shared decision
making, open communication, and no fault problem solving. There are more, but
the above three can constitute a powerful first step in creating a 'can do' and
'will do' culture.
Richard Walton, Counselor for SCORE, and President, Enterprise Resource
Management Associates, Inc., of Hagerstown,
Maryland. Cell phone: 301-462-9850, email: richard@ermacorp.com.
Managing
Sales and Marketing
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Compensation
systems for sales representatives can vary considerably between straight salary
and commission only. As a general rule, a base salary with commission over ride
is preferable, both to meet the needs of the representative (at least in part)
for regular income (the salary part of the comp plan) and a commission for sales
above a threshold level (to motivate the salesman or woman to seek sales orders
for the firm).
There are several problems with the hybrid compensation
system. One is setting the initial level of salary, and the second is setting
the level of commission payments. The salary level must be sufficient to provide
for the basic necessities while commissionable business is being developed. The
commission level must be sufficient to motivate the representative to seek
business from the firm's clients and prospects, and of course, there must be
adequate support for the field rep to obtain answers to client questions and
provide accurate and up to date information on prices, quality, and delivery
schedules.
There are several important steps that management should take
to ensure the best possible results from a field sales effort. They are the
following: 1) Establish a compensation plan that provides an attractive earning
potential for the motivated sales rep while ensuring that the firm earns a
profit, 2) Provide Marketing support and direction to the field reps, 3) Use
commission structure to guide field sales effort to attractive market segments
and high profit products and services. We will now explain each of the three
steps in detail.
Step 1 involves setting both a level of sales and a
time frame to guide sales rep evaluation. A draw against future commissions
provides a standard by which performance can be measured in that rising sales
volume can be measured against costs of both draw and commission payments.
Income from sales generated by the rep must exceed outflow for draw and
commission payments by a certain date. Sales must rise against that theoretical
breakeven point in order to provide a profit to the firm.
Step 2 involves providing Marketing support and
guidance to field reps. Without support and guidance from Marketing, the firm
becomes a sales driven organization and thereby forfeits its future in the sense
that the strategic plan as envisioned by management will be over ridden by the
field rep's motivation to seek sales where they can be found. The best solution
is a Marketing driven organization that provides its reps with high value
products and services to sell competitively in the market place.
Step 3 involves the use of commission structure to
guide field sales efforts through the sliding scale of payments tied to company
profits. Lower prices mean lower commissions. Higher prices mean higher
commissions.
These three steps will make for a highly motivated and
informed sales force, with effort concentrated on high value/profit products and
services, thereby ensuring profits to the firm and high levels of satisfaction
to the field sales representatives.
Richard Walton, Counselor for SCORE, and President, Enterprise Resource
Management Associates, Inc., of Hagerstown, Maryland. Cell phone: 301-462-9850, email: richard@ermacorp.com
The
Two Worst Mistakes a Manager Can Make in a Slow Economy
And an Alternative Approach to Yield Sustainable Sales and Profits
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Managers make two serious mistakes in a slow economy, such as
we have today in many industries (other than energy). They are: 1) cutting
prices to stimulate business, and 2) cutting costs through layoffs. There are
much better ways to maintain and grow profitable business even in these times.
What follows is a prescription for success by simultaneously improving sales and
profits at any time.
The first step is to change focus from selling price minus cost equals book
profit to value added minus cost equals sustainable profit. Conventional
accounting systems gather data on all product and service costs, including
materials, labor and overhead and then add a profit margin to arrive at a
selling price. This system leaves the firm vulnerable to competitive pressure on
price which only serves to reduce profits when prices are lowered.
A better approach is to focus on value added, which means
that the costs we are concerned with are those which are added to materials, and
excluding the cost of the materials. Obviously, materials costs will have to be
added later when costs are totaled, but for the moment, we must focus only on
the value which is added after the materials are purchased. The more value
added, the better. The lower the material cost as a percentage of total cost,
the better. Value is added through labor, and the type of value added must be
according to real customer needs. When the firm adds value that customers
perceive as important, value is a more important buying determinant than price.
The second step is to focus on cost reduction through
productivity rather than across the board reductions. Every element of cost is
ultimately justified through its productivity in adding value. This can be
accomplished through the use of a tool we call ratio budgeting coupled with
sensitivity Analysis. (RBSA).
Every element of cost including materials, labor and overhead
is measured in its ratio to sales price by product or service lines. The ratios
then form the basis of a productivity improvement effort focused on reduction of
the ratio through productivity gains. Gains are made through improved
performance tracking, more effective purchasing procedures, training, process
improvement and quality management. They are traced through periodic review of
the starting ratios versus current ratios measured against goals. The power of
this system might be demonstrated by a simple example.
In a business with sales of $2,000,000 annually, with labor
costs of $500,000 (40% of sales), a 2% reduction in labor costs through improved
productivity would produce an improved profit of $10,000. A 10% improvement
would lower costs by $50,000.
These two management systems, refocusing on value added to
develop and maintain sustainable sales and profit levels, and a new emphasis on
productivity improvement through Ratio Budgeting and Sensitivity Analysis can go
a long way toward enabling profitable operations regardless of the economic
slowdown.
Richard Walton, Counselor for SCORE, and President, Enterprise Resource
Management Associates, Inc., of Hagerstown,
Maryland . Cell phone: 301-462-9850, email: richard@ermacorp.com.
Appreciative
Inquiry: A New Tool for High Level Business Growth and
Improvement
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In my most recent article, I introduced the term "Appreciative
Inquiry", which is a system of organization development, which focuses upon
the positive core of the firm, its most important achievements and greatest
strengths. This positive core of accomplishment becomes the basis through which
energies are concentrated via inquiry on the situation as is, as it should be,
as it could be, and ultimately, as it will be. In this article we will look at
each step in the process of 'Appreciative Inquiry' (AI) as a mean of propelling
a firm to constant growth and high achievement by building and renewing its
positive core.
The first step is to focus through AI on what is the current
status of the firm in its major systems, including Marketing, Production,
Finance, and Innovation in a positive way. Our inquiry is aimed at the discovery
of what we, as a firm, do uncommonly well and to build from that positive core.
The tools of AI at this stage are open communication, trust, and shared decision
making. The targets of inquiry are typically present sales, costs and financial
health.
The second step is to move beyond what is, to what should be.
Here the focus of the AI is to build upon our positive core through constant
improvement. The tools are teamwork, mutual respect and an open mind to new
ideas and change. The targets of inquiry are planned (and expected) sales, costs
and financial health. We are now squarely focused on what should be, which is
constant improvement in each category.
The third step is to move from the basics of what is and what
should be to what could be. We can use AI to envision a future of goal
accomplishment and a business reputation for excellence in everything we do as
an organization and individually. Here the tools of inquiry are the dreams of
the future, unfettered by present day limitations of resources and other
constraints. The targets are growth and profitability opportunities both within
and outside of the current business lines and industry.
The fourth step is to concentrate energies on what will be.
Here the focus becomes one of transformational leadership and unlimited
potential. The tools of AI at this level are communication of the vision, and
the building of commitment toward a new goal previously unimaginable. The
targets are the distant horizons of an unlimited future. The power of
transformational leadership at this stage is to energize everyone in working
toward the realization of the vision.
In summary, we can use AI to initially focus employee and
management effort on the positive core of the current business, things that
represent the best achievements we have made to date. Building on that positive
core, we can first make the present business as effective and efficient as
possible, through a focus on what should be. We can then move to what could be,
through envisioning a future of even greater accomplishment, and then finally,
'make it happen', through inspired transformational leadership.
Richard Walton, Counselor for SCORE, and President, Enterprise Resource
Management Associates, Inc., of Hagerstown,
Maryland . Cell phone: 301-462-9850, email: richard@ermacorp.com
Managing
in Tough Times: What To Do - That is the Question
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Over the past year tough times have been
visited upon many small businesses. Surging energy costs, declining sales
volume, decreasing profitability and increased competition have all combined to
create an environment of tough times. Managers are faced daily with questions of
what to do by way of adaptive efforts to deal with a vastly changed business
situation. In this short paper, we will try to provide effective answers to this
question.
(CENTER)What
to Do
Focus
Effort Upon Simultaneous
Profit Maintenance and Improvement(END)
What To Do
involves the use of the four key managerial skills, Marketing, Process Control,
Finance and Innovation. It also involves the use of one key administrative
skill, which is the use of 'Appreciative Inquiry'. Here are the steps:
First, Calculate the Individual Profitability of Every Item
You Make or Sell
This can be done using Breakeven Point Analytics on a whole system basis. The
summary of individual items at selling price minus cost per unit multiplied by
the number of units sold will show which items are the most profitable.
Second, Use Marketing/ Sales Efforts to Promote the Most
Profitable Items
This can be done by developing a revenue budget by individual product and using
this budget to manage daily Marketing and Sales efforts in the field, through
sales promotion and advertising, and with telephone/email/direct mail and web
methods to reach and sell customers and prospects.
Third, Use Production Management Skills to Reduce
Manufacturing Costs
This can be very effectively done via a system of 'ratio budgeting', by which
manufacturing costs are measured and managed through controlling the
relationship of cost to revenue for each item. This system is then applied to
preliminary cost estimating, and daily production management statistics. It can
provide a blueprint for concentration and improvement of those costs, which are
depressing organization profitability.
Fourth, Focus Attention on Creative Innovation to Stimulate
Creativity
Innovation is not just for the Research and Product Development people. It can
and should occur at every level in the organization. A system of 'Appreciative
Inquiry' can be used to create an organization wide culture made up of a new
spirit of creativity and enthusiasm among all employees and managers.
Fifth, Use Monitoring Skills to Set Result and Effort Targets
in All Areas
Managers often overlook the fact that performance targets require effort and it
is that the effort must be measured as well as the results. The only way
management can really affect results is through the management of effort, which
requires managers to provide guidance, training and coaching for all employees
within an atmosphere of continuous improvement. There should be a constant
search for the best relationship of effort to results, measured continuously
against the target of baseline plus improvement.
Summary. These five steps should be undertaken
simultaneously, not in succession. It is only by a 'full court press' of
coordinated system wide effort can real results be obtained.
Richard Walton, Counselor for SCORE, and President,
Enterprise Resource Management Associates, Inc., of Hagerstown, Maryland. Cell
phone: 301-462-9850, email:
richard@ermacorp.com.
Monitoring
for Effectiveness
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You need to focus simultaneously on results and the effort that produced them.
Monitoring is the process of assessing progress in the
accomplishment of planned tasks and the achievement of the outcomes desired.
Note that this definition of monitoring is not concerned only with results, but
also the effort that is needed to bring about the results.
This is a key factor in monitoring. I have often seen in my consulting work
undue attention to results without reference to effort. This leaves management
without a means of correction for results that fall short of expectations. It is
only through effort that constructive changes can be made to produce more
favorable outcomes in the future. Here are the main points that should be
utilized in the development and implementation of an effective monitoring
system.
1) The monitoring system must be put in place before the plan
is implemented to ensure that all participants know what is expected of them and
when. The expected effort that is intended to produce the planned result is what
should be monitored. Results will of course be monitored as well, but reviewing
results only without reference to effort will leave managers and employees
without a true performance measure.
2) Monitoring should focus on schedule, budget and quality in
both results and effort. Being on time and within budget are performance
measures that are almost universal in their application to business operations.
But so too is quality. Being on time with delivering an unacceptable product is
clearly sub par performance. And once again, effort must be measured as well as
results.
3) Monitoring should be continuous, not at planned intervals.
It has often been said that what gets measured gets done. Therefore, monitoring
performance continuously will be a strong incentive to employees to do what is
expected of them, continuously.
4) Management must take the position of coach and
facilitator, not as judge. In monitoring performance, management should function
in a supporting role, helping employees improve their individual work habits and
assisting them in problem solving on the job. Any job can be and should be
improved wherever possible, and there is usually no one better to do that then
the employee who is intimately familiar with the required tasks.
5) Good results require action as well as unfavorable
results. So too for effort. It is obvious that poor results and sub par effort
requires correction action, but what is less obvious is that excellent results
and effort also require management action. Good results must become part of the
regular practice of the firm, and policies and procedures must be adjusted to
account for changes that bring about improved operations.
6) Finally, monitoring should focus not merely on meeting pre
set goals, but in continuous improvement. Managers should constantly assess
systems and procedures to be on the lookout for improvement in operations, and
employees should be enlisted in this effort as well. Merely meeting pre set
goals is no big accomplishment, but exceeding them is.
Performance monitoring will be improved and this will result
in improved profitability and growth for those managers and firms who follow
these six principles.
Richard Walton, Counselor for SCORE, and President, Enterprise Resource
Management Associates, Inc., of Hagerstown,
Maryland . Cell phone: 301-462-9850, email: richard@ermacorp.com
Seven
Key Steps in Effective Planning
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Organizational Planning is a key step in goal achievement. Very little can be
successfully achieved without planning in today's complex business environment.
Yet often, planning seems to result in budget breaking cost over runs, failure
to meet scheduled completion dates, and quality that is unacceptable to the
user. In this article we will identify the key principles in effective planning
that will yield the results we are seeking. The ideas I shall present are based
upon a 40 year career in executive management, teaching, and consulting with a
number of organizations in both the private and public sector.
Number 1) Plans must be made in sync with overall
organizational objectives. Plans must not be independent of the overall
(strategic) goals of the enterprise. For each level within the organization,
plans must support the long term strategic objectives of the firm.
Number 2) Plans must be focused first on the business
fundamentals such as cash flow, marketing and production. The organization must
be financially stable first in order to undertake further goals for growth and
expansion. Only after the business fundamentals are addressed, can the
organization reach for 'breakthrough goals'. These goals are what is otherwise
known as 'stretch' goals that propel the organization to greater heights of
achievement and recognition.
Number 3) The planning process must include the people who
will implement the plan. This is the only way that plans can be made realistic
in terms of the amount of effort that can be devoted to achieving the objectives
and goals of the plan. To attempt any plan without the involvement of those who
will implement the plan only invites error in the process and ultimate failure
to achieve the goals.
Number 4) Planning must contain objectives which are
specific, measurable, attainable, relevant and timely. (Note: Plans that contain
these elements are known as SMART plans). Not only must the end objectives be
listed, but so too must the means, resources, and manpower be identified that
will be available to carry out the requirements of the plan.
Number 5) Plans must contain provision for monitoring
progress in plan implementation. We should not wait until the end of the period
to assess whether we have reached the goals. Regular progress updates enable the
implementers to correct under performing aspects of the plan while making
permanent the gains that have been achieved. Both are important.
Number 6) Simultasking both for quality and quantity is an
essential process in planning. We should never satisfy quality in pursuit of
quantity. In fact one of the key premises of effective planning is the concept
of continuous improvement under which the firm in all its operations constantly
strives to do better. It is typically not a question of working harder as much
as it is a question of working smarter.
Number 7) (and last) Planning should be undertaken in a
collaborative atmosphere where input is sought from all levels within the
organization. Plans should not be dictated by senior executives and left for
implementation by those who had no part in their development. A culture of
collaboration and cooperation will position the firm for success in both
planning and implementation of those plans.
In conclusion, this seven point program can greatly improve
organizational planning and implementation processes, thereby yielding greater
results to the firm and its personnel.
Richard Walton is a counselor for SCORE, and President of ERMACORP, a consulting
firm. His email address is: richard@ermacorp.com,
telephone 301-462-9850.
Elizabeth Mauk - (301)
432-0079