If your company is selling through distribution, it's well aware of the common challenges and issues that distributors will pose, such as continual price pressures, not comprehending nor selling the value of your company's products (or services) and demand for lucrative volume discount programs to name a few.
As a result, it can be a daunting effort to keep your price discounting in check, while trying to persuade distributors to sell the value of your product. In order to more effectively handle these types of challenges, there are several factors that should be taken in to consideration, such as distributors' performance, behaviors, and alternative pricing techniques.
When pricing through distribution, you know that one needs to price accordingly to motivate distributors to sell your products or services. However, one also needs to keep in mind whether you're adhering to your company's objective. Is it to increase market-share? Profitability? Whatever your company's objective is, in your pricing to distributors, you want to allow them some room to make a profit. Therefore, selling through distribution requires looking at a host of typical pricing factors. But one area that should be included and given close attention to in your analysis is a distributors' performance. For example, when evaluating this, you should carefully review:
- The product mix that your distributors are selling.
- The distributor’s incentive programs. They may be too rich and disproportionately reward more low-value vs. high-value product sales.
The overall relationship your company and its distributor have with each other is key. This can be a challenge depending on the distributor itself. Some will use "street-bully" or devious tactics to get what they want. It's not uncommon that some distributors will be difficult to work with. Are they concerned about, or do they understand, the value of your product? Some will make unreasonable demands, such as asking for continual deep discounts or allowances. Working with distributors is a team-effort for the pricing group and the sales force, which is usually at the forefront of these encounters. To work effectively with distributors, you also need to understand not only their challenges and issues, but also the behaviors they may exhibit to obtain the best pricing. They may impose unreasonable timetables. For example, a distributor might claim "I need a price now!" threatening to take the business elsewhere.
They may demand lower prices or claim your company's pricing practices lack flexibility, just to name a few antics. To more effectively handle these common types of behaviors you should determine:
- What is fact or fiction. Get to know your distributors well. Make an effort to better understand the distributor’s challenges, issues and concerns.
- Is your distributor is loyal and a true ally or a hindrance to your business? Is the distributor generating significant and profitable sales revenue for your company or not?
Though the onus is primarily on the sales force to develop and maintain a good working relationship with distributors, it's also important that the pricing group is able to implement strategic pricing tactics through distribution. We know distributors usually do not pay list price. However, it's important to control price discounting to distributors, as the pricing waterfall chart below shows.
The chart illustrates (concepts developed by McKinsey & Co.) how the difference between list price and "pocket-price" can result in a significant reduction to bottom-line profit. It's important to understand this concept in order to help manage these discounts effectively.
Educating the sales force about the pricing waterfall concept is an important factor in helping them more effectively manage the discounts they may offer a distributor. It can also encourage more thoughtful judgment as to how the sales force's decisions will affect the company's profitability. However, a few ways a company can attempt to minimize these revenue leakages are as follows:
- Leverage your company's advantage. Is it the incumbent supplier? Try to capitalize on that by selling or reminding distributors of your company's excellent customer service and/or inventory supply. Offer additional value-added services, such as priority scheduling and delivery, but do it at a premium.
- Discount on incremental sales volume only. Entertain earned discounts not negotiated.
- Obtain something in return for price concessions. Reward a change in distributor behavior, i.e., offer discounts for using EDI or telephone service support, thereby reducing or eliminating on-site sales visits. Or, modified payment terms. Has the distributor asked for continual price reductions? If so, consider adjusting their lengthy payment terms.
These are some pricing tactics and strategies one can implement when pricing through distribution. Distributors are in business to make a profit just as your firm is. However, it doesn't mean you have to give your product away at ridiculous prices. In working with distributors, developing an effective relationship is important, as is any successful relationship. Your pricing team should take the time to truly understand your distribution channels. Have them join your company's sales force on account calls to understand the distributor's challenges, issues and concerns. Ensure that your sales team has a good understanding of your products and pricing tactics and remember:
- Control your discounting
- Obtain something in return for price concessions.
- Leverage your company's advantage.
- Evaluate distributors performance.
Peter Maniscalco is a contract senior pricing consultant for the Strategic Pricing Management Group, an international pricing management consulting firm. He is based in the greater Philadelphia area. His specialty is B2B and B2C product and services pricing for multi-industries. He can be reached at email@example.com or (484) 947-6450, as well as on LinkedIn.
Researchers at Eastman Kodak Co. invented the first digital camera in 1976. In January 2012, it filed for bankruptcy protection.
How could a company that had one of the most well-known brands in the world, dominated the film industry and had the means to keep itself from becoming obsolete have fallen so far? Simple: No one transformed the company.
Kodak’s old model was fairly basic: You sold cheap cameras and made a fortune on the disposable supplies that were used in them. It was the old razor blade model — give away the razors and make your money on the blades. This model worked exceptionally well for a long time and made the company the envy of many.
What brought the company down was digital photography. Film became obsolete as more people switched to the conveniences of digital photos taken with either digital cameras or, increasingly, mobile phones. It has to be incredibly frustrating to the leadership of Kodak to look back at what might have been. The company was already the No. 1 player in the market and invented the digital camera, the very device that could spell its doom if developed by a competitor.
But the leadership of Kodak couldn’t envision a world where film didn’t exist. When profits are rolling in, it can be difficult to see changes in the marketplace that can adversely affect your business. Why transform to digital when film is what is making everyone money?
While Kodak was clutching onto its old business model, the digital market took off, leaving film manufacturers behind. Kodak failed to transform itself to face a new reality and is a shell of its former self. It is now left to the mercy of bankruptcy proceedings.
Don’t be like Kodak.
Here are four things that need to happen to transform your business to reflect the reality of the marketplace.
• Have a clear vision of what direction your company is going and communicate that to your management team and employees.
• Get everyone to buy in. Start with your managers and have them help you get buy-in from everyone else. You can’t afford a disconnect between management and staff. Provide as many facts as possible to win over skeptics. Many people don’t like change, so it may take some time to get everyone on board.
• Make sure you have the right people. Do your people have the ability to execute the plan to transform your business? You don’t need to maintain the status quo anymore; you need to become something completely different. That may require difficult personnel decisions.
• Persevere. You are not going to transform your business overnight. You need to create benchmarks and measure your progress toward your goals. It’s not glamorous. As CEO, you can never stop believing, because people are watching you for cues. If you aren’t a true believer, how can you expect them to be?
Some of you are already working your way through this process or may have even finished it. If that’s the case, then I congratulate you on having the foresight to make the changes you need to survive.
For those of you who haven’t started, as you work through your transformation, expect there to be pain and a lot of hard work. There will be times when you feel like you are not making any progress. But there cannot be growth without pain.
In today’s economy, every company has to transform itself, because everything is changing. In the end, there are only two types of companies: those that transform themselves into market leaders and survivors that are just getting by.
Which one are you?
Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or firstname.lastname@example.org.
There are hands-on executives who get down and dirty in just about every aspect of a business and then there are leaders who manage from 50,000 feet, rarely calling anything but the big shots. Seldom does a single style or technique always fit every situation. Much depends on the size and maturity of a business and simply how many hands are available on deck to fight a specific fight.
In a start-up or younger organization, initially the entrepreneur probably has to do just about everything merely to survive. In a midsize or Fortune 500 operation, a good boss, depending on the quality of the team, can pick and choose the level of involvement in a project based upon the complexity, significance and sometimes just the boss’s gut feeling or inclination.
Periodically, at one time or another, most leaders miss the forest for the trees, either by not getting involved enough or by delegating too much responsibility. Then, when something goes south, the boss nitpicks his or her way into the company’s every twist and turn, driving subordinates nearly to the brink.
Either too much or too little attention is usually well intended, but unfortunately, it can cause more bad than good. Instead, as a boss, one must have a sixth sense of when and, much more importantly, how to get involved and with whom depending how near the undertaking is to getting in big trouble. This is preferable to a blanket mandate that requires an “I must see everything first before going to the next step” policy.
Like it or not, today we’re doing business in a 24/7 world and, to accomplish objectives, speed counts. We must be wary of potential bottlenecks that impede process and progress.
One of the biggest obstacles in moving from point A to B is that too many leaders are lousy delegators. Sure, they talk a good game about empowering their people and letting them run with it, but in reality, they hinder progress because they have an insatiable need to function much like an automobile engine air filter. Unfortunately, instead of helping to clean the air, they suck all of the air out of the project.
The “air filter” executive mandates that every preliminary plan, e-mail or even a simple new idea must first be passed by him or her before the undertaking can go to the next step. In a perfect world, this type of filtering might be good. However, at the speed of business today, this type of management style bogs things down or brings them to a screeching halt, as everyone waits for the “air filter” executive to get around to reviewing the latest step. The results include losing productivity, squelching creativity and derailing the initiative of those encumbered by unnecessary oversight.
When this occurs, everybody is negatively affected, including the filterer. Soon the boss who must touch everything gets overwhelmed by what has to be reviewed and, instead of maintaining control, winds up losing it.
There are simple solutions that an effective executive can employ to speed up the work. First, the boss has to be comfortable in his or her own skin about knowing how and when to follow up, intervene or let others keep the ball moving toward the goal line. It’s not just about blindly delegating, but instead knowing the skill sets of those to whom the boss delegates and everyone involved having a clear understanding of the parameters of who does what when.
Having explicit ground rules in place, the boss can give subordinates much more rope, not to hang themselves, but instead to throw the lasso much further to snag the bigger prize. This also enables the leader to have many more balls in the air, exponentially increasing the opportunities for success on many fronts and, quite simply, improving the overseer’s quality of life by providing more time for the executive to function as an executive. The subordinates win, too, because they have the authority, within prescribed boundaries, to get the job done.
Remember, good intentions aside, it gets down to the fundamentals of how an internal combustion engine functions. If an air-filtering management style clogs the workflow, it can suck the power out of your company’s engine, causing it to shut down abruptly.
Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. Reach him with comments at email@example.com.
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The use of fiber-optic technology in businesses has spread quickly as businesses look to fiber’s scalable bandwidth to keep up with exponential increases in the amount of data they need to transmit — something legacy copper networks cannot do. According to Doak Field, senior director of enterprise sales for Comcast Business Services, many companies who could benefit from fiber’s bandwidth often don’t realize that fiber is currently available in their area or why they should consider upgrading their network.
“In today’s competitive business environment, speed and scalability are essential to staying ahead of the game,” Field says. “Network connectivity speeds have increased substantially over the past five to 10 years and will continue to increase as more businesses rely on it to successfully run their businesses.”
Smart Business spoke with Field about what you need to know about fiber and how it can take your business to the next level in terms of connectivity.
What are the advantages of using fiber-optic for telecommunications?
There are a number of benefits for choosing fiber for business telecommunications, including:
- For a cost-effective solution, fiber provides plenty of bandwidth.
- The high capacity of fiber provides users with access to bandwidth levels that were only a dream a few years ago.
- Fiber carries a digital signal (rather than analog signal) which is advantageous for almost all applications.
- Its relatively small size makes fiber convenient to use because it takes up less space.
- It allows for much longer distances between amplifiers because there’s no need for continual splicing, which allows for less signal degradation.
- Fiber can be installed next to utility lines, power lines and other areas where interference or crosstalk might normally occur and there is minimal impact.
- Because it is made from glass fiber is not corrosive or susceptible to any chemical breakdowns.
- It delivers Internet, phone, TV, security monitoring and carrying of data traffic all over the same medium efficiently and securely.
How can mid-market companies determine whether a fiber network makes sense for them?
We live in a world where speed to market, speed to respond and quick scalability is the norm. Fiber provides businesses with the speed and the security that a few years ago were reserved only for the Fortune 500. Most businesses are in business to grow and prosper and fiber offers them the ability to grow exponentially without having to make drastic changes to their infrastructure.
Fast, scalable and reliable are three areas that cannot be compromised in the competitive business landscape. Fiber networks are inherently scalable, which allows for any size company to be nimble yet able to proactively upgrade its network as changes in respective markets demand quick action. Fiber is a fast, reliable and secure form of data delivery.
No matter how small a business is, it requires a fast, reliable and secure access to the Internet. As businesses continue to grow, they need subsequent offices and/or locations to have the same access as their headquarters. Fiber provides a cost-effective and virtually seamless way for businesses to connect to as many sites as needed.
What are the important questions for a mid-market company to ask when considering this upgrade?
- Am I still locked into traditional TDM Private Lines, Frame Relay or ATM services?
- How quickly does my network need to transmit, upload and download data?
- Do my bandwidth needs change often or are they fairly static?
- How secure does my data network need to be?
- Do I want my provider to manage my network and support it accordingly?
- Do I need symmetrical dedicated Internet connectivity?
- Do I need redundant paths into or out of my location?
- Do I need and expect 24/7/365 network monitoring and support?
- Is the company I am considering a certified member of the Metro Ethernet Forum (MEF)?
- Can my data provider provide me with local support?
- Can my data provider provide me with Online Reporting Tools?
- Do I need to implement Border Gateway Protocol Routing (BGP)?
- Can I get access to Class of Service (CoS) Options?
- Is there a limit to the number of locations my provider can provide access to?
How difficult is it to integrate fiber into a company’s existing infrastructure?
Designing a fiber network and integrating it into the existing copper infrastructure of a business is essentially seamless as there is no ‘forklifting’ of equipment involved. It’s as simple as connecting into a customer’s location with a single pair of fiber cables, one for transmitting and one for receiving, and providing the equipment necessary to convert the fiber to standard Ethernet. Look for a provider that makes the transition from copper-based transmission facilities to fiber optic facilities as simple as plugging into an Ethernet jack on their Local Area Network (LAN).
Doak Field is senior director of enterprise sales for Comcast Business Services. Reach him at Doak_Field@cable.comcast.com or (770) 559-2156.
It’s obvious that business owners want their employees to be safe on the job. But to truly impact worker safety, posting some signs and giving instructions isn’t going to cut it. There needs to be a program in place that takes into account the company’s distinct needs, the jobs employees’ perform and the laws the company must comply with.
Having a professional assess the workplace and assist the employer in preventing injury and promoting safety is a big step toward protecting employees as well as the business, says Clark Fain, general manager for the Entera Group of Companies.
Smart Business spoke with Fain to learn more about what to consider when implementing a safety program that will have a real impact on keeping employees healthy and productive as well as keeping the business out of trouble.
How does a focus on safety benefit the company’s bottom line?
A formal written safety program focusing on workplace safety reduces the costs of injuries to employers. The costs of claims may include medical costs, pharmacy costs, loss of time at work, morale issues, retraining, even replacing an employee. These expenses can and will decrease bottom line profits.
Accidents cannot be totally eliminated, but the number of compensable workers’ comp injuries can be reduced. Focusing on safety with a formal, written risk management plan that is implemented and enforced is almost mandatory to a well-meaning employer.
Accidents are expensive, period. A reduction in accidents through a focus on safety rewards the bottom line and benefits the employer and the employees.
What are some ways companies can improve safety?
For many companies, there are numerous ways safety can be improved. Each employer is different by job category and size. The utilization of a risk manager/safety engineer trained to advise and consult should result in a list of written recommendations for each individual job to improve safety on each job.
In general, monthly safety meetings, awards for days without a loss, recognition of employee safety, awards for individual workers and furnishing employees with a safe workplace are ways to improve safety. Constant reminders should be a part of any efforts to promote safety.
What should be the components of a good safety program?
First, a good safety program must contain common sense so it is understood by all. Secondly, a complete written job description to clearly explain to the worker his job and whether he is suitable for his job is very important. How many times have we heard, ‘he doesn’t know what he is doing?’ Following a job description should help to alleviate the problem of someone doing a job for which he is not trained or suitable.
Thirdly, a safe workplace is the responsibility of the employer. If employees are hurt, your bottom line suffers in several ways, including higher workers’ comp premium, less days of production, decrease in production and lower employee morale.
And, lastly, the impact of a risk manager/safety engineer tailoring the program details to each work site job is a valuable component of a good safety program.
Where can companies find help in developing a program?
There are numerous risk managers and risk management programs. Finding the right one can be time consuming and expensive. We have used the same company for 20 years because we have been pleased with the results. We have designed with them a six-page report that numerically scores from 1 to 100, with 70 being a minimum score. Scoring helps companies to see where a program may be lacking and help to focus the conversation when making recommendations for improvement.
The components of the report are too numerous to list here, but the report gives the employer a numerical written score on how they rank from a risk management/safety standpoint. The report normally takes three to five hours of on-site work and two to three hours of office administrative work for a company of 10 to 250 employees. Other factors could cause the report to take more time.
Our group of companies can provide a program to assist those employers seeking a better way.
How can companies ensure employees are on board and the culture of safety remains consistent?
Measuring the results of a safety program is not easy. Your company’s loss ratio is one method to use to evaluate your results. There is national and state data you can use as a benchmark to compare your results to your peers through your loss ratio. If you have fewer losses than your peers, your personnel have likely ‘bought in’ to your program. If you are experiencing higher than normal losses, it is likely they are not on board.
Safety needs to be a top priority and become a habit ingrained in the employees’ everyday performance through the culture of the workplace. They need to understand that being careful is being smart.
We have developed our safety program over the last 20 years in conjunction with our loss control/risk management company to evaluate results. We offer this program through our workers’ comp coverage and to outside companies. We consider our program complete and very thorough, but we know there can be improvements. The culture of safety is ongoing.
Seldom do employees intentionally hurt themselves. The reality is that a lack of concentration is one of the largest single factors in an accident.
Clark Fain is general manager for the Entera Group of Companies. Reach him at firstname.lastname@example.org.
“One of the hallmarks of successful companies is being open-minded and receptive to ideas for improvement from the employees, who are closer to the work than the executives are. It’s kind of built into your DNA. Either you are or you aren’t receptive. You have to be curious and receptive and then be willing to work with it. Then you need to set up a pattern and a tempo of consistency on this topic. If you do it once, and it goes away — a flash in the pan idea — it becomes not effective. If you do it every year, you’ve been doing it for 10 years, people come to expect it, and it becomes part of the culture.” — Chip Perry, President and CEO, AutoTrader.com
- Be receptive to ideas for improvement.
- Foster a collaborative environment.
- Reward employees who suggest innovations.
The old saying that the sun never sets on the British Empire applies well to Atlanta-based Global Payments Inc. Daylight is always shining on some part of this company’s domain, too.
In the company’s decade of existence, Paul Garcia has led Global Payments from its birth as a $300 million-a-year spinoff from National Data Corp. to its current status as a $2 billion-a-year Fortune 1000 company with more than 3,700 employees living in 26 nations around the world.
Doing business in far-flung locales presents an interesting set of geographic and cultural challenges for the electronic payment processing firm’s leadership team. Garcia, Global Payments’ chairman and CEO, recently talked with Smart Business about the nature of those challenges and about how he and his team work to surmount them.
Q. Looking back over the last few years, what is the greatest leadership challenge you’ve faced?
I would say it stems from having almost 3,800 employees in 26 countries. We are strong believers in our company’s values, but those are sometimes very tough to translate. You have cultural issues, you have language issues, and you also have time zone and distance issues, obviously.
Today, I spoke to our colleagues in Asia. They’re 13 hours ahead of us. If it’s morning your time, it’s night there. So you’re in very different ‘head spaces,’ you know? Their day is over, and they’re thinking about going and getting a cocktail somewhere, and your day is just starting. Or vice versa.
Obviously, [everyone] wants to go home at night. So we do our best to mix it up. And that’s a challenge. All those geographies, all those cultures, all those time zones. And there’s always something going on. You have things happening 24 hours a day, literally. So sometimes you have to disconnect. Sometimes you have to put your BlackBerry down.
Q. At what stage in your company’s development did this start to become a significant challenge for you and your team?
Let me give you a little history. We just had our 10th anniversary. Ten years ago we had about $300 million in revenue, and we were all basically from the U.S. Today we’re at $2.1 billion, with 45 percent of it coming from outside the U.S. So we have significantly more revenue outside the U.S. than we had in entire-company revenue when we began.
These challenges started to become evident pretty quickly, because we started doing deals outside the U.S. right away. The first was Canada, which in some ways is not that big an adjustment from the U.S., but, you know, it’s still a different country. In fact, in my opinion Canada is more like Europe than it is the U.S. in a lot of important ways.
Then we did a deal in Asia. And that immediately created challenges with distance and cultural differences. Then we added the U.K. to that. Then we did deals in the Czech Republic, and Russia, and now we’re also in Spain, and Brazil. …
So it happened quickly. When I took over this company, I looked at the opportunities, and I said, you know, the most dramatic opportunities are outside of our borders. So that’s what we focused on.
Q. Let’s talk about the specifics of some of the difficulties posed by doing business around the globe. What’s a typical situation that you run into with time differences?
Well, take this interview, for example. If you wanted to chat with me and you were in Hong Kong, it would now be midnight your time. So we’re only going to have a skinny window. You’re going to talk to me at 7 or 8 o’clock [p.m.] your time, which is going to be 6 or 7 a.m. my time. Then if we go too much later, I’m now really cutting into your evening, and you’re really cutting into my morning. So it creates practicality issues, in terms of just finding a good time to talk. And ultimately, management is about people talking to people.
Culturally, it’s a different type of challenge. For example, on Dec. 31, you would wish me Happy New Year. But if you were talking to someone in one of our 11 Asian countries, you would be mistaken, because their New Year starts three weeks later. And right after that — right around now, in fact — they have what they call Golden Week, which is their big shopping time, when all the merchants are very busy. So this is a huge peak period for our business there. But this time in the West is not a busy shopping period at all. It’s just the opposite.
So it’s very different. There are different cultures; there are different shopping patterns; there are different consumer behaviors; there are different expectations from employees. And you have to ‘get’ all of that.
Q. With such distant business units, how do you structure your management team?
One of the things we do is that, unlike a lot of American companies, we don’t say, you know, we created this whole merchant credit card environment, in terms of automation and sophistication, and consequently we’re going to make sure we have people from our head office in all of these regions running these businesses. We do the opposite. So we have a really smart Russian guy that runs [our business in] Russia. We have a really smart Chinese guy that runs China. A very accomplished Indian lady who runs India. We’ve got a top-notch English guy that runs England. We have a great Spaniard that runs Spain. A Brazilian that runs Brazil. … All the way down the line.
So they’re running their country or region. And they ‘get’ the cultural differences, because they’re from there. And they know what they need. Our job is simply to provide support to them. Where we can provide assistance, we do. But most of the time we stay out of their way.
Q. What else have you done to overcome the geographic challenges?
I know this sounds trite, but the most important thing is to hire good people and empower them and give them objectives.
So this is how we do things here. If you’re in charge [of our business] in a given country, you’re really in charge. You have a lot of latitude to run your business. Now, if you make your numbers, you’re going to do well. You’re going to be rewarded; you’re going to make your bonuses; you’re going to receive equity compensation; you’re going to be given even more latitude. If you you miss your objectives, then, frankly, unless we all understand that there were extenuating circumstances, you’re probably not the right person for that job. Because we ask you to set the objectives. We have realistic goal-setting, and we expect people to make those numbers.
Now, that doesn’t mean make them at any cost. You always do so in an ethical, honorable way. But we do expect production. That’s the capitalist world we live in.
Q. Can you give an example of a situation where a translation mistake was made or where there has been confusion or misunderstanding because of the way something was translated?
Here’s a good one; it shows how even the best intentions can lead to unintended consequences: We had a meeting once, right after we did a deal in China, and we told the people there that it’s really not part of our culture to work six days a week, so we won’t be requiring people to come in to the office on Saturday. We expect you to get enough production in the five days a week, and it would be an exception that you would have to come to work on a Saturday. And the staff seemed upset by this. So I said to the guy running it, what am I missing here? He said, if they don’t come to work on Saturday, all their neighbors will think they’ve been fired. So they’re going to put on a suit and go somewhere.
Q. How did you respond to that?
We said, you know, that isn’t what we meant to convey; that isn’t what we’re trying to accomplish. So we will continue to adhere to what you’re doing in this region. The office will remain open [on Saturdays], and we’ll continue to serve the beverages, and we encourage you to come in. And I apologize because we weren’t being culturally sensitive.
Q. Your company has grown quickly, and a lot of the growth has come from acquisitions. What types of challenges does that pose?
There’s an old expression — it’s kind of corny, but it’s true — that the first word in merger is ‘me.’ When you merge companies, you’ve got to answer the ‘me’ questions. What about my job … my pay … my location … my boss … my products … my future … my retirement? And you’ve got to encourage people to ask those questions, because they’re important. They’re providing for their families, they’re working for that reason, so you need to have answers. And we have good, crisp answers for every one of those questions. That’s how you start off a new relationship properly.
Q. Let’s delve into what you’ve learned as you’ve addressed this challenge. For example, let’s say I’m the CEO of a company and I’m thinking of expanding into a country in Asia. What’s the most important thing I should know? What should I be watching out for?
The first thing you have to do is answer this question: What exactly can you do that will advance things — whatever service, whatever product, whatever business you’re in — what can you do to make that business better? But if going in and doing it is going to cause some serious cultural shifts, don’t even think about it.
Also, always look for good local management. Those are the two keys that I have never violated, and it absolutely has paid dividends.
So those are the things that you have to do, and you have to be very honest about them. And if you’re talking about, OK, we are going to have to change this wholesale; we do it this way in this country, but they don’t do it this way in that country — forget about that. That’s a disaster.
Q. So when you say forget about that, what would you do instead?
Well, you have to look at things that you really can do. And if the answer is, I don’t know if I really can make this better, then save your shareholders the write-off. Don’t do the deal.
Q. Don’t go into that country at all?
Yeah. Let me tell you: The road is littered with companies that do deals internationally and they fail. Because they’re either arrogantly thinking they can run it from the United States, or they don’t understand the local markets, or they try this one-size-fits-all [approach]. It doesn’t work that way.
Q. So you’ve had situations where you’ve given serious consideration to expanding into a country and reached the conclusion that it’s a bad idea and backed out of it?
We’ve had several. Several [markets] that I’d really like to go into that have tens of millions — in one case, hundreds of millions — of people. But I haven’t done so because their payments market is different. It’s either priced in a way that you can’t make money, or the relationships you have with the merchant and the card-issuing bank are not defined in the same way. We’ve resisted going into those markets, until either we can think of a way that we can help — I mean, if we get to the point where we really believe we can change it — or it changes on its own. So you’ve got to be disciplined about that.
Q. I gather that your company has a very decentralized management structure, with a lead person in each country who has a lot of autonomy. Would you say that’s an accurate description of how your business is set up?
Absolutely. And I think that translates into a couple important things to remember. No. 1: Management is simply people taking care of people. Your job as a manager is to help someone do their job. And to always be a moral example, to make ethical decisions that are above reproach.
And the other thing to remember is that people want to do well. It’s very important for someone’s life — what they do, how fulfilled they feel, coming to work feeling that they’re doing something that’s meaningful, receiving appreciation in an environment that’s conducive to success. And that’s the CEO’s job. It starts with one person, then it filters down from there.
HOW TO REACH: Global Payments Inc., (770) 829-8000, www.globalpaymentsinc.com
THE GARCIA FILE
Name: Paul Garcia
Title: Chairman and CEO
Company: Global Payments Inc.
Born: Newburgh, N.Y.
Education: Ithaca College, Ithaca, N.Y.; bachelor’s degree in history, 1975
What was the first job you had?
I started working when I was 14, and I’ve had some doozies. I worked in a factory at night. I drove a laundry truck. I was an industrial plumber. I was a form setter. I’ve been a waiter. A busboy. … Then, post-college, my first job was with Citigroup in New York. I got into the payments business, travelers checks, commercial instruments at that point. It was very exciting.
What’s the most important business lesson you learned from that job?
Show up. Just, be there. Be there on time, keep your nose down, raise your hand when someone needs a volunteer. And don’t give up. Don’t get discouraged. It’s not perfect. I mean, I was naive to think that, ‘Boy, Citigroup, they’re going to have the most enlightened managers.’ It wasn’t necessarily the case. So you have to hang in there. It’s amazing what you can accomplish if you just hang in there.
In a nutshell, how do you define success?
That’s a tough one. The first thing you would say is, ‘What’s your return to your shareholders?’ I mean, this is capitalism, so you’re expected to make money. But I think it’s deeper than that. I think you could have significant shareholder return, but if you’re a [company] that is not helping your community, not helping your people, and not providing a true service to your customers, that’s built on a house of cards. That’s going to collapse. So while ultimately the bottom line is the most important thing, it has to be a sustainable bottom line. There has to be true service, with employees who are loyal and customers who are loyal.
The concept of effective leadership has been changing over the years. The traditional concept of a leader being the directing chief at the top of a hierarchy is incomplete at best, harmful to the organization or company at worst. In today’s world, this view simply does not truly appreciate the very nature of true leadership.
Leadership is also misunderstood to mean directing and instructing people and making important decisions on behalf of an organization. Yes, leaders make decisions. Yes, leaders instruct and teach. Effective leadership involves much more than these.
The very nature of effective leadership is seen in an understanding of the difference between "management" and "leadership." They are often mistaken as one and the same, which they are not.
Here are the distinguishing differences:
- Management is concerned with processes.
- Leadership is concerned with behavior.
- Management relies on measurable capabilities like systems, goals, planning and evaluation.
- Leadership, while involving many management skills, relies on less tangible and measurable things like trust, inspiration, motivation and personal character.
While a bit simplified, we can boil down the main difference between management and leadership to be: Leadership is about leading people and influencing behavior. Management is about managing processes and securing results.
With this difference in mind, let’s look at five tips for effective leadership:
1. Become a servant. Effective leadership involves serving. Too many leaders go about this backwards. They see the role of their people as servants to them as the leader. Good leaders see themselves as a servant of the organization and the people within it.
Ineffective leadership takes. It sets itself up to garner favor or personal gain. Servant leadership is an opportunity to give and to give in such a way that fosters growth in people.
2. Understand that leadership is about people. While leadership does involve making decisions and taking action, it is centrally concerned with people and behavior.
Strong leaders are able to see and understand vital relationships even within large and complex networks of people. These leaders then focus on building those vital relationships in such a way that adds to the trust level between them and these networks.
People follow leaders they trust. They also are drawn to leaders who possess positive qualities like:
When it all comes down to it, effective leaders can express their humanity in such a way that fosters trust and builds commitment from those they seek to lead.
3. Be an engaging conversationalist. Smart leaders spend their time starting and advancing conversations within their organization, not running away and hiding from them.
It is nearly impossible to engender the necessary confidence, trust and loyalty a leader must possess without being fully engaged.
A leader spends as much time out of the confines of the office engaging in real conversation with people as they do in their office planning, decision making and organizing.
Whether in person, over the phone, via email, through the social web, or even by sending a good old fashion "thank you" note – be an engaging conversationalist.
4. Listen. This tip piggy backs off of the former one. As you are an engaging conversationalist, listen.
Great leaders realize that there is far more to be gained by surrendering control of the conversation than by dominating it.
Being a leader doesn’t give license for you to talk just to hear your head rattle. Powerfully effective leaders realize the value of what can be gleaned from the minds of others.
Know when it is time to stop talking and start listening. People want to be heard. They need their voice to be affirmed.
5. Lead yourself. It's important that leaders have the ability to focus and motivate themselves as they motivate others. In fact, without this ability securely fastened in your own life, you cannot be a truly effective leader of others.
It is often said that we lead by example, and we do. It is vitally important that we have a handle on the leadership of ourselves so that we have a positive, strong and trustworthy example for those we lead.
Leaders know that while some people can be considered “natural born leaders,” most have to learn the art. Therefore, effective leaders seek opportunities for personal growth. They seek out books to read, seminars they can attend or personal coaches to foster their growth.
Leaders never stop learning for their benefit and the benefit of those they serve.
Leadership is an exciting thing. It can be the most joyous and personally fulfilling work you do. It is my hope that you find these tips helpful along your journey.
DeLores Pressley, motivational speaker and personal power expert, is one of the most respected and sought-after experts on success, motivation, confidence and personal power. She is an international keynote speaker, author, life coach and the founder of the Born Successful Institute and DeLores Pressley Worldwide. She helps individuals utilize personal power, increase confidence and live a life of significance. Her story has been touted in The Washington Post, Black Enterprise, First for Women, Essence, New York Daily News, Ebony and Marie Claire. She is a frequent media guest and has been interviewed on every major network – ABC, NBC, CBS and FOX – including America’s top rated shows OPRAH and Entertainment Tonight.
She is the author of “Oh Yes You Can,” “Clean Out the Closet of Your Life” and “Believe in the Power of You.” To book her as a speaker or coach, contact her office at 330.649.9809 or via email email@example.com or visit her website at www.delorespressley.com.
Parisa Perkins and Lance Kosmal, both National Account Managers at Aventis Systems, share the benefits of server virtualization for businesses.
For more information on Aventis Systems, visit www.aventissystems.com or call (866) 528-9313.
Whether a company is a 10-person operation or a corporation with thousands of employees, its employer has a need to protect itself in case of employee-related claims. To keep the potential for legal landmines, confusion, and false expectations to a minimum, all employers should ensure they have an updated and relevant employee handbook — and that employees read and understand it. From HR policies such as vacation days to legal issues surrounding discrimination and employment contracts, employers need to stay up to date on what to include in their handbooks.
While every company is different in its structure and culture, each business’s handbook should at least address the basics.
“When creating a handbook there are a few essential items that are important to include,” says Jennifer Leeper, major accounts manager at Ashton Staffing.
Smart Business spoke to Leeper about how to help protect the business through proper use of an employee handbook.
Why should a company have an employee handbook?
A handbook is an important communication tool that is vital to any company with employees. A key aspect to a successful business is trust between the employer and the employee. One of the best ways to establish this trust is to develop an employee handbook. Handbooks are designed to help create structured environments and build loyalty within the company. Having said this, there are some employee handbooks that are so poorly written that they can actually damage the relationship between an employer and an employee. A poorly written handbook can cause a hostile work environment and can bind the company to promises that it didn’t even know it made. With the right advice, each company can develop a handbook that will establish a concrete relationship between the company and the employee.
What should be included in an employee handbook?
? Disclaimer. The disclaimer is used to show that the handbook is not a binding contract of employment. This helps protect the employer if a fired employee decides to try to sue the company based on a breach of contract. The disclaimer should also include that the employment with the company is ‘at will’ and can be terminated by the employer or the employee at any time for any reason.
? Equal opportunity statement. This should simply state that the employee’s religion, race, age, or sex will have nothing to do with hiring decisions, promotions, pay, or benefits.
? Mission statement. A mission statement defines the question ‘Why do we exist?’ It should give the company a purpose and help boost morale. The statement should provide a better understanding of the values that the company has and its goals.
? Defined work week. This should include lunch and time allotted for breaks.
? General policies and procedures. All the basics should be included in this section. Policies such as dress code, vacation days, holidays, and telephone and Internet policies need to be clearly stated.
? Sexual harassment and discrimination policies. It must be known that the company has a no-tolerance policy for harassment or discrimination of any kind. The company must also include different ways an employee may voice a complaint and who employees need to go to with concerns.
? Leave policies. Include policies on all types of leave that the company is willing to allow. For example, jury duty, maternity leave, sick leaves as well as bereavement. It should also discuss who is eligible for leave and what would happen if excessive time is taken off.
? Benefits. This is an important topic and should include who is eligible for benefits, the period of time that the employee must wait for coverage as well as how much the company will contribute towards the policy.
? Disciplinary polices. Define what is included and considered to be employee misconduct as well as what the consequences are of such actions.
? Acknowledgment form. Every company needs a form for all employees to sign stating that they understand all of the rules and policies set forth in the handbook.
What are the most common mistakes employers make when putting together handbooks?
All companies can benefit from having a well prepared and thought out employee handbook. When creating a handbook it is important to make sure the following common mistakes are avoided.
Not having the handbook reviewed by a lawyer is one of the most commons mistakes employers can make. There are a lot of ways to state policies and sometimes being too vague may lead to potential legal issues. Having a lawyer who is versed in employment law review the handbook prior to distributing it to staff will help prevent any potential legal issues from arising.
Another common mistake employers make is not using straightforward language. If the handbook is too vague or too technical that the employees don’t understand it, then it won’t serve its purpose.
Failing to make sure that all employees read, sign, and have a copy of the handbook is another item that is often overlooked. A company must ensure that everyone signs a form agreeing that they have received a copy of the handbook. Employers need to keep that form in the employees’ files.
How often should employee handbooks be updated?
The world is constantly changing. From technology to society in general, it is important to make sure that handbooks are constantly updated to address new laws. What applied and was appropriate when the handbook was written may not apply or be appropriate now. Once a year, companies should review the handbook for any significant changes in company policies or laws.
Jennifer Leeper is major accounts manager at Ashton Staffing. Reach her at (770) 419-1776 or firstname.lastname@example.org.