Joel Strom

Thursday, 23 October 2003 10:59

Is it them or us?

Yet another survey on employee satisfaction has been released, saying that less than half of employees like their job.

Is it any wonder managers complain about employee performance? Someone who isn't happy where they are, doing what they are doing, is not a great candidate for employee of the month.

Most managers blame the current generation. But there have always been employees like that. In every generation, managers have complained about employees and their lack of drive and ambition. The job of a manager is to find and keep the best employees. Even if the pool of good, motivated employees is shrinking, we can find them, and once we do find them, keep them.

Employee satisfaction is tied more to the conditions of the job and the practices of the employer than to the job itself. Employees doing the same job at two different companies can have huge differences in their satisfaction levels.

Think about your worst job and why you felt it was so bad. Odds are it was because of a bad boss or a hostile environment, or simply an uncaring and demotivating culture.

Making employee satisfaction a core part of your company's strategy can create excellent returns by saving unnecessary expense.

The costs to replace employees found them and trained them can be tremendous, and there is a greater, unmeasurable cost in the form of the loss of customer goodwill and organizational disruption.

With the right strategies and commitment, companies can make workers doing the most mundane or unpleasant jobs into satisfied employees. I've talked to employees with jobs ranging from cleaning toilets to handling molten metal in hot factories. Each of them, despite the tedium or unpleasantness, described themselves as satisfied with their jobs and happy to be doing what they were doing.

It wasn't the job that made them happy; it was what the company that employed them did to make them want to come to work and feel good about themselves and their contribution. They felt appreciated and a part of a bigger mission. They understood what their efforts did to accomplish the bigger goal.

If these employees can obtain satisfaction, think how much easier it should be to achieve that with employees whose jobs are challenging and exciting.

We can't make every problem employee into employee of the month material. We can, however, create an environment that makes good employees not only stay good employees but also stay with our companies.

We play the major role in our employees' job satisfaction. We cannot be satisfied with 50 percent of our employees unsatisfied. Joel Strom (jstrom@cp-advisors.com) is director of Joel Strom Associates LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing their profitability and value. Contact him at (216) 831-2663.

Friday, 31 January 2003 10:40

Beating the mean

Too many companies operate in the middle of the pack. They would rather be average than be great.

Many stay in business because there is a need for their product or service, or they have a convenient location. But most companies can be great if their owners want them to be.

My parents told me two things: If something is worth doing, it's worth doing right. And whatever you do, do your best. It was simple but strong guidance that unfortunately is not universally followed in business.

It's easy to be average, but it's not much more difficult to be great. It just takes awareness and commitment -- awareness of what constitutes the difference between being in the middle of the pack and being the leader, and a commitment to move into the lead.

When I work with clients to develop strategies, I urge them to set lofty goals. I want them to strive to be the best and be disappointed if they don't reach the top. When encouraging them to set their goals on greatness, I'm often told, "We're a small company with limited resources. How can we be the frontrunner?"

But being the best does not mean being the biggest. Nor does it equate to spending extraordinary amounts of resources. Being the best means finding out what the best possible practices are for your company to differentiate itself and exceed customers' expectations.

A smaller business can have an advantage. A small staff is more cohesive and consistent with service delivery. But it will not happen automatically. The culture must be strong, and it must support, communicate and reinforce the mission to be the best.

Understanding the requirements for being the best is only the start. Achieving those requirements is where commitment counts. Being the best requires you to go beyond commitment to passion.

You need to have passion and show it. It's imperative to have the passion to never let a customer go away unhappy, to make others try to imitate your company, to set the standard for excellence and to be the best.

To settle for less is a disservice to yourself. Joel Strom (jstrom@jsagrowth.com) is director of Joel Strom Associates LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing their profitability and value. Contact him at (216) 831-2663.

Monday, 22 July 2002 09:49

Strategy isn’t a four letter word

Successfully growing a business is not an accident. After years of working with closely held, entrepreneurial businesses, I’ve found that most business owners either want to grow or feel they must grow.

The resulting dilemma is how to achieve added revenue, and once it’s achieved, how to remain in control and ensure that the increase in sales results in an increase in profits.

There are obvious exceptions, but most truly successful businesses got there by developing and executing a well thought out plan. Unfortunately, in many companies, planning is a totally foreign concept.

Even when the suggestion to plan doesn’t create heart palpitations, if you put the word strategic before it, jaws drop. No business that desires growth and profitability is too small, too different, too wise or too savvy to benefit from a strategic plan.

Business owners undertake strategic planning processes for different reasons, and I have seen some pretty amazing results: Transformations and rebirths of tired companies, new directions set for fast moving companies and new ideas and concepts that enabled companies to leapfrog the competition.

There are different methods for performing the process depending on the size of the organization. But no matter the size, process methodology affects the results. More important, it can be the difference between simply producing a plan and producing results that really drive the organization.

I have identified the components of the process I consider to be the most important in maximizing the return on a company’s strategic planning investment. Over the next three months I will share my 10 rules for strategic planning for success. Here are the first three:

1) Plan for the plan

This ensures the process is thought out before diving in. Not only will that get it off to a good start, it will help maintain momentum once the process begins. In planning for the plan, the methodology and the members of the planning team are determined, and a timetable for completion is set.

Communication plays an important role in the process’ success, so this is also the time to develop a communication plan.

2) Understand the CEO’s role

Although team involvement is critical, the CEO plays a major role in the success of the process. Inherent in the strategic planning process is the establishment of the company’s vision. In a closely held business, it is the CEO’s privilege and responsibility to set and communicate the vision. (This should be a top priority for the CEO even without a formal planning program.)

But the CEO’s role doesn’t end with the vision. He or she must be an integral part of the process itself. That person needs to guide the process and ensure that momentum and enthusiasm are maintained. The hardest part of the CEO’s involvement is often listening to and accepting input from the rest of the team. If they perceive their involvement is not real, the process will fail.

3) Maximize organizational involvement and communication

There is a direct correlation between the extent of the impact on the organization from the process and the extent of organizational involvement. My personal objective is to get as many people as possible, in some manner, involved. Not everyone will be on the core planning team, but communication can make everyone feel involved.

Communication needs to be ongoing and accomplished in a manner that fits your company culture. It is important that the organization understands what strategic planning is, why it is being done, what it entails, what will be expected of everyone and what the communication process will be.

Next month we will look at the rules for development of the plan itself.

Joel Strom (jstrom@jsagrowth.com) is president of Joel Strom Associates Inc., Growth Management. His firm works exclusively with closely held businesses and their owners, helping them set and achieve their growth objectives while maximizing profitability and value. He can be reached at (216) 831-2663.

Friday, 31 May 2002 11:41

Leadership success

Effective leaders understand their role.

Recently, I met with the leader of a very successful family-owned business. His company employs more than 200 people in multiple locations, yet maintains a flat organizational structure. The owner has daily involvement in the business but is not hands-on or involved in the details. He is confident that under his leadership, people will act appropriately, serve customers' needs and protect the interest of the company.

According to him, there is only one way to run a company successfully: "You need to pick the right people and then hold them to the right standards," he says. "By doing that, I can be scarce."

This owner is committed to his leadership ideas. He hires people for management positions based on his personal "good people" rating system. It is not easy for him to explain, but the system is weighted heavily toward strong entrepreneurial and independent managers.

Once he has good people, he holds them to high standards. His managers know his expectations and standards because he continuously communicates them. He feels this is one of his most important responsibilities.

He has unwritten, but understood, agreements with his managers that define how they will operate, including how they will satisfy customers and treat employees.

Offer incentives for good decisions

The company's compensation program is another important factor that helps this leader be "an unimportant part of the daily operations of the company." He designed and implemented a compensation system to reward managers and other key personnel for making good decisions.

The system doesn't simply reward a manager for running a profitable operation. It is designed to ensure the operation is meeting or exceeding operational and cultural standards and expectations. This reinforces his belief that operating the company the "right" way and fostering the "right" culture are important to producing a healthy bottom line.

This is proven in the fact that the company's net profit percentage is very high for its industry, while its managers are among the most highly compensated.

Combined strength

It's no surprise this company is doing so well. It is simply one more example of the power and practice of good leadership getting a team rowing in the same direction, without the leader even being in the boat.

This organization excels because it combines:

* A strong leader with a clear understanding of his leadership style who knows the strength of his company lies in the strength of his team.

* Management carefully selected to excel under his style of leadership.

* Managers who understand the leader's expectations, have clearly defined standards to operate under, and are given the freedom to lead in their areas.

* A compensation system that rewards management for making the right decisions and operating according to clearly understood standards. Joel Strom (jstrom@jsagrowth.com) is director of Joel Strom Associates, LLC, the growth management practice of C&P Advisors LLC, which works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing profitability and value. Reach him at (216) 831-2663.

Tuesday, 25 January 2005 11:12

Theoretical realities

It is always reassuring when the results of a study verify theories you've been espousing for years. Recently, the international consulting firm Hewitt Associates studied "people practices" in what it refers to as DDGs -- companies that achieve double-digit growth.

Here are some of the results of that study.

* Culture. There has always been discussion about company culture and the role it plays in success. This study confirms the importance of culture and the components of that culture that make DDG companies stand out. Employee engagement at DDG companies was nearly 30 percent greater than at non-DDG companies. When employees are engaged, they tend to remain at the company, say positive things about the company and strive for outstanding results.

In addition, the study found DDG companies have strong customer-centered cultures; employees who saw a strong connection between their role and business results; and management that focused resources on core competencies and outsourced activities beyond that focus

* Selection. The study's findings in the area of employee selection mirror Jim Collins' right people on the bus scenario. The study found a strong management mindset in DDG companies to recruit, retain and develop the best employees.

Then these companies identify the employees with the strongest potential and provide them with opportunities to shine. Frank management discussions about talent in the organization, as well as discussions with that talent, are common practices in these companies.

* Assessment. DDG companies also employ strong employee assessment processes. The study found DDGs focus on performance and results, continually evaluating the fit of the employee into his or her particular position.

* Performance. The differences between DDGs and single-digit growth companies are magnified when it comes to performance. Three characteristics were common -- aggressive goals, clear communication and broad-based participation.

Finally, incentive plans were also different. DDGs averaged 47 percent work force involvement in short-term incentive plans, compared to 19 percent in single-digit growth companies. However, in a not-so-surprising twist that follows the DDG mindset of lofty goals, it was more difficult for employees in DDG companies to achieve those incentives.

Joel Strom is the founder of Joel Strom Associates. His firm works with closely held businesses and their ownership, helping them set and achieve their growth objectives while maximizing their profitability and value. For more results from the Hewitt study, reach him at (216) 831-2663 or jstrom@cp-advisors.com.

Monday, 22 November 2004 11:47

Bottom-line growth

Business owners say activity is increasing, and they are actually talking about growth. That's a drastic change for firms that have been focused on short-term survival.

As business owners see opportunities for growth, anxiety may cause them to seek any type of growth. But bad growth can be worse than no growth.

Bad growth is focused solely on the top line -- revenue -- and ignores the bottom line -- profits. Top-line sales growth may stroke the ego, but it is no guarantee of more money for your retirement fund. When a company reports sales are up 38 percent from a year ago, the first question should be, "How much has profit has increased as a result of that growth?"

It's imperative to remain focused on the bottom line. Keep in mind, though, that without top-line sales growth, you'll never truly grow your bottom line. It requires a combination of the right kind of sales growth and cost management to ensure the bottom line grows as well. Unless sales growth consists of the right products and services to the right customers and markets, at the right prices, you'll spend valuable resources and money to grow sales for little return.

As an example, a company had won four straight annual growth awards, based on increases in top-line revenue. The owner had everyone focused on acquiring new customers and increasing the revenue line.

The company was rapidly opening new territories and aggressively adding customers. Unfortunately, the bottom line wasn't keeping pace.

While the business was growing, its computer systems had collected much data. But since the focus was sales, that data was never used to determine why, with increasing sales, it was still not very profitable. By turning the data into valuable information, the owner saw there was a definable difference between good growth and bad growth.

As a result, he's identified good customers, who create bottom-line growth, and bad customers, who do nothing for the bottom line.

It's been a long time since the opportunity to grow existed, and it's important to take full advantage of it. But make sure you're focused on good growth, not bad, or your bottom line will suffer.

Joel Strom (jstrom@cp-advisors.com) is the founder of Joel Strom Associates. His firm works with closely held businesses and their ownership, helping them set and achieve their growth objectives while maximizing their profitability and value. Reach him at (216) 831-2663.

Monday, 27 September 2004 10:17

Growing too quickly

When you think of quality manufacturing, one name likely to pop into your head is Toyota. The Japanese automaker built quality cars for years and became so good at quality that it set the standards not just for other automakers but for other manufacturers.

So imagine my surprise when I read that Toyota is having trouble maintaining its level of quality, for the same reason that many growing businesses falter -- success. Toyota's success caused it to outgrow its ability to manage and control the most important reason why people buy Toyota's cars.

To grow successfully, business owners must understand why customers buy from them instead of the competition. This will help you identify your company's critical success factors, which must be maintained to retain customers. When a critical success factor, such as Toyota's quality, disappears because the company outgrows its ability to provide it, the customer doesn't care why it's happening.

The combination of unhappy customers and aggressive competition will hamper growth.

But outgrowing your ability to maintain critical success factors doesn't have to mean the end of your business. If acted upon quickly, it can actually cause operational improvements that can enable you to build and strengthen your business' success factors. Toyota seems to be doing just that; rather than denying the problem, it looked for its cause and attacked it.

Restoring a company's ability to maintain critical success factors can be expensive. But with what quality means to Toyota, what amount would be too much to maintain its leadership position? And, how much would be too much for you to maintain your market and customer strength?

In a fast-growth situation, response time is critical to limiting the damage and the cost to fix it. Fast response, however, is only possible when management is aware of what its company's critical success factors are and how well they are being delivered.

Through continuous monitoring, then acceptance of reality when it seems that standards have slipped, timely repairs can be made. This can keep costs to a minimum and, more important, ensure customers remain satisfied and growth is maintained.

Joel Strom (jstrom@cp-advisors.com) is director of Joel Strom Associates LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing their profitability and value. Reach him at (216) 831-2663.

Wednesday, 21 July 2004 10:51

Who gets the Bible?

There was one of those "What is wrong with these people?" stories in the news recently, the story of a woman whose family, following her death, fought over who would keep her Bible.

The fight went to court, where the judge decided that since the Bible could not be cut in half and neither sibling would give in, it would be sold and the proceeds split between them. The fight for the Bible resulted in it no longer being in the family. Initially, both wanted the Bible for its keepsake value, but they lost sight of the reason for the fight and winning became the most important thing.

It's the principle
The Bible story reminded me of two brothers I worked with. They each owned 50 percent of a family business. One was in charge of sales. The other, an engineer, was in charge of operations. They had a good product in a good market, but the company never reached its potential.

One reason for the company's poor performance was that the brothers spent more time arguing than managing. When I met them, they'd been fighting for so long that it no longer mattered what the issue was. Neither would ever agree with the other. They were willing to sacrifice customer service and satisfaction if it meant showing up the other brother.

Not surprisingly, they lost the company. And it's always frustrating to see a successful or potentially successful business lost because people are standing on principle rather than reason.

Awareness
When considering your company's succession plan, being aware of these types of situations will help you minimize the chance of them happening. If siblings would go to court over a Bible, imagine everything they could fight about in a business. The potential for this behavior in a family business can be reduced by:

  • Being realistic when assessing your children's personalities and behavior styles.
  • Not assuming that they will always play fair with each other.
  • Carefully documenting succession plan details, even when they appear obvious.
  • Incorporating a dispute resolution process into your plans.

Joel Strom (jstrom@cp-advisors.com) is director of Joel Strom Associates, LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing their profitability and value. Reach him at (216) 831-2663.

Thursday, 26 February 2004 08:52

Planning for success?

"How can we get Dad to agree to these great ideas my sister and I have for growing our business? He seems content to maintain the status quo and take a pass on all of the great opportunities that are out there for us."

Those statements were part of a conversation I had with a brother and sister in a family business that their father had started more than 35 years ago. The father saw things differently.

"If I left it up to them, we would be in deep trouble," he said. "All they want to do is grow, and grow quickly. They have no patience. They don't understand that we need to grow slowly and conservatively in this business."

This is not an unusual circumstance in a family business -- two generations with two views of what the company needs to do and how it needs to do it. It is really less a matter of the path the company takes than the need for agreement between the owners (especially between generational owners) on which path to take. Without agreement, progress becomes mired in continual conversations and arguments that prevent decision-making.

Yet many family businesses have a strong aversion to any type of formal planning that could accomplish this. In a 2003 study of more than 1,000 family businesses by Mass Mutual and the Raymond Institute, only 37 percent of the businesses polled had a written strategic plan. That means 630 of the companies could be having conversations similar to the one I described.

Other interesting, although not surprising, findings from the study that indicate that family firms with written strategic plans tend to engage in other types of planning as well.

* They are more likely to have buy/sell agreements and formal means of share valuations, and they hold board meetings more frequently.

* They rate the board's contribution more positively, employ more workers, have qualification policies for employing family members and were more likely to have named a successor.

* They had higher sales volume.

These findings demonstrate a correlation between the existence of a strategic plan and taking actions that are essential for family business survival and success. Of the 63 percent of family businesses that did not have a formal plan, there are probably some very successful companies.

I would speculate, however, that a large number of them are in trouble. And unless the overall management mindset in the business changes, ownership will likely never truly understand the need for developing formal plans or for breaking out of the family business mold and ensuring long-term success.

Joel Strom (jstrom@cp-advisors.com) is director of Joel Strom Associates, LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing profitability and value. Reach him at (216) 831-2663.

Monday, 22 September 2003 13:06

Passionate one

Another consultant and I were discussing a company we had both worked with. Why, we wondered, was this business -- with a long history in the owner's family and a good niche product and market -- not able to break through and reach its potential?

We agreed the company was not a very exciting place, and a gloom hung over it. The owner was a nice person but very low key. He spent a lot of time on committees and causes outside the business, and his business was in desperate need of a full time leader.

What was missing was passion. The owner lacked a true passion for the company and his role. He was there because the family owned the business, and it provided him with a good opportunity to make a decent living.

When you talk with business owners who have passion, you can feel it. They are excited, proud and committed to their business, its people and its success. A client, who built a successful business from scratch, told me he even loved the smell of his business. Passion will not overcome a lousy product or a lack of customers, but it can help companies overcome some large hurdles.

An owner's passion can be contagious. Once it begins to spread, the power of the organization can be overwhelming. Customers, employees, banks and everyone important to your business success can see and feel it. Employees pick up on it and build on it. They pass it along to the customer.

Employee pride and retention increase. Customer service happens naturally because you don't even have to think about it as the passion takes over.

The consequences of no passion can be worse than the benefits of strong passion. Without the owner's passion, the company simply exists. There's no
excitement. Good employees, who started their careers with a strong passion lose it because it is not reinforced.

Remember that machine in the penny arcades where you squeezed the handle and a string of lights turned on? The machine supposedly measured your degree of passion, and you stood there with your date hoping the lights would reach the top. What if we had machines that measured passion for your business? How high up the scale would you score?

Squeeze the handle and measure your passion. Is it still there? And, is it strong enough to spread throughout your organization? If your passion is gone, you need to consider what is best for the company and for yourself, including the possibility of getting out of the business. Joel Strom (jstrom@jsagrowth.com) is director of Joel Strom Associates, LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing profitability and value. Contact him at (216) 831-2663.