What is the best way to motivate employees? Some successful CEOs treat employees as friends, while other equally high-achieving leaders regard employees as merely hired hands, giving them a day’s pay for a day’s work and nothing more.
What’s the best approach to produce the best results for the company, the employee and the employer? Much of the issue lies with one’s definition of a friend and the culture of the organization. Many companies boast that their employees are like family. This sounds great, but can it work?
If either party crosses the fine line that separates the difficult-to-define business and personal space, both employer and employee can become disenchanted or worse. One way to think of it is that friendship is more unconditional. We accept a friend for what he or she is or isn’t. On the flip side, the reality is that most bosses embrace or reject employees for what they do on a consistent basis.
The military has its own way of handling fraternization between officers and the enlisted by making it a possible court martial offense. This stance is predicated on the belief that socializing between these two levels is “prejudicial to good order, discipline and partiality.” It is well recognized that business relationships without boundaries can produce too much drama.
Perhaps what we need is a new definition for a nonemotional, congenial, enjoyable and productive day-to-day relationship between leader and follower. This moniker could be employee-friend, or “e-friend” for short. “E-friend” isn’t an app but would describe an employer/employee relationship where there is mutual respect and a genuine appreciation of one another, underscored by an understanding, albeit perhaps unspoken, that when the time for talking is done, the boss has the final word on matters that occur between 9 a.m. and 5 p.m. Using these ground rules, both sides can have it both ways by using good judgment and treating each other as they would want to be treated if their roles were reversed.
The employee should expect from the boss that, when the chips are down, either on a business basis or when the employee has a personal problem, he or she knows that the boss will be there for him or her, providing understanding and advice and, when requested, helping the employee maneuver through rough patches. From the employer’s perspective, the employee would be someone who, through thick and thin, is there for the company and can temporarily put personal needs aside when there is a business issue that can’t be postponed.
The e-friend boss should know as much about the employee as the employee wants the boss to know, which can include sensitive professional problems or even family or medical issues. In a good relationship, the boss could certainly know, as one example, what the subordinate’s kids are up to in their lives and be the first to say to the employee that it’s more important for him or her to go to an offspring’s ballgame or play, rather than putting in extra time on the business project du jour.
Instinctively, employees know if a boss truly cares or is just going through the motions to be politically correct. They know if the head honcho is sincerely concerned about them as a person, not just another set of hands.
Not everything and everyone in the workplace are created equal. There will always be a pecking order; however, there is nothing wrong with truly enjoying the people with whom you work every day and sharing meaningful experiences, all of which lead to a more fulfilling role for both the employer and the employee. The best criterion to avoiding problems is using generous doses of plain common sense. There is a much-quoted line from the 1987 movie “Wall Street,” starring Michael Douglas as the ruthless tycoon Gordon Gekko, who proclaimed, “If you want a friend, get a dog.” This provoked both laughs and sighs, but in the real world, this attitude makes for a very lonely Ebenezer Scrooge-type life for the boss and a shallow existence for employees who must spend more than half, at the very least, of their Monday through Friday waking hours working.
At times, people can be difficult, both to work for and with. However, it’s the people who make the company and relationships that combine respect and a form of e-friendship that can make the real difference.
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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Richard Branson is full of big ideas. The man who founded six companies that each rake in more than $1 billion annually dares to think big. For him, it’s all about the experience, making a difference and not doing things the same way as the competition. An idea captures his imagination and he sets out to turn it into reality.
For him, it’s not about the money. It never has been.
When he sees a situation where he thinks he can make a difference in people’s lives, he looks for a way to make a difference. He understands that “why” he is doing it is more important than the “what” or the “how.”
Author and consultant Simon Sinek agrees (see video link). He explains that Apple is wildly successful at what it does not because it can build computers better than anyone else but because it understands “why” it is doing so. It’s not that the competition doesn’t know what it is doing or that it doesn’t have talented people creating good products. It’s just that Apple understands why it is in business and focuses its message on that instead of what it does — which is build electronic devices.
Sinek says that people like to do business with people who believe what they believe, so they buy more on the “why you do it” rather than what you are actually doing. Notice that profits are secondary. If you do things the right way for the right reasons, profits come naturally.
You might already have a big idea for your business, but it will most likely never reach its full potential unless you understand why you are doing it. Have you ever stopped to think about why you are in business or why you are doing what you are doing? It can be an enlightening exercise.
With the demands of daily business, we seldom stop to think about the reasons behind our actions, and if we do think about it, the answer is often “to turn a profit.” But to what end?
When you understand why you are trying to make a profit and the answer goes beyond simple wealth, then you are getting to the heart of what differentiates a good business from a great one. Maybe the reason why is a social issue, such as eliminating hunger, or maybe it’s a medical issue, such as curing a disease. But it doesn’t have to be grand. The “why” can be something like “making computers easy for everyone to use.” The important part isn’t the scope; it’s understanding your business’s basic reason for existence.
When you’ve taken the time to understand that, your business will have the potential to do great things because employees and customers alike can unite around a common understanding.
It’s why Apple is a great company and it’s why Richard Branson is wildly successful. If you’re already doing it, you’re on your way. If not, take the time to think about it.
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.
Effective communication is the vehicle to bring board meeting decisions, annual strategies and initiatives, and support programs for your constituents to fruition in business.
Without a plan to communicate their importance and implementation, time spent participating in daylong retreats, creating charts, finalizing objectives and enduring the wearisome budgeting process are a waste of your time — and who has time for that?
Today’s technology has created myriad options for sending messages across varied time zones and locations inexpensively. I don’t know any business leader or CFO who doesn’t love to see expenses cut, including me. The challenge for all business leaders is to evaluate your communication approach, considering your audience, budget and desired outcomes using the following four topics.
I love my iPad, and in fact, that statement is included in my email signature. Skype is another way I try to tackle communication when my schedule is filled with frequent travel, days with back-to-back meetings and a to-do list with more items than hours in the day.
I appreciate the iPad’s mobility and Skype’s two-way video capabilities to stay connected when I need to.
At the same time, if I have an important point to make or am communicating a new change from an expected direction or have bad news to share, I prefer to pick up the phone or visit the person directly rather than send an email. The immediate connection allows a more substantial exchange with the other person, allowing us both to have a clear understanding of the message, its expectations and to discuss the outcome.
Use a variety of media to ensure the business-building information your team sends is well received.
Service Brands International has three home-services franchise companies under its umbrella. Each brand creates six-to-eight annual objectives agreed to by the home office team and its franchise advisory council during a series of planning sessions. If those initiatives were communicated only once, the opportunity for success is small.
A communication is like a marketing message — the sender or the brand will tire of it long before the audience does. If you’ve invested the time and resources to put a plan into place, keep your audience engaged by sharing it at a consistent frequency and with progress updates.
Whether it’s the technology you select to communicate or the written word itself, don’t lose your audience by overcomplicating the message. Use words that are clear, concise and memorable.
I have sat through hundreds of meetings, and I have received thousands of letters and emails throughout my career. I am most impressed by the well-prepared speaker or writer who shares their key points and leaves out unnecessary data and words.
Call to action
A fabulous message that you share across many media channels is not yet complete unless you consider what you’re asking your audience to do with the information. As the leader, it’s your job to create the map to success and make sure your team has a copy of it, understands it and knows what to do with it.
During your strategic planning session, it’s likely you identified specific, desired outcomes of your initiatives. Consider each communication carefully, and decide on your purpose and end result before you begin writing or speaking. Your personal call to action is to measure your results to ensure your communications are being well received and to adapt to your audience if they are not.
These techniques have helped me and my leadership teams manage businesses across state lines, country’s borders and a wide range of tenure and experience. What legend will your vision create?
David McKinnon is the co-founder and chairman of Ann Arbor, Mich.-based Service Brands International, an umbrella organization that oversees home services brands, including Molly Maid, Mr. Handyman, 1-800-DryClean and ProTect Painters. To contact him, send email to email@example.com.
No matter what size your business, your employees probably rub elbows a bit in their workspace. It’s both a fact of life and of space limitations. If you create the right company culture, they’ll become more like a functioning family than a bunch of bickering siblings.
But even the most collaborative colleagues will wrestle with pet peeves from time to time. Whether it’s impromptu office social hours that are too close for comfort or phone chatter happening at a few decibels too many, noise pollution tops the list of many workers’ gripes about their neighbors.
At Petplan, we’ve tackled this topic head-on, as our employees share an open workspace that encompasses a call center, claims adjusters, a marketing and creative team, a sales force and managers alike (not to mention our four-legged office mates).
With so many people working for so many different facets of the business, it takes a delicate balance of tolerance and consideration to keep varying noise preferences in check. Here are some of the lessons we’ve learned — loud and clear — about sounding off at work.
If you love them, set them free
Setting up your staff so everyone has the option to “go mobile” will help ease tensions when exuberance reaches intolerable proportions for quieter folks. At Petplan, all of our employees have a laptop they can take to less high-traffic areas, such as meeting and conference rooms, if they need some serenity during the day.
Carving out a few quiet places within the workspace gives your employees the option to retreat when they need to nix the noise and get down to business.
Open Pandora’s Box
Streaming music or white noise can greatly reduce the stress of a noisy co-worker and help increase focus and concentration, so we’ve adopted a permissive policy regarding headphone use by employees.
Drowning out the distraction is sometimes enough to manage the situation and keep frustrations in check, and studies have shown that music in the workplace can actually boost motivation and increase productivity. If bandwidth is an issue and you need to block Pandora or other music-streaming sites, radios (with a headphone jack), iPods and CDs can still do the trick.
Communication is key
Create opportunities for regular social interaction among your employees, across all departments. At Petplan, we host a handful of employee outings throughout the year, but we also encourage everyday mingling, with perks like picnic lunches and Friday cupcakes.
Fostering friendships — or at least friendly acquaintance-ships — can help workers manage differing noise preferences themselves. After all, it’s much easier to ask someone you’re friendly with to keep it down than someone you don’t know well.
Practice strategic eavesdropping
At Petplan, being able to hear everything has at times been beneficial. Our marketing department overhears our sales force answering common questions, which has helped shape some of our prospect communications. Our claims manager can hear our “happiness managers” servicing policyholders with pending claims, which has given her better insight into the customer experience.
Never underestimate the power of strategic eavesdropping — mining the melee for useful information can often turn up gold.
As the saying goes, you can’t please all the people all the time, so no matter how you try to accommodate your employees, there are bound to be issues around noise levels in every office. Acknowledging and making allowances for varying preferences can help solve some of the discord, but if all else fails, consider adopting an officewide noise management policy.
As part of an overall approach to providing a positive working environment, an official policy can help make sure everyone’s noise concerns are — ahem — heard.
Natasha Ashton is the co-CEO and co-founder of Petplan pet insurance and its quarterly glossy pet health magazine, Fetch! — both headquartered in Philadelphia. Originally from the U.K., she holds an MBA from the University of Pennsylvania Wharton School of Business. She can be reached at firstname.lastname@example.org.
According to Merriam-Webster, management is “the process of dealing with or controlling things or people.” While “controlling” is a bit harsh in my book, the definition is correct in it's focus on management of people. To be a good manager or team leader, you have to have an above average interest in people. Success in management is found in the relationship developed between leader and team.
The best managers see themselves as catalysts. They become that agent or force that provokes or speeds significant change or action. These managers get things done quickly by leading with solid people skills.
Here are 4 people skills that every good manager must possess:
1. Understanding the right way to give a critique.
The worst thing you can do if you want to get someone to listen to you is to criticize.
As human beings, we hate to be criticized. When we feel attacked, we usually attack back – even when we are in the wrong. Many of us fall into the trap of thinking “I know I am right and I am going to prove it to you.”
Over the years I have learned that this way of thinking simply does not work.
A good manager has the self-control and presence of mind to put aside the needs of his own ego and say “I've got a problem, will you help me?” Enlisting cooperation in this manner will always lead to better results.
2. Understanding the need to help.
If someone comes in to criticize you or to raise your game, under what circumstances would you be willing to accept the critique?
The answer for me is simple. If I think someone is really trying to help me, then I'll engage and listen.
On the other hand, if I feel that the person is just trying to get the job done or make himself look good, I may listen, but my heart will not be in it. My interest and creative energies will be lost.
The truth of the matter is: Managers will only have influence over their people to the extent that their people think they are sincerely trying to help them. It is simply the way human beings work. Good managers truly care about their team and work hard to help them.
3. Understanding no two people are the same.
As a manager, you do not influence everybody the same way. People do things for their own reasons – not for others and not for you.
Inspiring people to your company vision happens best when you help them to see what's in it for them. This varies from person to person. It is your job to discover what things motivate each member of your team.
Some people are motivated by a challenge, some by money and others by recognition.
It is about reading their needs, desires and wants and then leading in such a way that ensures their success at obtaining them.
4, Understanding the best way to get tasks completed.
An effective manager realizes that each time he has an interaction with someone about a task, there are two things going on:
a. A discussion about the task and how to get it done.
b. The way in which the interaction affects the managers relationship with the collegue.
The first is pretty straightforward, but it's success is determined by the tenor of the second.
It must be said that the task should not be sacrificed for the relationship at all costs. It must also be said that winning on the task is not good if the manager ruins the relationship. Both are important and the manager must do well in each area.
I refer again to the need for the manager to develop relationships with the team in order to understand the best way to get things done according to individual members needs, desires and strengths.
In the end, good managers know how to use their influence and power to help others achieve beyond their wildest dreams.
I like management guru Tom Peters' definition of power:
“My definition of power is understanding that all of managing — and this comes out of the old grade school book — is the notion of doing more than you and I can do by ourselves; that is, doing things through other people.”
He goes on to say:
“If you are interested in getting things done effectively and imaginatively through other people then what you're trying to do in the workplace is exactly what you're trying to do on the football field – which is to get people who work with you to achieve beyong their wildest dreams.”
Workplace managers understand that good people skills determine their success. They work hard to develop the skills needed to lead in ways that shows their interest in people.
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.
One of the questions I wished I focused on earlier in my business career is, “How do I ensure my company remains a great place to work?” The answer: You consciously craft its culture.
What is culture? Try to think about your company as a person, with a specific personality. Do you like it?
You may be thinking the personality (culture) of your company happens organically, or that it’s simply an extension of you. Most founders I’ve met start their companies with a strong vision and a passionate belief in what they’re doing.
When a company is small, it often adopts the personality of its leader because the leader is in direct contact with every employee daily. His or her personality is so dominant that it outweighs all others.
But before you know it, you’re on the road to success and it’s time to hire more people to grow your business — and this is when culture can get away from you.
New people bring new attitudes to work that may be different from yours. But in the spirit of working together, accommodations are made to try to keep people happy. Soon, the company isn’t what you imagined. People aren’t handling customers with the same care you would. Going to work every day isn’t fun. You find yourself thinking: How did we get here?
Assessing an individual’s fit is always a challenge. We all want to hire smart, hardworking, creative individuals. A touch of genius is nice too. Yet if you’ve ever hired anyone, you know that the hiring process is tricky. All kinds of personalities show up for interviews. One candidate arrives with an extensive skill set or impressive resume but a questionable work ethic or flat personality. One shows up with a great personality but less-impressive resume. Whom do you hire?
Use the ultimate test
A friend of mine, who had a successful career as a venture capitalist, once told me about an ultimate test he would apply when investing in a company, called the “Toledo Test.” Here is a variation: Imagine a massive snowstorm in Toledo, Ohio, and you and your hiring candidate are stranded. The airport is closed. You must spend the weekend sharing a hotel room with this person while the storm passes.
If the thought of being with this candidate in this situation strikes fear in your heart, do not hire the person. If the thought sounds fun, evoking images of the two of you solving the world hunger problem over a few drinks, then hire the person.
We can’t always accurately assess someone right off the bat, and that’s OK. Mistakes happen.
Admit your errors
The other key to building and maintaining great culture is admitting when you’ve made a mistake and fixing it. The greatest mistake I made in all my years of business was not firing people fast enough. A bad fit negatively affects the business and also the good hires — employees who are killing themselves for the cause, sacrificing family time and vacations while they watch others goof off.
Now some of you may feel this sounds a little harsh. However, I’ve learned that firing a person who is clearly a bad fit is not only good for the company, but it’s good for the individual. Don’t believe me? At a wine tasting in California, I ran into a woman whom I had fired years earlier. Now she owns the beautiful winery and is so much happier.
So the answer to crafting a successful culture is hire better, fire faster. Spend more time finding the right people so you make fewer mistakes hiring. And when you discover you’ve made a bad hire, remove the person as quickly as possible, before they affect the “personality” of your company.
Terry Cunningham is president and general manager of EVault Inc., A Seagate Co. He founded Crystal Services, which was purchased by Seagate in 1994 and integrated into the company’s software division, which then became Seagate Software. His accomplishments include serving as president and COO of Veritas Software and founding, building and leading two other successful software companies.
Take a look at the demographic makeup of your staff. Chances are that you’ll notice a broader range of ages and backgrounds than you’ve ever experienced before. Your success is dependent on creating a culture that can get the most from your talent base because a happy workforce is a productive workforce. So how do you build a culture that is conducive to multiple mindsets?
At hfa, we’ve embraced the generational gap in our workplace by creating a collaborative culture that values contributions from multiple perspectives.
It’s essential to take into consideration the differing psyches of various generations: Baby boomers are work-centric, goal-oriented competitors who believe in long hours at the office to get the job done. Gen-Xers are more tech-savvy and adaptable — they value a strong work-life balance. Gen-Yers are even more tech-focused, collaborative and likely to blur the line between work and leisure time because they want to work at something for which they have true passion.
All are valid philosophies
The key to managing differences in mindsets is to understand that they are all valid, viable philosophies that can contribute to your business’s success.
Bringing disparate groups of talent together requires team dedication. The model that our company has adopted to drive teamwork is based on a book called “The Five Dysfunctions of a Team” by Patrick Lencioni. The book describes five healthy functions, which form a pyramid that builds toward a results-based, productive environment rather than one that is activities-based and nonstrategic.
The five functions are trust, conflict, commitment, accountability and results.
The most important function is trust. Trust means team members believe in each other, both as people and as professionals. It’s a vulnerability-based trust that forms the foundation of any good team.
Conflict means healthy conflict — the ability to challenge one another in order to find new perspectives and unique solutions. Unhealthy, negative conflict is counterproductive and harmful to your team.
Once the team has gotten past conflict, all members align with the chosen course of action in the commitment stage. Differences are put aside for the good of the team.
Accountability is the act of taking ownership of one’s responsibilities and answering to the team when efforts fall short. An accountable team member will strive harder not to let the team down, resulting in higher quality work.
And finally, everything builds up to results. Establish a tangible goal and measure your efforts against whether that goal is met. A team that performs all five of these steps can expect to start seeing positive results.
Embrace differing talents
Another method we’ve found for fostering a collaborative culture is to embrace the different talents of each individual. “Strengths Finder 2.0,” a book by Tom Rath, stresses the importance of capitalizing on strengths rather than wasting energy trying to shore up weaknesses. It also contains an assessment test to identify an individual’s strengths.
By giving this assessment to our entire agency, we were able to use the results to group associates into teams based on complementary strengths. Furthermore, the information has been helpful in building trust between associates by allowing them to better understand each other’s motivations and preferences.
Finally, a collaborative culture must provide associates with outlets that can help bolster business. Our agency has teams such as our Future Team and Green Team that promote innovation among associates with a strong interest in technology and the environment by encouraging them to explore opportunities and trends to apply in our business.
We’ve also remodeled our offices to create a more collaborative workspace. Adding open gathering areas for informal meetings, for example, now allows associates to quickly exchange ideas and updates.
The secret to growth in the modern business environment is an idea as old as business itself: teamwork. Embracing the multiple mindsets and strengths of your workforce by fostering collaboration is a growth strategy that will pay dividends in any marketplace. ?
Matt McCallum is vice president/talent development at Hitchcock Fleming & Associates Inc. (hfa), a leading full-service marketing agency in Northeast Ohio, named as one of the Top Workplaces 2012 Northeast Ohio by The Cleveland Plain Dealer. McCallum is in the current class of Leadership Akron, is past president of Torchbearers, a leadership development organization for young professionals, and is a member of the Akron Art Museum’s marketing committee. Reach him at (330) 376-2111 or firstname.lastname@example.org.
Everyone knows the economy has been challenging, difficult, irritating and many other things in the past few years. When did it start to affect your enterprise? When did you start feeling business was a little soft? For us at M/A/R/C Research, it was July 2008. The interesting thing for me is that was more than four years ago.
In my opinion, the last four years have been the most difficult that my generation of business executives will ever face. Since I always wanted to be a professional athlete, I think of this environment as my seventh game of the World Series, my Super Bowl, my NBA final.
In some ways, this is my quest. There is no better way to see how good you are as a business executive, strategist, leader or motivator than to see the results you have had during the current economy.
I also believe there have been tremendous lessons during this time. Here are a few I wanted to share with you.
1. Don’t hire ahead of the curve. I have made this mistake more than once. This volatile economy has taught me many things and at the top of the list is this one. I don’t want any of our staff working 60 hours a week consistently, but occasionally, this type of extra effort will be needed.
Before we have traction with a new strategy or a new revenue stream, we need to find a way to use internal resources. Once the revenue starts to roll in, then we can add staff — not before.
2. You have a new best friend. Not everyone wants or needs a new best friend, but this is one everyone should have. I am actually not talking about a person; your new best friend is LinkedIn. You need to be a power user and understand all the benefits associated with this amazing tool.
LinkedIn is the single most important business tool I use daily. With industry contacts changing jobs frequently, it’s critical to stay in touch and know where they are. LinkedIn is the largest business database that exists, and the basic version is free.
3. You need to be relevant. You need to be relevant to your staff, your clients and the industry you are in. If you aren’t relevant to your staff or clients, they eventually will leave.
You need to be considered an innovator or thought leader in your industry. If you are, this will give you a tremendous lift over your competitors and protect you during economic declines.
4. Don’t let clients pigeonhole you. This is one of the more painful mistakes that companies make. When we have senior leadership meetings and discuss clients and partnerships, our team gets confused with longevity as a core reason they consider a client a partner.
Longevity is great with any given client, but if they are using only one of your services or think of you for only one solution even though you sell 10, are they really a partner? I say no, and we have changed our thinking and spent months strategizing about increasing revenue with current clients and expanding our service offerings to them. And, thankfully, it has worked.
5. Expect the unexpected. What are you going to do when your largest client has a layoff? Or you lose a significant amount of business to a small competitor? Or your top salesperson leaves? All of these things are real. They can happen. Are you prepared? Do you have a solution ready that you could implement quickly? If not, sudden events like this could cost you a lot of money. ?
Merrill Dubrow is president and CEO of Dallas-based M/A/R/C Research, one of the top 25 market research companies in the United States. Dubrow is a sought-after speaker and has been writing a blog for more than six years. He can be reached at email@example.com or (972) 983-0416.
“It doesn’t matter whether you win or lose; it’s how well you played the game.”
Do you agree? Or should the quote be, “Knowing the score will push you to play the game your hardest”?
I recently read “The 4 Disciplines of Execution” by Chris McChesney, Sean Covey and Jim Huling. The discipline that stuck out in my mind most was Discipline No. 3: Keep a Compelling Scoreboard. While it may be true that it’s not whether you win or lose, a very important factor in determining how well you played is keeping a scoreboard.
Create a focal point
Whether on the field or in the office, if you’re not keeping score, you’re just practicing. Imagine you’re watching a lacrosse game with players that aren’t keeping score. You might see the players screwing around, not passing or cradling the ball, being careless about field positioning, taking risky shots or playing without any strategy in mind. No one’s trying to win.
Now, imagine there’s a scoreboard. You see the teams start to develop strategies on how they can work together to outsmart their opponents, maintain possession and defend their goal. The players play with more intensity and have a will to win, and there’s more sweat and blood.
When you have a team working together to drive your business forward, unfortunately, there’s no time for practice shots. Your team needs to keep score and be “game on” — working hard strategically and pushing toward the same goal.
Let the team set goals
Many organizations have their top leader develop their scorecard, filled with a bunch of information and lofty goals that no one on the team knows about. Or if they do know about it, they’re not sure how it was derived or what it was based on. When the leader sets the goals and puts them in their office, how is the team to know what they’re trying to achieve?
Allowing your team members on the ground to develop the scorecard helps it become personal to them. They buy in to it. They have a passion for updating it and have a desire to reach the goals they help set. Ultimately, the scorecard is for the team, not the boss. So let them set it.
Display score clearly
Some scoreboards have data on every point played, stats on every player and even stats from the entire season. Some have graphs and charts. Cut through all the clutter and help your team stay focused.
What is the main goal the team is seeking? They should be able to figure out the score within seconds of looking at the scoreboard.
Also, where is the scoreboard displayed? Is it in the boss’s office? How are your team members to know whether or not they’re close to reaching it?
Don’t be afraid to put your scoreboard on display in a common area where people congregate. They should see it every day and know right away what they’re working toward. If you have people in the field, take your scoreboard on the road.
When you keep score, allow your team to help set the score and provide constant updates, everyone wins. At Moe’s Southwest Grill, we have to be “game on” every day for the team, for our franchise partners and for our customers. Because when we meet our goals, our guests win, too. They get clean restaurants, the freshest food and high scores on the board across the system. This tells us that the guest is really enjoying the game.
But at the end of the day, I know our team can say — with confidence — that they set the score, they knew the score and they played their hardest to win. ?
Paul Damico is president of Atlanta-based Moe’s Southwest Grill, a fast-casual restaurant franchise with more than 430 locations nationwide. Damico has been a leader in the food service industry for more than 20 years with companies such as SSP America, FoodBrand LLC and Host Marriott. He can be reached at firstname.lastname@example.org.
As investors in lower middle-market companies, valuation is a fundamental question we grapple with in every transaction. The short answer to the valuation questions is “what the market will bear.”
Then the next question is, “Which market?”
Company valuations typically are discussed in terms of multiples of trailing 12-month EBITDA. The higher the “multiple,” the more the company is worth. While there are exceptions to using trailing EBITDA multiples — for instance, software company valuations often are discussed in terms of multiples of revenue, and companies with predictable contracts going forward may be valued on projected EBITDA — the valuation of the majority of companies will be discussed in terms of multiples of trailing EBITDA.
Cash and debt
Strategic buyers often pay the highest multiples. As they generally are in the same or related businesses as the acquired companies, these buyers often can identify significant synergies that will effectively grow the acquired company’s post-acquisition EBITDA and thereby lower the effective multiple. Another factor currently pushing up valuations paid by strategic buyers is the amount of cash many companies have on their balance sheets.
To the extent that companies are able to deploy this cash in an acquisition with a higher return on their invested dollars, the acquisition then can be considered “accretive” even if the multiple paid for the acquired company is higher than the multiple at which the acquiring company is valued.
However, often outbidding strategic buyers these days are financial buyers — typically the larger private equity funds.
While these buyers will look at many of the same intrinsic aspects of a target company as strategic buyers (except for synergies), there are other external factors that can move their valuations up or down. The most important of these is the availability of debt.
If lenders are aggressively lending, then the financial buyers will use that leverage to justify and pay higher multiples.
Another factor is the life cycle of fund buyers. Often, fund managers are anxious to deploy their capital before their investment periods expire, and thus, they will pay higher multiples to win transactions.
Your company’s multiple
So, the final question then is what is the multiple for your company? Multiples vary greatly based on company size, industry and specific company characteristics. As for size, there are rough EBITDA breakpoints where companies will be valued at higher multiples merely because of their size. These are at $5 million, $10 million and $20 million.
As for industries, multiples vary greatly. For example, a $5 million EBITDA software company may be valued at an eight multiple, and a nonvalue-added distributor may be valued at a four multiple.
Underlying these multiple variances, however, really is recognition of the predictability and scalability of a company’s EBITDA. A company that produces commodities and is vulnerable to competition and market fluctuations will be valued at the low end of the multiple range.
Conversely, a company that is solving a unique problem, with little or no competition, that is not cyclical and that has a very steep growth trajectory in a very large potential market will be valued at the high end of the multiple range.
Other than these EBITDA considerations, another important factor in the quality of a company is its leaders. Is the company well organized with good processes? Is there a great leadership team that will come with the company? Is there a clear strategic vision? If the answer to those questions is “yes,” the company will be awarded a higher multiple than other companies of the same size in its industry.
Dan Lubeck is founder and managing director of Solis Capital Partners (www.soliscapital.com), a private equity firm headquartered in Newport Beach, Calif. Solis partners to build great business in the lower middle market. Lubeck was previously a transactional attorney, and has lectured at prominent universities and business schools around the world.