jinteractive No Comments

Lean in Sales

As we know the subject of ‘Lean’ is predominantly aimed at manufacturing elements of organisations but should however be applied across all areas. Here we are specifically going to look at how it can be applied to ‘sales’.

If we accept that the ‘value add’ (VA) aspect of sales is understanding what the customer has a need for and then proposing a solution to fill that need, then everything else that is done in that department is ‘non value adding’ (NVA). Let us consider a salesman who conducts Face to Face, Business to Business sales calls that should take approx 45 minutes and yield say a £500 sale. In a ideal perfect day he will turn up at the first prospect at 9.00am, have the sales meeting, win the order, be away by 9.45am, and arrive ready for the next client to repeat the process at 10.00am. Using this method our salesman would secure £500 of sales per hour, which would give us say £4000 per day / £20,000 per week. I can hear you saying now though, ‘but life’s not like that!’. So let’s list the things that often go wrong?

  1. We get to the appointment and the prospect isn’t there
  2. The sales meeting starts late
  3. The travel between appointments is longer than 15 minutes
  4. The sales meeting overruns the 45 minutes allocated
  5. The prospect decides not to buy the product
  6. The decision maker isn’t there so a second visit becomes necessary
  7. The appointments can’t be made at one hour intervals… etc, etc, etc

With just a few of these factors hitting our salesman every day the results will tumble dramatically and perhaps he secures just two sales a day = £5000 per week

So what has this got to do with ‘Lean’? It’s here that we now need to start working on the systems to ensure we can perform nearer our ideal scenario. Let’s explore the actions we could explore under the ‘Lean’ banner.

  1. Qualify the leads better to ensure they are the right people with the need
  2. Always turn up on time
  3. Pre-frame the prospect that time is tight so they are prepared for you
  4. Phone the prospect when 10 mins away so they are ready
  5. Only book appointments in the same vicinity
  6. Take control of sales meeting and keep to timescales
  7. Make sure decision maker will be there at appointment booking stage
  8. Not book appointments at random times in the day, eg:- 11.15, stick to on the hour

Now I’m not suggesting that it’s that easy, however we shouldn’t ignore looking at what we can do. As you can see, in each scenario our salesman does 40 hours work, but the output from each is vastly different. Have a go and see if you can analyse the VA and NVA activities in your business.

jinteractive No Comments

Are You Ready for the Journey?

Let’s have a look at the importance of and the relationship between financial accounts, management accounts and Key Performance Indicators (KPI’s).

Now this has all the hallmarks of being a dry boring article but don’t despair and dive for the headache pills just yet. I’m going to look at this by the way of a metaphor to bring some clarity and understanding to the subject.

We are going to embark on a little boat trip. We want to motor our boat from England to Holland.

So we need to do some planning. First off we must get the charts out and plot our route. What information do we need?

Well we need to know the weather forecast, the expected wind direction, the state of the tide and the strength of the currents so we can calculate our bearing to reach the destination.

We will also need to know how many passengers we have on board, the average full consumption, the overall distance so that we can calculate how long we will be at sea and therefore how much fuel and other supplies eg. the food and drink we are going to need for the journey. Quite a lot of info and planning. In a business this would be the budgeting or forecasting stage.

But hang on a moment have we forgotten something really basic. Surely, we really need to know exactly where the boat is moored. Not just the area but exactly where a boat is in which marina because that is where we are going to set off from. We may have done all our plans but if we don’t know exactly where we are starting from we are unlikely to reach of destination. In business terms the location is a set of accurate timely financial accounts. No good trying to start from where the boat was a year ago as it could be somewhere totally different.

Now knowing exactly where we are- we can jump on board and plan our course and then safely set off on our journey. We monitor our speed, fuel consumption, distance travelled and keep an eye on the compass, tide, wind speed etc. In business these measurements would be our operational KPI’s. These give us up to date information that we are on course and we are going to reach our destination. We can control the business by the KPI’s.

Now on route we need to check our actual position against where we think we are. Maybe we take a GPS reading and find out we are fifty miles off our planned route and are heading for some nasty sandbanks. In business this GPS reading is equivalent to the management accounts. These need to be accurate and up to date. It’s no good knowing that the boat was off course an hour ago or the management accounts are one, two or three months late. The information was there but no one bothered to tell the captain. Also it’s no good telling the captain he is off course without telling him how he got there. Perhaps the wind has shifted, blowing the boat off course. Knowing that, the captain can recalculate the bearing and bring the boat back on course.

I have spoken to many, many business owners over the years that have no idea which Ocean their boat is in let alone the direction they are headed or indeed the final destination. Often the captain (owner) is not too worried as they know there is plenty of water under the keel (large cash balance in the bank) and there are no storms brewing. In fact the skies are clear and blue. The boat can just chug along merrily, oblivious to the changes going on around them until it’s too late.

Unfortunately, in nature and in business we have seen over the last few years the climate change. Storms and sudden squally showers are becoming the norm. What served us in the past will not help us in the future.

So perhaps by looking at the importance of the inter relationship between financial accounts, management accounts and KPI’s we can gain, regain or maintain control over our business in these changing times.

To finish, here is a brief relevant extract from my book ‘The Levels- Can Your Business Step Up to the Growth Challenge?’ (Page 143)

You cannot make sound business decisions and grow through the Levels without tackling your financial understanding, forecasting and planning.

I know that, for many business owners, the idea of getting to grips with the finances takes them straight back to a time when it was easier to feign sickness than attempt double math’s, but this is an absolute necessity and with the right resources it doesn’t have to be as painful as it sounds (I promise there are no quadratic equations involved in any of this!).

The language of business is numbers and, just as on an overseas holiday it is helpful to have a basic understanding of the language spoken, a business owner needs to have a good enough grasp on the language of numbers to understand what’s going on within their business. Without the numbers, we are once again relying on opinions rather than the facts and that is something which can result in bad decision making about where the priorities for the business should lie.

I am not saying the owner needs to be fluent in that language. They can always hire an interpreter (an accountant) if the conversation becomes too complex or detailed but having no understanding of the language is like being stuck in the middle of Athens without a map. There are road signs everywhere and plenty of people willing to give you directions but if you can’t read the words or understand any of the lingo, you have no way of knowing which way to go. With good luck, a little judgement and the use of some slightly mad looking sign language you may well eventually get to your destination but the journey could be a very long and winding road!

As any world travel enthusiast will tell you, if you can grasp the fundamentals of a language you will gain a deeper understanding of the complexities and nuances of the country where it is spoken. Basically, your enjoyment of the trip will be much improved.

So, in Setting out the Stall to face the TRANSITION from Level 2 to Level 3, the first thing you have to do is put in place strong financial controls and management information that is capable of allowing you to go to the next Level and beyond. Start by making a review of your current information system and take a look at the information it is providing.

There’s no time like the present so you can do this right now!

jinteractive No Comments

New Year New Start! Is It?

Well it’s the start of another year, actually as I write this it’s the second week of the year and it’s tempting to write a motivational piece around fresh start, new goals and….and….

But, most of us are aware that with all the greatest of intentions our New Year Resolutions often quickly disappear into the mist. In fact, statistically the vast majority of New Year resolutions will have already been broken or will be broken within the next four weeks.

Now before I switch you off totally and you accuse me of just being an old grouch there is a positive spin on the whole New Year thing.

On one side 1st of January is just another day marking the day the earth starts on it’s next 365 day orbit of the sun. On the other hand it also marks the day to take stock. It is time to reflect and consider. It’s out with the old in with the new.

Indeed, I often hear ‘thank heavens that year is over things will now get better!’ putting some mystical relevance to this day. Our fortunes are not going to miraculously change with the change of a year number.

When we think about it, New Year Day highlights the passage of time. It marks the passing of the last 52 weeks and allows us to welcome the next 52 weeks. It is a great time to Stop, Review and Reflect.

Just how quickly did last year go? Like most of us it seemed to fly by. Indeed it seems the older we get the faster the years seem to pass. Can you remember how long school holidays seemed to last?

So, let me ask you a question. What happened in the last 52 weeks? Can you truly remember what you did last year? Take a little time to think about the four weeks of February. What happened, what did you do, what where your thoughts, what were your feelings?

Now you may think that was easy as something major happened to put the period into context for you but for the majority of us it was just another month. Choose another month and review how much you really remember. Days blur into weeks that blur into months and suddenly a year. Life is busy doing stuff and we don’t give ourselves time to reflect.

No we certainly don’t want to live in the past opening up all the sores of yesterday but let’s learn from those experiences to build a better future.

With the passing of each year let’s aim to build on the experience you have gained in the last and previous years. To look forward to taking your understandings from say the last thirty years into your thirty first year. Now that has value.

There is an old adage that goes something like this. ’When we spend our money we can always make some more but when we spend our time it’s gone for ever. So invest your time carefully.’

In my book, The Levels: Can your Business Step Up to the Growth Challenge? I discuss the difference between experience and understanding. Here’s a short abridged extract that gives a little background.

The Levels model will make you more aware of what has happened or is happening in your business right now. Your role is to constantly review your experience to date.

After each of the following chapters, my challenge to you is to Stop, Reflect and Review. Write down your experiences so far, how the topic covered in the chapter relates to your business and what steps you can take to make a change.

So, step 1 is to learn how to review and becoming aware that you may need to change the way you do things if you want to move forward and grow.

When you take a good look at your experience to date you may be in for a surprise. Maybe the CV says 10, 20, 30 or 40 years’ experience in a particular field. Interestingly, what we think of as 40 years’ experience gained in the cut and thrust of business can actually be only 5 years’ experience that has been repeated over and over again. It just gets photocopied in each successive year.

By truly understanding your experience and how you have arrived at where you are now, you will become aware of many more opportunities that you will be able to exploit in the near future.

The next step is then passing on that understanding to your team so that you can really take control and maximise the opportunities.

Let’s make the New Year a time to understand, to leverage our experience to impact the future. Start to review regularly. Make it at the end of each week. Write it down, not just a diary of events but what you were thinking and feeling. Seek to understand what has gone on. Re-read your weekly reviews every quarter, take the learnings and seek to understand. At the Year End you have gained a wealth of understanding to invest into the future.

Enjoy reviewing, it’s a powerful tool.

jinteractive No Comments

The UK SME Market: The Levels

In the UK there are around 4.5 million enterprises that are defined as SME by ONS. Interestingly 75% or 3.3 million of these enterprises do not employ staff. They are sole traders who should be considered more as self-employed jobs and therefore should be excluded from the numbers.

Based on the EU employee definitions of the remaining 1.2 million businesses:

  • 83% (968,000) employ under 10 and are classed as micro enterprises
  • 15% (172,000) employ more than 10 and less than 49 employees and are classed as small enterprises
  • Only 2% (26,000) employ more than 50 and less than 250 employees and are classes as medium sized enterprises.

(Source B.I.S Survey 2010)

The demands of these three segments are completely different and the complexity of transitioning from micro to small and small to medium brings totally different issues.

Let’s have a quick look at how businesses in each of these segments can behave.

Level 1 – The Power Boat Phase

Micro businesses behave like a power boat. They are nippy and manoeuvrable. Flexibility is their advantage beating other boats to the action. They are quick to react to the conditions as they are very close to the sea. They can see things coming but have to constantly focus on the moment.

To ensure the other power boats (competition) don’t steal a march on them the skipper (business owner) is constantly on the lookout for the next job and keeping in front of the game. If the skipper (business owner) takes their hands off the controls for a moment disaster can ensue.

The ride is always very bumpy but exhilarating.

The skipper fixes the engine, maintains the boat, makes sure they have the right crew and gets stuck in when they arrive at the next job.

With never enough time to properly maintain and improve the boat means the boat and the small crew taking such a prolonged pounding the speed may be slowed to make it a more comfortable ride. This results in them being beaten to the jobs by other new boats in the area.

However the main problem is that in choppy or stormy conditions they can easily be sunk- losing everything.

Level 2 – The Fishing Boat Phase

Small businesses behave more like a Fishing Boat, the sort that battle the storms of the North Sea. It’s built to weather the conditions but it relies on the skill and knowledge of the skipper to keep it safe. From his experience the skipper knows where the fish are most likely to be and keeps an eye on the weather.

The skipper doesn’t have to get stuck in hauling the nets or sorting and storing the catch. Oh no! The crew just get on with that.

So what does the skipper do all day?

The skipper works long, hard hours to ensure the boat and crew are safe as well as finding the catch to feed all on the boat.

The boat is built strong enough to face most conditions but will often have to limp back to port to face long and expensive repairs. Past profits are pumped into the boat just to keep it afloat. If its condition is not kept up to scratch then the stormy seas will claim it.

The boat can easily become top heavy (too many overheads) and capsize.

Without the skipper the boat would drift and eventually flounder.

The skipper works from their gut backed by their experience. What they do can’t be easily taught and so it is difficult to hand over to the next skipper. Indeed it needs years and years of hard graft to develop the next skipper.

Level 3 – The Cruise Liner Stage

Medium sized businesses behave more like a Cruise Liner. The captain spends some of his time on the bridge but he doesn’t have to be there all the time. There are competent crew who can man the bridge whilst the captain is spending time with the passengers (customers) and crew (team) ensuring smooth passage for all on board.

How would the crew feel if the captain spent all his time down in the bowels of the ship in the boiler room keeping the engines going? The safety of the ship is the responsibility of the captain so they need to be kept abreast of all the relevant information to make informed decisions.

On board the communications crew (accounts and administration) who are constantly check the depth of water under the ship and that the ship is on course. The wireless section (Marketing) are monitoring what is going on around the ship and getting all the weather updates. Radar (KPIs) is looking out forward to avoid the icebergs so that the captain can be secure in keeping the course and speed. The Purser department (Customer Relationship and Marketing) ensure the passengers are happy and informed with what’s going on. The Entertainment Department (Sales Team) are down in the bar or in the Jacuzzi schmoozing the passengers!

Only joking unless it’s after 3 pm of course!!

The Liner is large enough and built with stabilisers to face large swells with ease and can also survive major storms relatively untouched.

It’s much easier to replace the captain than it is the skipper in small boats. The boat continues on its chartered course with all the crew knowing where they are headed and their role and responsibilities in reaching the planned destination.

The captain does not have to be the business owner. The business owner has the freedom to be onshore if they so desire. The owner knows the condition of the ship, it’s crew and passengers at all times. They know where it is headed and whether it is on course. The owner however has the freedom to be onshore knowing his ship is in good hands.

jinteractive No Comments

All Star Team

Have you ever wondered what differentiates a winning team from a team that has great potential but never quite makes it?

In sport this is often quite clear. Consider the team of all stars, full of talent, who don’t play together as a cohesive team and are beaten by a team of less talented players who pull together and produce a performance above their perceived skill level. Take a moment and I’m sure you will come up with many examples from Rugby, Football, Cricket etc …

It’s the difference between an All Star Team and a Team of All Stars. The members of an All Star Team work for each other to achieve a common goal, subjugating their own egos to achieve the team goal, whereas, a Team of All Stars play as individuals for their own goals and aim to massage their own egos.

As a business develops through the levels (see separate article) from a micro enterprise (up to 10 employees) to a small business (up to 50 employees) the pressure to succeed and grow can create a Team of All Stars. Often a talented individual (the business owner) works hard and excels in many roles. However, as the business starts to transition to a medium sized business (50 employees plus) the pressure on the talented individual becomes too much. To truly unlock the potential of the business, the future must be based on building an All Star Team that work together.

There are many things that differentiate an All Star Team from a Team of All Stars.

In this first of a series on building an All Star Team we will look at two of the main foundations that differentiates an All Star Team from a Team of All Stars

  • A strong leader that enrolls and inspires their team to achieve a common vision.

The leader has a clear vision and attracts talented individuals who want to help them on their journey. Each team member may have a different compelling reason (their why) for wanting to help and they are prepared to emotionally commit to the team success.

All Star Teams work tirelessly towards achieving the team goals. They truly commit to the outcome and are prepared to be held accountable for achieving results and being responsible for their actions.

All Star Team members continuously develop themselves and others. They attract the best talent that is available at the organisation’s salary levels.

All Star Team members are prepared to give and receive open and honest feedback.

  • An All Star Team must be underpinned by common values that build trust between all the team members.

Interestingly, we assume that our definition of a word, especially a well-used word like Trust is the same for everyone.

But what’s our basis of Trust?

How do we know that we trust someone?

Let me explain, we all have our own rules about how we view our world and we put all our interaction with people through this ‘rule filter’ to get our perception of reality. We assume that when we are talking about trust to others we are all viewing it through the same rule filter. But is the case?

As our rules are built up by a combination of our past experiences, family and societies influences, to name but a few, so is it any wonder that we find it so difficult to define a simple word like trust that everyone can agree with.

We find everyone is coming from a different starting place, a different set of values.

In the business world, this can have massive repercussions.

Imagine being in a situation where the success of a project is dependent on team members doing what their said they we going to do but you just know that some never deliver.

You just don’t trust them.

What’s going to happen to that project?

So an All Star Teams have common values. These are clearly defined and written down, they are not assumed. The values underpin every action and decision. Issues are openly discussed and resolved to strengthen the team.

Team members are recruited on values first and skills second. Skills can be developed but if the values are not aligned then trust will be quickly undermined and an All Star Team will be transformed into a Team of All Stars.

The successful transition from a Team of All Stars to an All Star Team is one of the hardest steps in business. In deed many of the team may be loyal employees who have been with the company from day one.

Unfortunately, it also maybe these individuals that are not aligned to the company future and are holding the company back.

Often loyalty is also a core value of the business and therefore the creation of an All Star Team in these circumstances can lead to a conflict of values.

This in turn stifles open and honest communication. The door is open for the ‘Pink Elephant’ (see article)

I will discuss conflict of values and the results impact on results in a future article.

jinteractive No Comments

Do You Have the Right Team?

A business is only as good as the team members that work within it.

So often, we hear the Business Owner saying…

“Everything would be fine if the team that work for me did as they were supposed to.”

But, the real questions that follow are:

  • Who recruited the team?
  • What process was used to determine the right people to recruit?
  • Who is responsible for getting the Team to do what they’re supposed to?
  • What is the reason that they’re not doing what they’re supposed to?

Unfortunately, as the Business Owner, you have to accept responsibility for the team you have. But what makes a successful team? We often use the phrase – are all our team ‘on the bus?’ So what determines whether they are ‘on the bus?’

There are two aspects to consider; does the team member get results or not and do they have the values or not? Jack Welch, Ex CEO of GE, had a neat way of charting people within his organisation:

andys-team-on-board-article1

Consider your team at present and how they fit into the matrix.

If they have the values and get results, then the course of action is crystal clear. Look after these people. They are great team members and should be developed, promoted, rewarded and generally encouraged within the business.

It is equally easy to understand that if they don’t have the values and don’t get results they should be exited from the business immediately.

The next category, have the values but don’t get results require some attention. Basically they need to be developed, trained, helped to perform where they are. If this doesn’t work then they may be repositioned within the business to an area where they can get results. If this still doesn’t work then they will have to be delicately exited from the business and helped in their pursuit for alternative employment.

The last category is the most difficult to come terms with. These are the people who get results but don’t have the values. Often we find business owners scared to deal with them as they bring in the most business, so feel that the normal business rules don’t apply to them. They feel that they’re above all of that and can get away with murder.

The only way to deal with this group of people is to exit them from the business (at our convenience) as they are like the one rotten apple in the business that will turn the others bad. This is quite frightening for some as they worry how they will replace the income of business. The most important thing here is that it needs to be dealt with sooner rather than later as leaving the situation or failing to deal with it will just result in a much larger problem later down the line.

jinteractive No Comments

Family Succession- Timing

We are often asked to resolve succession issues within multi generational family business. In many ways issues that exist with family businesses can also appear within long established professional firms.

There are often many complicated inter related issues that causes problems at this critical time in the long-term success of the business or partnership.

We have found over the years that these issues can be summarized under one of four areas.

  • Communication
  • History
  • Boundaries
  • Timing

In this fourth and last article in the series the question of timing is put in the spotlight. This probably is the one issue that causes the largest amount of stress.

When is the right time?
Leave it too long and the next generation can become de-motivated and frustrated.
Or make the transition too early and the company can be put under pressure that may even put its very survival into question.

So, timing is critical but there can be no hard and fast rules. Its certainly not a time for abdication. It must ultimately be down to judgment. However, succession should be a process and not an event. So as with most things it needs careful planning and communicating the plan to all the stakeholders involved.

The fear that the successor is not yet ready and needs to gain experience can lead to delaying so long that the next generation has to wait for their turn they then block the following generation, the Prince Charles conundrum. Indeed, how can someone gain your experience without doing the hard yards. This mindset can put the successor in a no win situation. I have been told “They are not ready they still need to ripen,” but this thinking can just lead to them just becoming old, wrinkled and sour!

Interestingly what we think as forty years experience gained in the cut and thrust of business can actually be one to five years experience that is just repeated over and over again. It’s often our experience that becomes the boundaries of our thinking. Thinking outside of the preverbal box is really thinking beyond our experience.

Until we can truly understand our experience, how and why we make a decision or take an action, we are destined to remain in harness. It makes us indispensable, needed. Maybe just what we want!

Surely, the most important part of creating an enduring legacy is to pass on our understanding not just our knowledge. Knowledge without understanding is worthless.

There are many questions we need to ask both ourselves. Here are a few.

• How can I get to the position where the business is not reliant on one person?
Consider making the business ready for sale, so that the business runs without me and is an investment not just a job. Otherwise, you may be passing on the Poison Chalice (see separate article). Readying a business for sale is normally a three year project- minimum. As already mentioned, succession is a process not an event we need to plan. As this is so important I thought I would mention it again!

• Why am I really staying on?
Is it really I just want something to do and hate the thought of retiring. Or could it be that the business is truly dependent on me. Check to make sure that the reasons are true.

• Who is the best person to take over?
In reality may not be someone in the family. Often these decisions are based of emotional not fact. The incumbent may not be the best person to decide. Once again it may need the opinion of an external independent advisor to help with selection.

In most cases we have found that it’s the incumbent that is not ready to leave rather than the successor not being ready to take over.

Many years ago, someone wise said to me “Time maketh the man” which is really about giving someone the opportunity to step up to show they are the person for the job. First they have to be prepared to step up. It’s not easy and there are no excuses. They may need a safe environment, with tight boundaries, so they can spread their wings and learn to fly. At the point of flying they must be left to step out of the nest, we can’t protect them. Yes, they may need help, guidance, mentoring or coaching but surely it is never too early to be investing in the future. This should all be included in the plan, the process.

In 1988, Jeffrey Sonnenfeld in his book The Hero’s Farewell, identified four attitudes that prevail at the time of succession. We certainly see these traits over and over again

Monarchs
Do not leave office until they are decisively forced out through death or an internal coup. Normally there is no plan for succession and in the end the incumbent can get out of touch and even put the business at risk. The successor has an uphill struggle.

Generals
Are forced out of office, but plot their return. They quickly come back out of recruitment to save the company. Sometimes there is a plan for succession but there is no commitment behind the plan and key areas of understanding are not passed on. The successor is set up to fail.

Governors
Rule for limited term of office, retire and switch to other interests. Everyone working to a fixed date can work well as long as succession is planned. Care needs be taken to ensure there is no abdication which can result in not passing on understanding. The successor has a clean break and can work to fixed time scales.

Ambassadors
Leave office gracefully and frequently and serve as post- retirement mentors. Definitely a succession plan and it’s a process not an event to pass on the understanding so the successor has the best chance of success.

Which one will you be?

jinteractive No Comments

Family Business – Who Can You Trust?

In the UK two out of three small and medium enterprises (SME) are family businesses with many being multi-generation of the founding family.

In the early days of a growing business, it is normal for the business owner to be involved in the recruitment process. They personally select every member of staff from top to bottom. This has the distinct advantage that there is a consistency in the type of employee recruited.

Without necessarily knowing it, the business owner is choosing employees that they like, that they feel they will be able to work with, people that they feel they can trust. People naturally like people who are like themselves and this intuitive approach probably selects employees with a common set of values. There is a great spirit in the business with motivated employees wanting to help build the business.

It is natural for the founder to recruit family members to be the first employees. The business owner believes that they can trust family members as they feel that they all have the same values. As the business continues to grow it may be expedient to recruit more family members due to time pressures or a feeling of loyalty. It just feels comfortable to employ people they know and why not family?

Certainly, this is often true of the founder’s children but is it always the case for other family members? Often this family trust belief can extend beyond the immediate blood family to include in-laws, cousins etc.

These first employees go on to have senior roles within the business based on their perceived loyalty rather than ability. In the worst cases, family members can take precedence over non-family employees despite a lack of skills, education or ability to do the job.

Even when the business owner knows a family member is not aligned with the business, the issues are often ignored so as to not upset the family. In due course, this leads to a resistance to change creating a comfort bubble to protect the incumbent family members.

As in so many areas the ideas and habits needed in the early days of building a successful business become outmoded and can start to hinder the businesses long-term future. In the area of recruitment these habits can be particularly damaging for the long-term health of the business.

Perhaps, the business owner is still doing all the hiring and the firing or has handed over some of the responsibility to their senior team as it is assumed that they all have the same standards. But this assumption may not be correct. Indeed, to protect their own egos the incumbent management may not be prepared to take on talented people who have greater knowledge or skills than the interviewer.

Therefore, recruitment of talented people to help the business transition to the next level becomes an issue. When joining the company it quickly becomes obvious that they will always be viewed as outsiders and they may be mistrusted with little chance of career or personal development. This leads to demotivated employees which undermines the business and forms a cultural cancer that becomes hard to remove.

However, for the business to continue to grow and attract the right talented people for the future described above the ethos and ethics i.e. the culture must be developed and written down so that all employee’s behavior is driven by a set of common values.

The foundation on building any team is trust and trust is underpinned by this set of common values.

So one of the first tasks when considering bringing in fresh talent is to clearly identify and write down the current culture of the business. It can then be identified that all new employees are aligned with the culture of the business.

This is not as easy as it sounds. It must not be rushed or taken lightly or even abdicated to someone else.

Get it right and it will be the solid foundations on which to build the future.

Often when this is completed the founder may find that the underlying culture of the business is actually not aligned with his or her own core values. It may be that some of the current employees and this may include members of the family, are not aligned with these values.

For the long term health of the business this is an issue that needs to be tackled. Tread with care; the outcome will be well worth the angst.

jinteractive No Comments

Family Succession- Boundaries

We are often asked to resolve succession issues within multi generational family business. In many ways issues that exist with family businesses can also appear within long established professional firms.

There are often many complicated inter related issues that causes problems at this critical time in the long-term success of the business or partnership.

We have found over the years that these issues can be summarized under one of four areas.

  • Communication
  • History
  • Boundaries
  • Timing

In this the third of the series we will briefly look at how lack of defined Boundaries can impact on Family Business Succession.

The relationships within a first generation business can be relatively simple. However as the business is passed on to future generations the relationships and the vested interests can become more entrenched and more complex with the passing of years. As it is not a problem the founding generation do not put time aside to consider the businesses future or perhaps do not even want to think about it. The rules for the ongoing ownership and management succession are not considered and so it is left to chance and abdicated to future generations to resolve.

Later, where there are no guidelines, the perceived wishes and principals of the founding generations can become misinterpreted. As the value of the business increases there may come a point where this misinterpretation can become intentional.

As the size of the family grows through marriage, relationships etc the number of stakeholders becomes larger and more diverse then the likelihood of emotional and personality issues influencing what should be commercial decisions becomes greater and greater. The boundary between family and business become blurred. With no guidelines and boundaries in place these pressures can undermine the business success and the wider family wealth.

It is understandable that with the main focus of those family members involved in the day to day management of the business it is easy to ignore the future structure and constitution of the family business. Leave it to another day or not even want to consider the implications of the legacy – The Pink Elephant is waiting to enter the room! This omission can have far reaching implications.

Calling a meeting of all the family stakeholders to draw up a Family Plan and Constitution which sets out the purpose of the business and the rules around future ownership participation and management succession sets those clear boundaries so that future generations can benchmark their decisions and actions.

Without a clear Family Plan and Constitution we are allowing that Pink Elephant in the Room (see other articles in this series). Due to the complexity of relationships the family may need an external advisor to bring clarity and impartiality to what can be defining documents that can impact future generations.

To read the next article in this series click here.

jinteractive No Comments

Family Succession- History

We are often asked to resolve succession issues within multi generational family business. In many ways issues that exist with family businesses can also appear within long established professional firms.

There are often many complicated interrelated issues that causes problems at this critical time in the long-term success of the business or partnership.

We have found over the years that these issues can be summarized under one of four areas.

  • Communication
  • History
  • Boundaries
  • Timing

In this the second of the series we will briefly look at how history can impact on Family Business Succession.

The story behind how a business starts is often fascinating. There are many reasons, from no one would employ the founder, to the founder having a clear shining vision of the future (perhaps with even starting a business dynasty).

  • Interestingly, like all things in life, it is how we look back on the history, that our experience is really important. Indeed, in our role as advisors we are often chided that as the owners have forty years experience what can we add? However, is that forty years experience or is it the first five years that just gets photocopied every year?
  • Either the past is polished or tarnished based on the experiences over the important initial growth stages. The real skill, surely, is to learn from our mistakes and to pass on that understanding. Not for the next generation to have to make the same mistakes. ‘They are not ready to take on running the business yet they still need to ripen!’
  • Often we try to protect our children from the mistakes of the past in the mistaken view that is their role in the business. Family and business boundaries become blurred (separate article on Boundaries to follow). Actually by not recognising the maturity within the next generation we are stifling their development. When considering these issues timing is so important, a topic that is also the subject of a separate article.
  • Sometimes when there is a breakdown in family relations the positions become so entrenched that there is no going back. Particularly with sibling rivalry and between more extended members of the family, cousins etc. This needs to be resolved as its commercial impact on the business and family is potentially huge. (See ‘The Pink Elephant’). Sometimes the basis of the breakdown is a misunderstanding that has just been allowed to fester.

When we view family history we have to be aware of the paradigm (internal filter) we see the past through. Our perception of reality is seen through our own internal filter. Often two people looking at the same actions and behaviours will come to two totally different versions of reality. It’s difficult to communicate clearly if we are seeing them differently. There needs to be a consensus by all involved that the past will be consigned to the past, take the understanding and allow the business to move on to a bright and better future.

Once again we come back to that ‘Pink Elephant in the Room’. The individual members of the family may need an external advisor to be able to change the filter.

To read the next article in this series click here.