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Solomon CFO Solutions Blog

Dec
14
Local Owners Discuss Employee Engagement

According to a Gallup survey, 70% of U.S. workers are actively disengaged in their work and are not reaching their full potential. Gallup estimates that active disengagement costs the U.S $450 billion to $550 billion per year in lost productivity.

Recently, the Tri-State Manufacturers Alliance hosted an event to discuss employee engagement with four of the region’s successful employers discussing how they work to better engage their employees.  The presenters were Norm Bafunno, Toyota; Zach Bawel, Jasper Engines; Brandon Willis, Uniseal; and Matthew Nix, Nix Companies.  These employers range in size from 33 to over 5,000.  There were numerous activities taken by each company that met their specific culture.

For employee recognition, Matthew Nix stated that his team has a weekly safety meeting for all employees and the managers praise those who had an accomplishment the prior week.  The management team at Uniseal sends handwritten notes of congratulation to the employee’s home so the family can see what has been accomplished. 

Each company President discussed the importance of communicating with employees.  Brandon Willis stated, “We communicate daily with our employees and email is the last resort. Face first and phone second. This allows the team to get to know the leader.”  Norm Bafunno commented, “The leaders meet with small groups without an agenda. This allows employees to raise issues directly with leaders. Then we have to tackle issues head on, quickly and face-to-face.”  Matthew Nix added, “Communication must be intentional. We have to be able to discuss issues openly and quickly.”

Jasper Engines has a specific process for engaging new associates. Their Buds program assigns each new associate to a buddy who is not their supervisor.  They meet daily for the first two weeks and then weekly the following two weeks.  The Buds discuss family life, learn about continuous improvement as well as learn the Jasper Culture. “As a result of our continuous improvement program, over 17,000 ideas have been put forth with over 85% implemented in some fashion,” Zach Bawel stated.

There were numerous other ideas such as having fun outside work, gonging the bell for new sales, using cross functional teams to break down departmental barriers and so much more.

As Zach Bawel closed, “Don’t shoot for perfect ideas. Do something. If the first program doesn’t work, keep on trying.”  If, as an entrepreneur you want to have a productive, fun place to work, improve the engagement of your employees. 

I am a contributing writer to the Evansville Business Journal. This article was recently published.

Nov
14
Four Keys to Improving Cash Flow

Positive cash flow is the lifeblood of every business.  Without it, a business will fail. Is your business struggling with cash flow?  If so, let’s discuss some potential solutions.

First, take a proactive approach to cash management.  Take time to understand the cash cycle and why cash is insufficient to meet current needs.  While business owners frequently create annual budgets or sales forecasts, many fail to prepare a cash flow forecast.  Consider creating daily or weekly flash reports to measure the pulse of the business.

Second, improve operational processes to reduce time and expenses. One local owner shared that when the economy turned down in 2009, he easily cut overhead by 15%.  He wondered why he hadn’t done that in the past and now evaluates his overhead costs every year.

Third, recognize that the business needs to focus on generating cash, not just sales.  If inventory isn’t selling, get rid of it.  Cash today is far more important than cash in six months or a year. How long do customers take to pay?  Can you get a deposit or prepayment with each order for slow paying customers or long cycle projects?  One local company had a customer with over 200 locations. Each location paid its own bill and many were 60 or more days delinquent.  When the time for contract renewal came, in lieu of a price increase the customer agreed to pay by credit card on the 25th day each month.  The increase in cash was immediate and the accounting staff had time to focus on more productive activities.

Fourth, evaluate the company’s pricing strategy.  How does it compare with the competition in the marketplace? Are there products where the company can implement “dynamic pricing” where prices change frequently with changes in supply and demand? The airline industry has been using this strategy for years. Have you evaluated the profitability of your major customers to see if changes need to be made? Some businesses evaluate their customers by both gross margins as well as difficulty to do business with. The more challenging customers are charged a premium since it takes more staff time to manage the relationship.

Cash flow is critical to the success of any business. Once these steps are taken, the owner will know the pulse of the cash flow and be equipped to take proactive steps towards improvement. 

Aug
23
Dying a Slow Death by Meetings?

According to a survey prepared by Salary.com, employees admit to squandering away nearly 25% of available working time with web-based social media and surfing, boring meetings, socializing, and ‘spacing out.’  If, as leaders in our organizations we can find ways to cut the typical employee’s wasted time in half as well as our own, what kind of impact would it have on the business in terms of productivity, competitiveness and job satisfaction?

One of the leading causes of wasted time, confusion, and poor execution is with long, unproductive or inappropriate meetings. Here are some thoughts to make meetings more productive.

First, are there meetings you or some of your staff don’t really need to attend?  The primary reason for attending unnecessary meetings is a leader’s unwillingness or inability to release responsibility and control to qualified staff members.  To determine the appropriateness ask, “Why do I have to be in this meeting?”  “Why is that important?” Ask this one 5 times.  Then determine to stop attending unnecessary meetings.

Secondly, are the meetings properly planned and conducted?  If not, be sure before scheduling any meeting to be clear on its purpose by communicating specific objectives for the gathering. Also set a specific amount of time for the meeting and begin and start on time. Assign roles and responsibilities such as time keeper, minutes taker, etc.

Finally, be sure to never leave a meeting without first communicating an action summary that lists ideas generated, all follow-up responsibilities, and subsequent meeting plans. 

One great resource worth reading and using is Patrick Lencioni’s book, Death by Meeting.  In his book he recommends four meeting types.  A Daily Check-In lasting five to ten minutes to review administrative issues.  A Weekly Staff meeting lasting 45 to 90 minutes to discuss tactical issues.  Adhoc Topical meetings which may last two to four hours covering strategic issues. And Quarterly Off-Site Reviews lasting one to two days to focus on the big picture developmental issues facing the business. By scheduling, planning and conducting meetings properly, leaders and staff can be better prepared helping meetings become far more productive.

If you want to get more time in you and your staff’s day, evaluate the impact and time spent in meetings. Then take action to improve the process to gain better productivity, competitiveness and job satisfaction.  

I am a contributing author to the Evansville Business Journal.  This article was recently published.

Jul
24
Improve your business using Key Performance Indicators

Improving a business is difficult. An owner may want to improve the business by increasing sales, increasing customer satisfaction, producing products faster, reducing production costs, improving product quality, or any number of areas.  One component of process improvement is measurement using Key Performance Indicators, or KPIs.

While there are hundreds of KPIs that can be created, focus on a few for each area of the business for effective management. KPIs can be measured over different time periods, such as daily, weekly or monthly.  KPIs are also either backward looking reporting actual results or are forward looking helping predict future results. Examples of KPIs to impact sales are daily sales orders, sales dollars per employee, backlog, average sales per order, and customer retention rate. To improve productivity consider weekly production per hour worked, percent of billable time over total time, on-time completion percent, or reportable incidents per 1,000 hours. For human resources evaluate turnover and absenteeism rates.  Use return on assets and gross profit percentages to evaluate company results.

The first step to implementing an effective KPI is to analyze each particular area of the business to determine which processes need improving. The KPI should provide insight into the process and help meet strategic plans and goals. 

Secondly, set targets for each KPI to move the business towards it goals. Like any goal, these should stretch the business or department but be attainable.

Third, create a reporting structure so results can be easily measured. Results for each reporting period should be shared as soon as possible after each period, such as reporting daily results each day. In addition, create visual reports or dashboards so everyone can tell at a glance the progress being made.  Use graphs and charts to showing current performance, past performance, and the target.

Finally, develop different rewards for team and company success. Rewards can be as simple as having treats for hitting weekly sales or shipment targets, quarterly employee lunches for exceeding safety goals, or more complex like an individual sales bonus tied to increasing sales and gross profit dollars. 

Noted leadership trainer John E. Jones said: “What gets measured gets done. What gets measured and fed back gets done well. What gets rewarded gets repeated.”  Improve your results by implementing a system to measure KPIs, keep the team informed, and reward them for a job well done.  

I am a contributing author to the Evansville Business Journal. This article was recently published.

May
17
Is It Time to Prune?

I am always amazed at beautiful gardens, mostly because I do not take the time or have the patience to nurture and care for one myself. One of the most important tasks a gardener has is to prune the plants. In his book, Necessary Endings, Dr. Henry Cloud explains that gardeners intentionally cut off branches and buds for one of three primary reasons: healthy buds or branches that are not the best ones, sick branches that are not going to get well, and dead branches that are taking up space the healthy branches need.

The same is true in business as it relates to employees, product lines or business units.  Jack Welch, former CEO of General Electric, expected each year the employees ranked in the bottom 10 percent of performers should be fired.  Dr. Cloud notes that in this group of 10 percent are good ones, not-getting-well ones, and deadwood.  Handling each takes a different approach.

Before pruning, the owner must do a rigorous evaluation of the company and its people.  Does everyone know where the owner wants to take the company? How does each role support the vision and is it necessary? How does each person fulfill their assigned role? Would the individual be better suited in a different role?  Do they work well with other team members and fit the culture?

The good ones needing pruned may be in the wrong position or just not a good fit for the company. Either way, a mutually developed transition plan should be crafted and implemented. 

The not-getting-well ones should already have been through a performance improvement program for a predetermined period of time.  In this case, additional training, coaching and mentoring have not solved the problem and it’s time to prune.

For the deadwood, the time to make the change is now. In some cases, the deadwood is a cancer spreading throughout the company and the sooner the pruning is done, the quicker the business can become healthier.

To be successful at pruning employees, a business must have a good people management process. This includes objective performance based standards for each position, a disciplined hiring approach, a performance feedback system, and someone driving the process.  Providing and soliciting regular feedback to and from employees will greatly aid in identifying when pruning is needed.

Pruning is difficult but a healthy discipline for your business.

I am a contributing author to the Evansville Business Journal. This article was recently published.

Apr
11
Manage Your Time

How well do you manage your time as an entrepreneur?  In his book “The Top Nine Reasons Family Businesses Fail and The Eight Building Blocks for Creating a Sustainable Closely Held Company”, Wayne Rivers ranks the #2 reason why closely held businesses fail is due to poor self and time management.  He says, “Time is the most precious commodity anyone on this earth enjoys, and yet we blithely disregard how we use it. We genuinely don’t appreciate the fact that success in business or in life is simply the accumulation of how we use our minutes and hours on a day to day basis.”  He adds, “Management guru David Maister has research showing that most senior executives spend 40% to 50% of their time doing work that a more junior person could do.”

What impact does poor time management have on the business and the entrepreneur?  The entrepreneur can become frustrated, overworked, spending too little time with the family and becoming burned out.  The business suffers due to projects not being completed, bottlenecks in the operation, and important things left undone.

So how does an entrepreneur improve? Rivers suggest keeping a time log, in ten minute increments, for at least one week. Evaluate time by how much was spent on the unimportant and shouldn’t be done at all, could be delegated to someone else, or was just time wasted.  Then, make a plan to change things.  First, allow others to help you in the routine tasks, in other words - delegate. Not everything has to be done “my way” – just make certain the person knows what outcome is needed and has the tools to get it done. 

Secondly, don’t waste time on things that are unimportant.  Emails can be overwhelming. Look at and respond to emails only at specific times each day – as you come in, before lunch, and towards the end of the day.

Third, block off chunks of time each day to work on the priorities in the business. This means turning off the phone, twitter feed, and email so you can work uninterrupted. 

Fourth, don’t become buried in paper. Rivers states, use the “4 D’s” of paper handling:  Ditch it, Do it, Delegate It, or Delay it.

Each of us are given the exact same amount of time each day.  Managing yourself and your time will pay big dividends for you and your business.

I am contributing author to the Evansville Business Journal. This article was recently published.  

Mar
3
Begin with the End in Mind

The late Yogi Berra once said, “When you get to the fork in the road, take it.”  Entrepreneurs will likely face many forks in the road. And, it does make a difference which fork you take in spite of Yogi’s great quip.  So how does one know which road to take?  By beginning with the end in mind, according to Stephen Covey in “The 7 Habits of Highly Effective People.”

One chapter in the book describes creating a personal mission statement, the purpose of which is to help define those principles and ideals that matter most to you. Then, when the forks in the road appear, you can make decisions based upon those principles that define you.

The same concept is true for a business. Without a mission statement, the business can wander aimlessly, haphazardly reacting to the challenges it faces.  Understanding what the business stands for and why it was created in the first place will help to determine which fork to take.  It is even more important that everyone on the team understand the organization’s mission and how their role impacts the mission. Every person in a company, from the entry level position to the chief executive officer, should understand why their job matters.

The entrepreneur should be able to articulate what they expect out of their business and how they want it to end. Regardless of who we are, we shall all one day leave this earth and the business to someone else. An entrepreneur has numerous options for the business including running it for only a few years and selling it, creating the business to employ underprivileged, creating a business to pass on to children, and so on.  If partners are involved, it is even more critical to understand expectations going into the partnership and to create organizational documents that will facilitate a smooth separation. There are far too many examples of partners with different motives and expectations ending up with ugly results.

Take some time to write a personal or business mission statement.  When completed, keep it front and center in your daily life and refer to it when decisions arise. Lewis Carol is quoted as saying, “if you don’t know where you are going, any road will take you there.”  Begin with the end in mind.  

I am a contributing author to the Evansville Business Journal.  This article was recently published.  

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