Monday, May 25, 2015

The Top 10 Ways Not to Lead

Today we have a guest blog from Lauren Owen:

This month I’d like to present my own lighthearted take on leadership improvement, specifically the Top 10 Ways Not to Lead. (I also want to thank my wonderful clients, who are genuinely dedicated to improving their own leadership abilities and are continually setting examples of great leadership.)

Click HERE to read the Top 10 Ways Not to Lead:

Lauren believes in making a difference in her clients’ lives. She does this by helping them identify their personal and organizational WHY and shows them how to share that with their teams and their customers.  She identifies their areas of development as a leader so that they can focus on making changes that will make the biggest and quickest impact. As a result, their teams, organizations and personal lives are all transformed for the better. 

Lauren is a certified WHY coach and a Stakeholder Centered Executive Coach.

Monday, May 18, 2015

Why are more and more people in business talking about vulnerability?

Please follow me.  I am watching the Seahawks finish off the Panthers.  One of the announcers says that Wilson, the Seahawk quarterback, visions the game before it ever happens and then manifests it.  Following the psychology of sports, I was not surprised to hear terms like “vision” and “manifest” spouted by commentators of today.  The other eight people in the room were surprised and commented on it. 

Soon, I began hearing other words about the vulnerability and trust developed for the level of teamwork achieved.  Now, I have to admit, unless you watched Oprah, then I imagine you haven’t heard the word vulnerability bandied about too often in a rough contact sport like football or in male dominated business meetings. 

Yet, there it was.  So, what is vulnerability?  I’ll give you my definition… pure and simple it is risking something or being at risk.  Applied to business groups, I believe it means placing oneself in a position where others may potentially have power over us. 

Patrick Lencioni in the 5 Dysfunctions of a Team starts from the position that many of us feel a need for safety and we equate this to invulnerability.  So, feeling vulnerable is not something we do very lightly. 

Risking is a first step to producing trust and trust is one of the foundations of creating a highly effective team.  So, what is it that needs to be risked?  That actually depends on each person.  Here are a few questions to ask yourself, or others and which, if answered honestly and with self-awareness would show vulnerability, risk: 
  •  What is it that if I revealed it, I would feel that I looked less than good?
  •  If my team new something about me, what do I believe would undermine my authority?
  • Why don’t people like to work with me?
  • What is my weakest skill and how do I shore up that lack of skill?

First, if you can truly answer these questions, even to yourself, you are a person worth getting to know.  Second, most of us can’t? 
  •  "There is no 'I' in TEAM" ~ Anonymous
  • "A single arrow is easily broken, but not ten in a bundle" ~ Japanese proverb
  • "A boat doesn’t go forward if each one is rowing their own way" ~ Swahili proverb
  • "Coming together is a beginning. Keeping together is progress. Working together is success" ~ Henry Ford
  • "One man can be a crucial ingredient on a team, but one man cannot make a team" ~ Kareem Abdul Jabbar
  • "A group becomes a team when each member is sure enough of himself and his contribution to praise the skill of the others" ~ Norman Hidle
  • "You don't get harmony when everybody sings the same note" ~ Doug Floyd

“Remember teamwork begins by building trust. And the only way to do that is to overcome our need for invulnerability.” Patrick Lencioni

So, what would you risk in order to create trust?  What is it that you do that makes creating  trust more difficult? What actions do you take to create trust? 

Monday, May 11, 2015

Quantifying Your Value Proposition

Today we have a guest blog from David Lightfoot:

Much is made of financial metrics. This is good but often the simplest metrics are the best.  Gross Margin is one of the best. Gross Margin is the difference between the business’s revenue and cost of sales. Cost of Sales is the cost of providing goods or services to your customers but not including any costs of overhead.

The right way to calculate Gross Margin in a service business is to include the cost of labor of all people who provide direct client/customer service within Cost of Sales.  And that labor cost needs to be fully burdened including taxes, benefits and paid time off (PTO). To use the manufacturing term, that’s called Direct Labor.

Indirect Labor goes in Overhead. Indirect Labor includes managers, supervision and support staff. Often, some people do some work that is directly billable to clients and some work that is supervision or management. In this case, the labor costs need to be allocated between Cost of Sales and Overhead.

For most professional service companies, Direct Labor (unburdened) needs to be charged to clients at 2.5X to 3.0X. For example, if a staff person is paid $50 per hour, they would typically be charged to the client at $125 to $150 per hour. Looked at another way, Gross Margin in a professional service business should be about 50%. That’s Revenue less Direct Labor including burden.

Gross Margin of 50% sounds great but remember overhead and profit need to come out of that 50% margin, leaving (hopefully) some Net Margin.

Businesses selling goods rather than services will have significantly different gross margins. I’ve seen 30% typically for contracting and 90% or more for software. Whatever the business, gross margin, properly calculated, is usually one of the Key Performance Indicators (KPIs).

There are a number of things that are significant about making an accurate Gross Margin calculation. First and foremost, this is the purest measure of the value proposition of a business. It measures what customers will pay for the business’s goods or services against what it costs for the business to provide those goods or services. It is the quantification of your value proposition.

Why is all of this important? It helps with understanding the cost behaviors of the business. This allows one to calculate breakeven, figure out how to be more profitable and whether the business has a viable model.

Do you know what your gross margin is?

David Lightfoot
David Lightfoot has over 35 years of accounting, finance and operational experience as Controller, Chief Financial Officer or Vice President of Finance for small and medium-sized businesses. He also has operations experience and has worked as a CEO, giving him a broad business perspective.

      Mr. Lightfoot is currently a Partner with B2B CFO, the world’s largest provider of CFO services. David’s clients range from start-ups to $50M in annual revenue. He specializes in professional services, real estate/construction, software and healthcare.

Monday, May 4, 2015

Can Companies with fewer than 500 employees do effective training and should they?

Universally, companies with fewer that 500 employees are pretty poor at training employees.  The reasons for this are understandable and many, starting with flat organizations, populated by doers and a mindset that people are hired to add value. 

The reasons that training becomes more important to a company as it grows from 15 to 50 10 120 employees are just as universal: employees stop providing as much value if they are not challenged and developed; self-learners are extremely rare; companies whose employees, processes and systems don’t improve get stuck/complacent at points in their growth. 

So, what’s a CEO/Company to do?  Here are a few options that reduce risk, improve sustainable growth and provide size appropriate focus to the training that is needed:  Recognize training is important and that training is something you model; not what your company can train and what training it may not be able to provide. 

If you are an executive or business owner without a coach, then you don’t yet recognize that training is important or that it is something you model.  I know of no professional athlete who is without a trainer/coach.  Maybe they know something you don’t know?  If you are getting coaching ask yourself how much you are communicating its value to your team/employees?  Do you have goals for the coaching you receive and do you share those goals/KPI’s?  Do you include your key reports in the coaching process? 

As to training others… I have found that in most companies of the 15 and 50 employee size, that they are best at technical training, next best at operational training and usually weakest in training leadership, management and supervisory skills (soft skills:  communication, professional improvement, etc.).  These are important roles/skills and tools.  They should be a part of employees professional improvement plan and there should be some budget attached to the training involved. 

Back to the technical training…. If you make something, provide a service or distribute something, the knowledge base and tools to do it and do it better are likely to be within your and your employees wheelhouse.  Meaning that you have best practices, skills and tools that can be taught.  The companies that do this the best focus on three aspects of training: the provide training in very narrow areas and cross train; they train people to train and make the training a constant part of employee’s jobs. 

So, what works in your company?  How did you initiate training?  How did you make sure that training was a part of what everyone does?