Should we be panicked over the economy?

I had a manager once who always said, “Perception is reality.�?  My experience tells me this is generally true.  But is it always?

Our economy is all about money and when people consider money, some switch in the brain goes off and emotion overtakes logic.  Emotion does seem in charge these days.  The general perception of people is that we are not doing well economically.  Some seem to indicate that we are down the proverbial toilet.

Then, particularly in an election year, the politicians jump on board that emotional train.  It’s knee jerk time!  Even the President is joining in.  According to an item in today’s Wall Street Journal, President Bush is all set to unveil a relief plan for homeowners.

Without a doubt, the sub-prime mortgage mess is just that, a mess.  But shouldn’t the situation be presented with some perspective?  Shouldn’t we consider the overall picture, with, dare I say (Dare! Dare!), the facts?  According to more measured reports I have heard, most borrowers are managing to make their payments just fine.  Yes, there are foreclosures, but we need to look at how many in the overall context.

The stock market sure has been volatile lately, too, further exacerbating the general perception of economic malaise.  Looking again at today’s online Wall Street Journal, a headline states, “Strong Data Gives Stocks a Boost.�?  The article itself opens with the following:

“Stocks advanced, supported by benign economic readings and continued belief that the Fed is likely to deliver another rate cut next week.�?  (Emphasis is mine.) 

“Benign economic readings�??  According to Dictionary.com, one meaning of the word is “favorable; propitious: a series of benign omens and configurations in the heavens.�?  The American Heritage Dictionary offers additional perspectives: 

·         “Tending to exert  a beneficial influence; favorable: a policy with benign consequences for the economy.�?

·         “Having little or no detrimental effect; harmless:  a chemical additive that is environmentally benign.�?

So maybe we should take a deep breath before we panic and look more carefully.  Job creation has been excellent and fairly steady.  Unemployment rates are very low across most of the country.  The economy is still growing.  Even federal tax revenues are up significantly, reducing the national debt faster than anticipated.  And this after taxes were cut and during a time when our country is at war! 

There was a great article in the November 19th edition of Newsweek, written by George F. Will.  It is entitled “Peru and Other Menaces�? and talks about applying more reason to our view of the economy, and especially the potential actions of our government.  I highly recommend it to you.  He closes with the following:

“Presidential elections are always epidemics of economic illiteracy and hysteria, for two reasons:  The party not holding the White House has an incentive to talk gloomy nonsense, and the media, for whom the phrase “good news�? is an oxymoron (“We don’t report the planes that land safely�?), love crises.…  That can, however, be self-fulfilling:  Worried people curtail consumption, wary businesses defer investments.  Everyone should remember the witticism that the stock market has predicted nine of the last three recessions.�?

Posted in Business News | 1 Comment

The US Economy on Halloween – not as scary as you think

It’s that most scary of days and nights in our annual calendar, Halloween.  There are lots of households in my neighborhood who get into this in a big way.  I have seen lots of orange lights, fake spider webs, and simulated grave sites popping up all over the place.  I am not immune, either, as I sit here typing away while wearing skeleton earrings, my Halloween vest and glow-in-the-dark socks.

We all get to be kids today, to whatever degree we choose.  I am ready for the fairly small crowd of Trick or Treaters we get each year, with a stock of candy (in some of my favorites varieties, of course – I’m weak when it comes to candy).  I’ll have to make sure I have batteries in the camera, too.  The children and their costumes always tickle me.

However, when I look at business, it seems to me that there is more darkness and gloom and doom than is warranted.  I get regular news alerts from the Wall Street Journal.  Today, I got the following:

“Oct. 31, 2007

The U.S. economy grew at an annual rate of 3.9% in the third quarter, the fastest pace in 1 1/2 years, the Commerce Department said, as surging exports and stronger consumer spending helped counterbalance the weakening housing sector. The gross domestic product report suggests that the economy is thus far holding up well to the strains in the housing and credit markets, which had intensified during the third quarter.�?

In spite of the so-called mortgage meltdown, our US economy is holding up fairly well.  I looked at the entire article in the WSJ and found the writer to be balanced, citing both good and bad news.  However, the overall assessment was pretty decent.  Here are a couple of samples: 

 “Most economists expect growth to slow through the end of this year and into next year, as the fallout from a deteriorating housing market, higher oil prices and credit-market woes continue.  … Still, most forecasters expect the U.S. to dodge a recession.�? 

“The latest employment report from payroll firm Automatic Data Processing suggests that the government’s monthly jobs report will show a gain of some 125,000 jobs in October, a gain over previous months. And inflation appears to be contained, with the price index for consumer expenditures — excluding food and energy — rising 1.8% in the third quarter versus 1.4% in the second.â€?? 

In the State of Washington, our unemployment rate rose very slightly, to 4.2% from 3.9% if I remember correctly, but that is still so low as to be close to full employment.

So, why the general doom and gloom?  Well, in my opinion, some of it comes from the mainstream media who demonstrate two problems with the economy.  First, they work on the principal of “If it bleeds, it leads.�?  So they almost always report the bad news, or the cautious news as bad news.  Second, there are very few who understand business or economics.  Third, the reporting in the daily paper and in evening newscasts, unfortunately the primary source for too many citizens, is incredibly shallow.  It rarely delves even a fraction of an inch below the surface headline. 

The other source for gloom is simply emotion and the perception by regular folk, gleaned from what they absorb from the information swirling around them, that things aren’t great.  Not everyone takes the time to delve behind the headlines.  I can’t help but wish the media would, however.

Posted in Business News | Leave a comment

Attracting and keeping the best employees

Lots of us shoppers out there are Costco addicts.  Speaking for myself, I have to say I love the thrill of the hunt, finding something unusual and exciting at a great price.  I appreciate the more mundane benefits of shopping at Costco, too – the high quality and really good prices for stuff I need and use every day, even if I wind up buying a quantity more suited to an army than to my small family. 

 The thrill of Costco’s  “treasure-hunt technique” was described in a recent Wall Street Journal article, from an interview with Costco CEO Jim Sinegal.  It’s a great article, one I highly recommend.  What I found even more important, however, were his comments about hiring and keeping good people.  Here’s the quote:

“WSJ:  Costco offers better wages and benefits than most of its rivals.  Why is that?

Mr. Sinegal:  We think that you get what you pay for.  If you hire good people, pay them good wages and provide good jobs and careers, good things will happen in your business.  We think that’s proven true in our case.  We are the low-cost provider of merchandise, and yet we pay the highest wages.  Wouldn’t that suggest that we’re getting better productivity?”

Well, duh.

We have seen this principle used and abused among our clients.  One, who had a serious cheap streak when it came to employees, had a constant problem with turnover.  Employee morale and attitudes suffered and the results were reflected in reduced productivity and lower profits.

In contrast, another client was known for paying extremely well (almost too well, IMHO).  He demanded a lot from his employees, but gave them the tools, training, and freedom to deliver.  And they did.  They worked hard and well.  Productivity soared along with profits.  And the employees stayed!  They were an effective team and were rewarded for their hard work and loyalty.

What is your experience?  Please share your stories!

Posted in Business Insight, Featured, Management | Leave a comment

Customer Service – Anyone home?

We thoroughly enjoyed our holiday weekend.  We slept in, relaxed, and got some projects done around the house.  On Sunday, however, we decided it was time to get out of town, at least for the day.  So we hit the road.

 We stopped in a nearby town and strolled along the main drag, enjoying the shops and galleries in this tourist-focused spot.  Eventually, the delicious smells and attractive menu posted outside a bakery/coffee shop pulled us in.

The pleasant interior of the shop featured several tables, augmenting the few that were outside, and a large display showcasing those desserts I try to avoid.  (I swear they stick to my hips when I walk by and drool!  I don’t even have to eat them.)  Behind the counter were 3 young women, plenty of staff to handle the very modest late-lunch crowd, consisting of us and a family of 3.

This is when the sunny day dimmed a little.  The young women seemed to look everywhere but at the customers.  It took an inordinate amount of time for them to take the family’s order (they were ahead of us).  They also couldn’t seem to multi-task.  All three of them seemed fully involved with the family.  (Actually, 1 woman took the order while the other 2 watched.  Hellooo!  There is another customer here!)

They finally noticed us and took our order.  Dennis turned to me and asked if I wanted something to drink.  The girl behind the counter said, “Oh, you have to order beverages down there,” and pointed to her right.  We shifted in that direction (it was only a couple of feet!) and waited.  The other women behind the counter looked around and ignored us. 

 My order came up and I suggested to Dennis that I take it outside and claim the one remaining table while I could.  He agreed, said he would order drinks and join me shortly.

“Shortly” became quite a wait.  I could have finished my meal before he finally joined me. He brought two glasses of ice water he said took quite a bit of effort to get.  We ate our lunches, which were outstanding, and pondered the obvious business lesson.

Clearly, the owner of the shop was not there.  Just as clearly, the staff was completely clueless on the importance of customer service.  This shop could have done a booming business if they had their act together.  My experienced manager side was just dying to get in there and straighten things out!  I would have trained and supervised those employees and fired them if they didn’t come around.  I would have emphasized these important points:

  • The customer is not an interruption of your day, but the reason we are in business.
  • Greet people promptly, pleasantly, and look them in the eye.
  • Produce their orders efficiently and quickly.
  • When business is light, take the time to follow up with the customers.  Ask if their food is satisfactory and whether they would like anything else.  (“Would you like fries with that?”)

This little bakery was probably just surviving, based on their location in a high foot traffic tourist area and on the strength of really good food.  Their business could really boom with the application of BASIC business and management principles.

This isn’t rocket science, folks! 

Posted in Business Insight, Customer Service | Leave a comment

To Mentor or Not to Mentor – That is the question…….

I’ve been reading the Wall Street Journal again.  This time, the article that caught my eye was one by Elizabeth Holmes, “Career Mentors Today Seem Short on Advice But Give a Mean Tour.�?  It presents a trend in corporate America for managers to delegate the mentorship of new employees to more experienced employees, rather than taking on that role themselves as was the norm in years past.  Judging by the examples used in the article, the approach isn’t working very well.

I’ve been a manager in a large corporation, so I understand the demands on a manager’s time and the need to delegate effectively.  Now, however, viewing this situation through the lens of a small business owner, I have to say that this article raises some real concerns.  In the current job market, there are many more jobs than qualified people, so once you have found and hired a good person, it seems cavalier and stupid to handle bringing them on board so poorly.  Take the time to handle this task yourself or make sure your mentors are trained and equipped to handle the job well.  In fact, if you have an employee bucking for a promotion to management, being a mentor might be a great proving ground.  Use it as a growth and training assignment and monitor the mentor’s progress.

How you introduce a new employee to your company, handle initial new employee orientation as well as ongoing training says a lot about you as a manager and about your company as a place to work.  Give the task the time and thought it deserves and a good new employee will become a great long term employee.  It takes so much effort, time and money to hire.  Don’t waste your investment after the hire with shoddy management.

How do you welcome a new employee into your company?

Posted in Management, People Skills | Leave a comment

Finding Inspiration in Tough Times

There is a great article in the Wall Street Journal (in the Startup Journal section) today – “Recommended Reading for Inspiring Leadership.�?  The writer, Dana Mattioli, makes the point that being a successful entrepreneur means finding the strength and wisdom to overcome obstacles and persevere.  The article lists a number of sources others have found inspiring, including books, movies and a web site.

I couldn’t agree more with this premise!  Building a new business is sometimes a roller coaster, with serious highs and lows.  We all need ways to defeat the lows and keep climbing.  At Next Step, we frequently turn to books for inspiration as well as practical information in order to overcome those bumps in the road to success.  Our biggest problem is buying more books than we have time to read them, but we are working on that.  See some of our suggestions on our web site book list: www.nextstepsolutions.com/books.htm

Dennis frequently turns to quotations from a wide variety of luminaries, movers and shakers.  We include quotes in our e-newsletters and on our web site.  There are lots of reference books available for great quotes.  You can also find them on the web.    I just tried that, searching on Google for “leadership quotes�?.  Google produced tons of great results!  Here are just a couple of quotes I found that inspire me and make me think.

“Lead and inspire people. Don’t try to manage and manipulate people. Inventories can be managed but people must be led.â€??
-
Ross Perot 

“…peace is the highest aspiration of the American People. We will negotiate for it, sacrifice for it, we will never surrender for it, now or ever.”

- Ronald Reagan

Kind of puts our business problems in perspective, doesn’t it?

Where do you turn for inspiration?  Please share your sources with us and our readers!

Posted in Business Insight, Business Resources | Leave a comment

Leadership: Culture Flows from the Top

I really enjoy the Wall Street Journal and read as much as I can in the limited time available.  I have particularly enjoyed many of Carol Hymowitz’s columns.  The new one, published just today, is “New CEOs May Spur Resistance If They Try to Alter Firm’s Culture�?.  She talks about the “roller coaster of changes�? that usually follows a change at the top.  Her main point is this: 

“New leaders typically reshape their senior executive team and the company’s growth strategies.  The most wrenching adjustment occurs when a CEO changes the corporate culture – the core values and ways of doing things that bind people to their jobs.�?

Ms. Hymowitz illustrates her points with several examples culled from large corporations.  I am reminded of my own experience at IBM during the “wrenching adjustment�? (to use Ms. Hymowitz’s excellent choice of words) of the early 90’s.  That was when Lou Gerstner came in as CEO, the first outsider to take the post in the company’s very long history.  In hindsight, I see the necessity of bringing in the fresh viewpoint of an outside executive.  It was a very tough time in IBM’s history and change was critical to survival.

As an employee at the time, however, I remember the magnitude of the change as it hit the average employee.  It was like a solar plexus blow.  We were all left gasping for air initially.  For example, the company experienced its first layoffs – ever!  Even during the Great Depression, IBM kept its employees working, building machines that were warehoused due to lack of sales.  We were all steeped in this tradition, “dipped in blue paint�? during initial Big Blue training, as we used to say.

IBM survived the upheaval and thrives today, but with a very different culture.  This is the usual “good news, bad news�? fact, I am sure.  Ultimately, the news is good because a great company still exists, producing products, services and lots of jobs.  Could the changes have occurred with a less traumatic approach?  I don’t know.

Ms. Hymowitz offers the example of Staples as a different way of affecting much needed change.  Kinder and gentler?  How about other examples?  What are your experiences with company cultures?  Did you experience a change in leadership?  Has your company experienced a merger or acquisition?  How did that impact the culture?

Read Carol Hymowitz’s  excellent article, consider your personal experiences, and let me know what you think.

Posted in Business Insight | Leave a comment

The Joy of Business Travel – Differentiators in a Competitive Market

What can one say about the joy of business travel?  Especially nowadays?

In the interests of keeping the language civilized, let me simply describe my recent experience, rather than my resulting emotions.

I had occasion to travel from Seattle to Milwaukee recently, on business.  A client was expecting my arrival at their site on a specific day and at a specific time.  In other words, this wasn’t a pleasure trip with any flexibility.

As I was packing and preparing for my trip the night before, I signed onto Northwest Airlines web site to print my boarding pass.  Oh no!  My flight has been cancelled!  Actually, my first flight was ok.  I could get to Minneapolis.  But the flight from there to Milwaukee had been cancelled.  It was only about 12 hours until my flight time, so there was little I could do online.  I called the airlines.

The Northwest representative was polite, but was unable to get me to Milwaukee either Sunday, my planned travel day, or on Monday!  I finally asked if they could get me there through another airline.  The rep got his supervisor, who was able to find me flights on Delta – Seattle to Atlanta (now that’s right on the most direct route, right?) and then Atlanta to Milwaukee.  Only one problem.  The Seattle flight was to leave at 6:00 AM.  It was now midnight and I wasn’t fully packed! 

My wife packed and I got everything else ready.  We crashed (unfortunate verb, given my plans to fly) at 1:30 AM, only to have the alarm go off at 2:45 AM, so I would have time to shower and get to the airport and go through security, in these times of heightened alert.

When I got to the airport and reached the security checkpoint, I was informed by the TSA representative that I had been “selected by my airline�? for additional screening.  I found out later that it was due to the fact that I had changed my reservation and airline at the very last minute.  (Hey, my flight was cancelled!  I didn’t do this on purpose!)  So I was treated to a pat down inspection and a thorough hand search of my carryon, including swabbing it for explosives.

Looking at this in hindsight, I would make the following point.  To their credit, Northwest got me on another flight that got me to my required destination on the same day.  Fine.  But they also had my contact information – phone and email – a month in advance.  If I had been informed, even 12 hours earlier, I might have been able to get where I needed to go at better times and with far more sleep!

The Delta flight at 6:00 AM left on time.  In Atlanta, however, the second plane was late.  Then, we were further delayed by weather – obviously not the fault of the airlines.  But the inevitable result was an extremely long day of travel on no sleep with a late arrival at my final destination leaving me with little time to catch up before an early morning appointment with my client the next day. 

To make it even more challenging, only one of my bags made it to Milwaukee with me.  The second one, the one that held all my business paperwork, went someplace else.  I went directly to the appropriate lost baggage office to report the problem.  There, the three women staffing the office ignored me completely until I finally spoke up.  Their computer revealed that my bag would arrive in 3-4 hours.  I asked them if they would deliver the bag to my hotel and told them I needed the materials in the bag for my business meeting.  They asked how long I would be at the hotel.  Hearing that I would be there about 10 days, they said, “Oh good, we have plenty of time to get it to you.�?   “No,�? I said.  “I need the contents of that bag to do my business, which begins early tomorrow morning.�? 

They got me the bag by Monday evening.  My problem here is the attitudes – completely cavalier.  Throughout this entire saga, there were no apologies, either.  This is simply the way it is and I am supposed to accept it.

In complete contrast, my return trip (which also had to be rearranged due to a change in my return date) was on Frontier Airlines.  Since I had a tight connection in Denver (only 50 minutes), I asked the ticket agent if I would make it.  She assured me that I would.  Then, my first flight had to leave 20 minutes late because the plane was late getting to Milwaukee.  The flight crew worked together as a very efficient team to get us on board and into our seats as quickly as possible and on our way.  They made up the time delay in flight so that we arrived in Denver as scheduled.  The flight attendants then asked that everyone who didn’t have a connecting flight remain in their seats so that travelers with tight connections could make their flights.  I made it to my plane without a problem and the plane left on time.

As travelers, we have many choices of airlines to get to our destinations.  In a competitive market, which this certainly is, the prices are pretty consistent.  The remaining differentiator for competing companies in such an environment has got to be the service.  The Frontier employees were uniformly courteous, efficient, and displayed a desire to take care of the customers.  This can’t really be said for Delta or even Northwest.

So, next time I have to travel to the Midwest, who am I likely to call?

Posted in Customer Service | 1 Comment

Managing Employees: Now that you’ve got them, how do you keep them?

It’s tough hiring great employees these days!  There are more jobs than people to fill them, so we have to work really hard to find and hire the personnel we need to expand our businesses.

Once we’ve got them, how do we keep them?  We’re kidding ourselves as employers if we think we just have to get them in the door.

There was a great article in the Wall Street Journal recently, written by Carol Hymowitz, “Managers Lose Talent When They Neglect to Coach Their Staffs.�?  She contends that the “engaged employees work for managers who spend a big chunk of their time helping their subordinates succeed.�?  I thoroughly agree with her.  I believe the most important job of a manager is first to ensure that their people have the tools, training and guidance to do their jobs and second, to take roadblocks out of their way. 

Unfortunately, in many companies, managers are measured on their financial results rather than on how well they manage and retain their people.  Good management is a skill that is frequently undervalued.  In fact, too many employees are promoted to management based on how well they do the jobs themselves, rather than on their ability to work effectively with people.  What a waste!  It sets up the new managers to struggle and very likely fail, and their disaffected employees become the collateral damage.

Here are some of my thoughts on working with people.  I look forward to hearing some of yours!

  • Be alert to the signs of a struggling employee and take corrective action.  It’s in everyone’s best interest to do so, both the struggling employee and the rest of the team, whose productivity is no doubt being hampered by the situation.  By “actionâ€??, I don’t mean to get rid of the employee instantly.  Instead, try to find out why the employee is having difficulty and see what can be done to help.  He/she may need more guidance, training, even just encouragement.
  • Get to know your employees.  Different things motivate different people.  You may have to alter your management style appropriately.
  • Evaluate your entire team in view of the jobs they have to do and shift assignments if appropriate.  Sometimes an employee who struggles in one position will shine in another. 
  • Communicate with your employees regularly.  Keep them informed and involved.  If they know the “whyâ€?? of their task as well as the “whatâ€??, they will be more likely to buy into the team mission and deliver good results.
  • Foster an environment that encourages communication between workers and management.  In a previous job of mine, this was referred to as the “open door policyâ€??.  Employees could take an issue to management without the fear that their action would be held against them or would jeopardize their jobs.
  • Be tactful, but direct in providing feedback.  We all fear confrontation, but we do an employee a disservice if we don’t tell them what they are doing wrong and give them a chance to fix the problem. 
Posted in Management | Leave a comment

Planning: Are you ready for the unexpected?

Have you checked your fire extinguishers lately?  Are they damaged, fully charged (check those gauges!), etc.?  Most of us pay attention to things like this, particularly those of us who lean toward the anal retentive when it comes to preparedness.

Have you done the same for your business?  Huh? What am I talking about?

I am talking about succession planning.  Have you done any?

Normally, when I ask my clients this question, the answer is no.  Nothing’s been done.  In fact, they haven’t even thought about it.  In general, many are convinced they will be here forever.

The Reality – there’s a Mack truck out there for each of us.  We just don’t know when or where. 

So my business tip of the day is this:  Think about it.  Then take action.

Succession planning can be viewed in the context of two scenarios.

  • Scenario 1:  Who will take over business when I want to retire or pursue other interests?

  • Scenario 2:  How does the company run (i.e. survive) if something sudden happens to me?  Or to a key employee?  Here, I am referring to the Triple D threat – death, disability, and divorce, any of which can and will impact the continuity of a business, usually severely.

Statistics say we are more likely to encounter a temporary disabling event (skiing accident, surgery, etc.) than something permanent – like death.  However, don’t make the mistake of thinking that a temporary disability is just like taking a couple of sick days.  What if you are battling cancer and can’t work for 6 months?  Better to be prepared.  Have a clearly thought out, formal plan.

The primary difference in handling our 2 scenarios is the time you have for planning.  Scenario 1 is, by definition, a planned event.  It’s also happier to contemplate, so people are more likely to tackle the planning effort.  Scenario 2 is easier to ignore, but do so at your peril.  Don’t assume everything will keep going effortlessly while you are in traction after that skiing accident and on too many painkillers to think.

Why should you care about succession planning?  Well, if you are considering Scenario 1, you want to get the full value out of the business you created.  After all, it’s your baby.

When considering Scenario 2, company value still plays, but you also have to consider company continuity.  If you are not there, who will run the company, keep it going, maintain the value, maintain the income stream for your family and jobs for your employee family?  Along with selfish concerns, i.e. for one’s own family, you have a moral and ethical duty to think of your employees.  They count on their jobs in your company for their livelihoods and the welfare of their families just as you do.

So, how do you get started?

First, decide to do it.  Commit to developing formal succession plans.

  1. Think through your options very carefully.  Who could take over for you, either temporarily or permanently?  A family member?  Key employee?  What information would they need to step in quickly and effectively?
  2. Get your advisors involved.  A skilled business consultant can help you with your planning.  Bank on their experience.  They have most likely done this before and can guide you through the planning process. 
  3. Formalize your plan.  Document it.  Run it by your attorney.
  4. Inform the key employee, the one you designate as the person to take over.  In fact, get them involved in developing the plans and procedures.
  5. Periodically, review the plan and update it, particularly if that key employee leaves.

Finally, take great satisfaction in being prepared.  And avoid those Mack trucks!

Posted in Disaster Planning, Strategic Planning | 1 Comment