Monday, May 24, 2010

Feedback is a Gift

About 4 years ago I was approached by a man who wanted to give me some feedback - and none of it was positive.  He spent the better part of 30 minutes explaining and justifying how I had wronged him and why I barely deserved access to the oxygen I needed to breath (OK, he didn't say that specifically but that was about the tone of his message).  My initial reaction was shock - I sincerely had no idea he had such a problem with me.  As I listened to his rant, I was often tempted to jump in and defend myself and explain the apparent misunderstanding - but I refrained.  It was clear he needed to get this off his chest, so I took it on the chin.

In a recent training retreat I was reminded of this experience as well as the phrase that I kept playing over and over in my head to help me keep my cool while I was attacked: "Feedback is a gift!"  I honestly tried to appraise the situation and understand if there was some way I could learn and improve based on this feedback - the only way feedback can ever be a gift.  If you fail to try and learn and improve from it, then it will seldom add value to your life.

Once this man finished saying what he wanted to say, I communicated my surprise and I told him what I thought I might be able to do in the future to be better based on his feedback.  In fact, I swallowed my pride whole when I said: "Thank you for this feedback."  My response completely dis-armed him and we finished with a healthy conversation wherein he admitted he was at fault and we resolved to move forward and make things better.

The point of the story is this: whether it is good or bad, feedback is a gift.  If the feedback is neutral or you receive no feedback at all, then you really don't know where you stand and if you should be changing or improving something.  If you receive sincere positive feedback, then you will know you should do more of the same in the future.  If the feedback is negative, then you know what you should change in the future.  And, let it motivate you to make sure you never get that feedback again.

Either way, it is a gift of knowledge with which you can make the right decisions and take the right actions.  No feedback or insincere feedback (which, in my opinion, is the worst kind of feedback) is useless and should leave us wondering how we are actually doing.

When running a business, feedback should be the number one source of inputs you consider when crafting your strategic and tactical plan to build a successful enterprise.  You will take in qualitative feedback from conversations with and surveys of customers, employees, contractors, suppliers, and vendors.  You need to process quantitative feedback in the form of monthly financial statements, budget vs. actual analysis, daily and weekly dashboards, cash flow projections, and so much more.  Not receiving this information, whether good or bad, is crippling - you have no idea if you are doing well or n0t.

In my experience, the best entrepreneurs and CEOs are those who recognize that feedback is a gift.  They become empowered with real and actionable information from all of the appropriate sources.

So, why don't many people view feedback as a gift?  Because it is painful.  It is making yourself vulnerable and exposing your weaknesses and strengths to others, and sometimes they will come at you with more negative than you think you can handle.  But if you truly consider feedback as the gift that it is, it will always work to your ultimate benefit.

Monday, May 17, 2010

The Collapse of the Office Manager

When a business first starts, the founder is focused on getting customers.  Once that starts to happen and cash-in starts to exceed cash-out each month, the founder is quick to shed bookkeeping, cash management, and other administrative tasks to someone else.

The person hired to take all of this on quickly begins to wear many hats – receptionist, bookkeeper, accounting clerk, data entry clerk, assistant to the founder, customer service support, marketing support, human resources, sales support, and sometimes they even come in and clean the office on the weekends for a little extra money.  I have found that women are more often hired than men in this position because there seems to be an over-arching stereotype that women manage details better than men.  I neither subscribe to or deny the stereotype - I am merely acknowledging that it exists.  This person will end up with a title like office manager, meaning they handle a lot of the details no one else wants or has time for and they become a critical element of keeping the business running from an administrative stand-point.

As this person absorbs all of these activities their perceived value contribution to the business is high, although they wear so many hats and have to cover so many areas of the business that they really don’t master any of them.  In addition, they usually lack the experience and education to handle certain tasks they’re expected to do, especially when it comes to accounting and finance.

As a business progresses in its life-cycle this person does their best to keep the books in a spreadsheet or a low-cost off-the-shelf accounting software package, like QuickBooks.  While they have done their absolute best to make this effective, their lack of education and experience in accounting means that even with all their effort they are not able to provide much meaningful, timely, or accurate information/data to the people running the business.

This person becomes frustrated because they sense they are not doing enough, even though, considering the circumstances, they work long hours and care a great deal for the company.  Nobody likes a job where they feel inadequate or incompetent.  They may even try to get some training in accounting or the software package the company uses, but the training is usually so generic that it is hard to apply to the actual day-to-day operations and functions of the software in the business.

At this point the business owner is not getting the information he needs to run the business.  So he continues to trust his gut and makes far too many decisions based on the balance in his bank account instead of his actual business performance.  This leads to some bad decisions and the business struggles to grow as a result.  Yes, bad accounting can actually hinder the growth of a company!

The collapse of the Office Manager position comes as parts and pieces of the their responsibilities are peeled off and given to newly hired employees with more experience and expertise in those respective fields.  As this happens, the only work left is the low-paying duties like receptionist and data entry, and they are far over-paid for those functions.  Their position is ultimately eliminated, and very few of the people initially in the role survive with the company.  They were hired to be a "jack" of many trades, but the growth of the company has facilitated specialization and their master-of-none skills leave them without a job.

There is a way to avoid this tragedy, and I will discuss it in Solve the Mystery of Staffing Your Accounting Department on American Express OPEN Forum.

Tuesday, May 11, 2010

Servant Leadership Speech

On a recent stroll down memory lane, I came across the following speech I gave at the graduation ceremony for my MBA class from the University of Georgia.  The speech was delivered on May 9th, 2003, and here is it for your enjoyment, just as I gave it 7 years ago:

Believe it or not, getting an MBA degree is a lot like building a tree house.  Let me explain.  Two brothers, while in their childhood, spent an entire summer building a tree house in their backyard.  They experienced unforgettable feelings of joy and satisfaction when they finally were able to enjoy the fruit of their work.  The two brothers climbed into their finished masterpiece, and, after a few minutes, climbed down from the tree – and never returned.  The completed project, as wonderful as it was, could not hold their interest for even one day.  In other words, the process of planning, gathering, building, and working – not the completed project – provided the enduring satisfaction and pleasure they had experienced (Thomas S. Monson, “In Search of Treasure”, Ensign, May, 2003).

Tonight, at the conclusion of the MBA summer of our lives, we have completed what we set out to accomplish – graduation.  Interestingly, we will all climb onto this stage for a few minutes and then leave – and most of us will never return to this scene again.  Our graduation will not hold our attention for much more than the duration of this ceremony.  It is not the piece of paper that brings our feelings of joy and satisfaction – it is the very process we endured to get here and the relationships we formed along the way.  The process, not the product, has helped us grow and develop.  Moreover, our growth and development have been directly correlated to what we have put into, or given, to the program.

For example, everyone who worked with Dr. Hofer on national business plan competitions would agree that we worked harder and put more into that class than any other MBA class or project.  And each of us agrees that we learned more and got more from that experience than any other in the program.  As a bonus, all four teams enjoyed recognition and success on a national level, a tribute to Dr. Hofer’s commitment.

And herein lies a true yet often overlooked principle – when we focus on giving, not only is our experience more meaningful, but also the getting will take care of itself!  If we give of ourselves to our respective organizations, the “getting” will come.  If we look for ways to serve and give to those we lead, we will be successful leaders.  This principle applies to our personal lives as well.  By striving to give to, not get from, our personal relationships, those relationships will be more fulfilling.

My father understood this concept while I was in my youth.  When our garage door needed replacement, my father saw an opportunity to spend quality time with his boys.  I called it free labor.  Even though our newly re-built garage door fell apart within days, my dad held firm to his decision: “I’m not building a garage door, I’m building men.”  Hopefully his “men” will last a little longer than his garage door!

The northwest entrance marquee of my undergraduate university reads: “Enter to learn, go forth to serve.”  That marquee stands as a poignant reminder that we should use our education to focus on giving, on serving.  Max De Pree, in his writings on servant leadership, made the same point when he wrote: “the first responsibility of a leader is to define reality.  The last is to say thank you.  In between, the leader is a servant.”  Whether in professional or personal environments, the person who focuses on giving, on serving first, will succeed in the long term.  President John F. Kennedy was really inviting the American people to focus on giving when he implored: “Ask not what your country can do for you, ask what you can do for your country.”

Ralph Waldo Emerson understood the need to give.  He penned: “What wouldst thou have from life?  Then pay the price, and take it.”  Whatever price you had to pay to be here tonight, you now take your degree, your education, your relationships, and your experiences with you.  While we each have our own unique ambitions for our lives, the formula to achieve those ambitions is the same - we need to pay the price of giving of ourselves to our organizations and our relationships in order to obtain our ambitions.  So I ask, What wouldst thou have from life?  Then pay the price of giving of yourself, and the getting will almost always come in greater portion than you hoped.  May God bless us to be successful in our various endeavors, and may those endeavors improve the world in which we live.  Thank you.

Tuesday, May 4, 2010

The One-Sided Effect of Healthcare Reform

Entrepreneurs, by their very nature, are usually very skilled at figuring out how to create opportunities out of even the most dire of circumstances.  They regard health care reform no differently.

Now that the dust has settled on this new legislation and employers are waiting to see what else transpires between now and 2014, let me shed a little perspective on how small business owners and entrepreneurs are planning to comply with the reforms.  Interestingly, the people that will feel the brunt of this impact are the employees, not the employers.

Businesses with over 50 employees will be subject to a penalty of over $2,000 per year for not covering their employees.  This is steep, and amounts to a 5% increase in labor costs for an employee that makes $40,000/year.  In a recession in which double-digit percent margins have almost become extinct, how will these businesses survive such an increase?

The answer is quite simple.  The objective is to render the increased health care costs neutral to the firm’s overall labor cost structure.  I have heard many employers that will be impacted by this explain that it will have to be the employees who pay for it, primarily through wage and other benefit decreases.  So, it ultimately comes out of the employee’s pocket, not the employer.

Although businesses with fewer than 50 employees will not be subject to a penalty in 2014, they will be eligible for significant tax credits for covering their employees with health insurance.  Certainly the tax credits pale in their monetary benefit when compared to the cost for small employers to cover their employees, which means the business owners and entrepreneurs will figure out how to make the employees pay for at least the difference.

My point is that the average hard-working American will pay for this health care reform, not businesses.  We will see wages and other benefits decrease to offset the costs of health care.  I doubt this is the result legislators wanted, but it will certainly be the reality.

There are two common reasons these employers are not offering health insurance.  First, their industry's business model does not have enough room in it.  Second, the employees do not value health insurance offerings from their employers.

By forcing employers who have operated their businesses without offering health care to their employees, this legislation is trying to tinker with proven business models and employee compensation packages that were not broken.  As we approach 2014, most businesses will prepare for implementing health care reform by "tweaking" their overall compensation programs to create a zero-sum result for the company rather than trying to absorb the costs into their business model with no additional value perceived by their employees.