Interpersonal Business

Vol. XXXIV

Dear Manager,

I will be the first to admit that I thrive in a face-value environment. Too often, relationships and business practices can fall deep into the caverns of dealing with another’s hidden agenda. We are taught to keep our guard up for those who live in a world of servicing only their own needs. We can begin to question the motives of others, with or without justification. There is a distinct contrast between having a sense of awareness, and buying into the paranoia of “every man for himself.” I am absolutely convinced that a positive, and ever-so-slightly naive, approach to business can best service the needs of an organization.

We have all been taken aside and warned about an individual or organization prior to developing a new working relationship. Common sense suggests we look beyond the surface. Good business demands a dose of benefit of the doubt, or many solid opportunities will be lost due to the unhappy experiences of others. I believe that, in the vast majority of business situations, those with whom we come into contact are fundamentally good. We owe it to ourselves, and those individuals, to anticipate an ability to measure up.

At least once in our lives, each of us has failed to meet the mark. Thankfully, maturity and experience plays its hand. We learn from our mistakes and are better off for the process. Business provides us with many opportunities, and we hope to be given another chance. Under new circumstances, there is every reason to believe that we will rise to the occasion.

Over the years, I have interviewed individuals who are obviously reeling from difficulties with a former employer. There have been indications that this individual is convinced that these unpleasant experiences are common business practices. I have also been faced with individuals who suggest, in their own subtle but direct way, “You better not mess with me!” As managers, we also deserve the benefit of the doubt.

In both instances I have quickly “taken a pass,” as the risk is simply too great. This jaded attitude will never serve the needs of the individual nor the organization they have asked to serve. Are there bad people out there? Yes. Are they in the minority? Yes, without question. As managers, we obviously need to focus on the good, and deal with the “less than good” as it arises.

By approaching business with a degree of trust, we develop a platform of understanding that only a very few, and the very foolish, would be willing to risk or compromise. I continue to believe that individuals will learn from, and respond to, reasonable expectations. Individuals want to offer and receive respect. Explain the standards of your company and give everyone the opportunity to succeed. You will be disappointed on occasion but, ultimately, you will have won for having retained your objectivity.

Having addressed the majority, I believe it is now time to address the wayward souls with whom we may also come into contact. These are the individuals who have granted themselves the God-given right to accept little responsibility for their actions. These people are obviously dangerous to themselves, and to those of us in business. After three years of publishing this letter, it is time to deal with this type of business personality as well.

In no uncertain terms, there are individuals who will make every effort to bring you down. Often, these individuals will take a very visible role and show a great deal of initiative. If we fail to understand, or underestimate their potential, they have the ability to (with great delight) bring harm to those around them. As I shared with a friend and business associate recently, “Unfortunately, there are bad people out there. It’s easy to be caught flat-footed.”

This friend had recently gone through some very difficult times with an employee. The employee had made a grievous error in judgment and, without a second thought, my friend immediately terminated him. The former employee could, in fact, be imprisoned for his offense. My friend owns a high-profile company yet, because of his swift termination of the employee, he was convinced that the issue had passed. While I hope this to be true, he would be foolish, and very vulnerable, if he were not to not prepare for all scenarios … not to anticipate them, but to prepare for them.

Sadly, there is a segment of the population who is convinced someone else owes them a living. Their actions are justified by their desire to even the score from previous business dealings. These individuals are vocal. They will share with any audience that, through no fault of their own, they have been wronged. This is a personality type that we must all be aware of.

Rather than taking full responsibility for our own successes and failures, as all of us in business must do, these individuals are relentless in the use of their index finger, pointing at anyone but themselves. We don’t generally think in these terms, nor do the individuals we associate with, so they catch us off guard. When they appear, it can be as if they multiply like rodents. Don’t over estimate their numbers … it only takes one. Their appetite can be huge, and their perception of importance upon conquest is a source of personal fulfillment.

These individuals live in the world of harassment and litigation. They will seek out others to assist in fabricating their position, then align themselves with attorneys of a similar breed. Armed with the pointer’s information, they will practice their profession, often at your expense. Those who practice are always looking for pointers!

As managers and business owners, we are foolish not to give consideration to this phenomenon. We must first define our exposure, then begin to understand it more fully. This includes becoming familiar with current laws that may rightfully, or wrongfully, affect us. Integrity and a sense of fairness will not always protect you. As my wife often says, “If you cross the street with the walk signal and you’re hit by a car, you may be in the right, but you’re still dead.”

Retain a qualified lawyer (one of the many who do not simply practice) for an hour to review your business and define the potential sink holes. Speak with your accountant regarding any changes in the tax structure that may impact your business. Watch the newspapers and business journals for changes that may affect you. Stay informed.

Secondly, keep very good records. There can be no stronger evidence than information that speaks from the past. This information inherently establishes consistency, mutual acceptance and intent. Dated correspondence and notes from conversations will provide great assistance. These are the things the pointers will have conveniently forgotten, or neglected to convey to those who practice. It is very difficult to contradict the evidence of fact.

You will always have the opportunity to rely on your allies – those who might have common knowledge, who will be outraged by the false intentions of others. This is the unknown factor for pointers, and is often underestimated, as it is the one aspect they cannot manipulate.

Of greatest importance, do not allow yourself to focus on, or be absorbed by, these individuals. By doing so, you have only validated and enhanced their perceived position of strength.

It is sad to say, but I have seen far too many jaded managers. From a personal perspective, I would accept an ever-so-slight touch of naiveté over being jaded, each and every time. In the end, the answer can be simple: trust, awareness and a dose of preparation. And… always look both ways before you cross the street.

Personal Regards,

Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2009. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL/INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM

Vol. XXXIII

Dear Managers,

Taken at face value, this is an example of management exercising its fundamental responsibility to maintain fiscal profitability for the organization. I sincerely support the profitability of the manufacturers associated with our organization with almost the same tireless enthusiasm that I support the need for the profitability of my organization and those associated with it. All parties must first sustain profitability for a relationship to exist. Prior to an evaluation of each of these conclusions, let’s take a look at the premise for the decisions.

The new year is a critical wake-up call for all companies relating to that elusive profitability issue and controlling or reducing ones fixed costs. Profit and loss sheets are complete for the previous year and, for most of us, hidden but very real expenses have eroded our anticipated profits. How do we possibly get these costs under control and, more importantly, how do we do so with the least amount of interruption and impact on future growth? Obviously, reducing overhead at the expense of growth should be our absolute last course of action. In this scenario we have simply exchanged one critical concern for another.

There are many fixed costs that have no relationship whatsoever to future growth potential. The process begins by addressing these areas. The erosion of profits effects all of us on a relative basis. Following are a few examples that should be addressed by all individuals and organizations in a position to impact and enhance the bottom line.

PHASE ONE: OFFICE EXPENDITURES

Historically, this is the area with the greatest opportunity for cost reductions. Often, a full 20% can be shaved off current budgets with a relentless review of all fixed costs. Savings in these areas have little appreciable relationship to the future growth of the organization.

• POSTAGE: When was the last time you reviewed this money pit? Batch mailings to customers and sales agencies, third class mail for catalogs, and re-negotiating air express charges are all areas worthy of your review. I have worked with a manufacturer for a number of years who continues to mail a single page invoice in a 9 x 12 envelope; we receive these envelopes 3 or 4 times a week!

• OFFICE EQUIPMENT: With technology moving forward on what seems like a daily basis, do we truly need the very latest on the market? Will last year’s model adequately meet our needs? Developing strong relationships with individuals who are familiar with secondary markets creates an opportunity to save from 30% to 50%. Computer hardware, telephone systems and copy machines are just a few areas where last year’s introduction will adequately service our needs. We all enjoy the smell of a new car, but how does that smell translate itself into increased sales productivity?

• FINANCING COSTS: Most organizations work with a line of credit through their bank to even out the ebb and flow of cash reserves. Do you anticipate your needs and activate funds prior to actually using them? I recently changed my credit line to only activate upon checking account overdraft. With careful cash flow management, my line of credit use was reduced by 50%. Have you reduced or eliminated excessive credit card interest charges by using a line of credit on occasion? This can add up to a 50% savings on interest rates alone.

• FACILITY COSTS: With interest rates relatively low, is there an opportunity to purchase a facility that can meet your current and foreseeable needs? I recently purchased our office building, which will significantly reduce operating expenses in its third year and beyond. If leasing is your only realistic option, have you taken a proactive role in securing favorable rates for your current and future needs? Simply knowing the current market and the options available will assist in your negotiations.

• PROMOTIONAL EXPENSES: The desire to continually expand our trade show presentations has dramatically increased costs for many of us. As exhibitors, we are very important to these show management companies. I have found them to be willing to assist in managing costs (such as storage fees, lighting and drayage) by negotiating long-term commitments; very few people even ask. By the way, are you charging these fees on a credit card to earn frequent flyer mileage for future business travel awards? Strategic credit card purchasing can make a significant impact on your travel budgets.

By nature, office expenditures have a tendency to compound themselves year after year. The solutions come from asking the question, “Do the systems that were established to meet the needs of a previous time continue to create an advantage in today’s market?” It may be time for some cost-effectiveness house cleaning.

PHASE TWO

This area of review may not return the 20% seen in Phase One, yet even a 10% cost savings in areas with much larger budgets can be very significant to any organization. This review (and the ultimate reductions) will begin to unlock the doors of ones organization. There is the potential risk for an emotional price as compared to Phase One. Approached correctly, the risk is limited and will have no significant impact on the future growth potential for the organization.

• MANUFACTURING COSTS: I have toured many facilities and was amazed to view the varied levels of productivity found acceptable from one facility to another. I saw warehouses full of obsolete product, production lines slowed by little or no departmental management and pride, and little incentive to correct the problems. Certainly these are only surface judgments, yet has corporate management abandoned incentivising the productivity of those at the bottom of the scale for a job done accurately and well? If so, is it time to revisit out-sourcing this critical area of business?

• STAFFING COSTS: As an alternative to increasing staff salaries, have you considered increasing vacation time in alternating years of their review? I have often found this to be very well received. In many cases, and with proper preparation, other staff members can assist with the temporary additional load.

• MANAGEMENT AND MARKETING COSTS: With just a bit more planning, can that four-day trip be condensed into three days? Can the three-day trip be condensed into two with an earlier flight? Have we adequately negotiated the most favorable advertising rates, based on the size and duration of our advertising? Simply by creating an “in-house” advertising agency, you can save 20% off the top!
Have we finely tuned our budgets for the cost of printing sales materials, catalogs and order forms, by getting three to four bids? Printing is a very competitive field, and a great place to leave money on the table.

Have you considered an in-house staff member to manage and monitor these and the many other costs in doing business? You may find their position will pay for itself, again and again and again.

PHASE THREE
(You had to know there was a sacred cow somewhere in our midst)

In my twenty-five years in business I have worked with hundreds of manufacturers. As my experience relates to competent managers and sales professionals, I have never seen one that was being over compensated. I have certainly seen incompetence in sales and management being over paid but, evidently, ownership found this scenario to be acceptable.

The implementation of Phases One and Two have in no way impacted the heart of your organization. This heart is shared between your management and sales staff. I can’t help but ask, “Has ownership thoroughly exhausted all avenues of cost management prior to carving out the heart and source of growth for their organization?”

Without question, there is a time and place to implement Phase Three cost reductions. There is a very real moment when costs exceed revenues and profitability no longer exists. There can be no other alternatives; all Phase One and Two cost analyses have been addressed. Survival becomes ones singular concern and, ultimately, a heart transplant is the only course of action. On this occasion, allow me to be first donor in line to assist in protecting the long-term interests of the ailing organization.

Personal Regards,

Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2009. Duplication of this publication is permitted for both personal and business use. Excerpts may only be quoted with acknowledgment of INTERPERSONAL/INTERPERSONALBIZ.ORG as the source. For re-publication rights, please contact the editor at KEENAN@INTERPERSONALBIZ.COM