Interpersonal Business

Vol. LX

Dear Manager,

What determines which of these “hard assets” should be considered obsolete? It comes with the conclusion that what was previously an asset no longer sustains its value. There are clear and obvious fixed costs in retaining resources that no longer represent future revenue. Warehousing, financial carrying costs, data entry, and poor use of valuable management time in their maintenance, are just a few. The closer we look, the more apparent it becomes. When an asset is no longer an asset, it is time to cut our losses and move on. When was the last time you took an inventory of all your assets?

In this instance, I am no longer referring to the hard assets in your warehouses. What is the current financial inventory of those assets your business considers to be its good will, or “soft assets?” These include current manufacturers relationships, customers, sales territories, and staff positions within your organization. Certainly there is a constant ebb and flow in each of their evaluations. While the need to take a close look at the value of ones physical inventory may be obvious, it can be much less obvious to do the same for other organizational assets. Rarely have I seen an organization define a specific and detailed financial evaluation for this equation and each of its parts.

Begin by taking a full accounting of exactly where your revenue is generated in all aspects of your business. We often have a very general idea, yet it’s not uncommon to be well off the mark. We all know the rule of thumb that twenty percent of our assets sustain eighty percent of our revenue. I have always found this concept to be much closer to actuality than I ever anticipated.

If this is the foundation, then the bottom twenty to forty percent of your assets represent less than ten percent of your revenue. If this were true, would it not be considered obsolete inventory if professionally reviewed in any other light, or by any other form of measurement? Similar to an inventory of ones hard assets, what is the true cost of retaining underperforming and value-deprived soft assets?

For many years, I made a concerted effort to minimize the number of client manufacturers our organization represented. Our top five manufacturers represented seventy percent of our sales, with the remaining ten to twelve representing the remaining thirty percent. To take it one step further, the bottom five manufacturers represented less than five percent of our total revenue. As often as I would analyze this, adjusting the mix with the addition and subtraction of manufacturers, the bottom five manufacturers would continue to maintain a very similar percentage.

There were always other considerations in retaining some manufacturers, regardless of their current revenue. A manufacturer’s future growth potential, their significance to other areas of our presentation, or simply a foot in the door of a potentially lucrative category, all came into play. These “other considerations” should also be evaluated as part of your total inventory. I believe you will find that in all but the most rare circumstances, their net value is a few hairs above meaningless, while their carrying costs continue to be very significant. (By the way, ones ego can’t be concluded as an aspect of “other considerations.”)

My own rule of thumb always came down to the following: If, as an organization, we could double or triple the sales of one of these underperforming product categories, would they then represent any value? In almost all cases the answer was no, and the chances of actually increasing their sales by this multiple were slim to none.

We once represented a manufacturer who produced a variety of products from varied artists. They were convinced that one of their artists was being “under represented” by their national sales force. The truth was that this artist represented only one percent of their national sales, yet we were asked, and expected, to promote these products to new markets outside our current customer base. When I asked this manufacturer what percentage of their total sales this artist should represent, the response was an unequivocal, “You could double the volume!” I could hardly wait to redirect the field sales force for this dramatic potential!?!

I asked this manufacturer if they had considered the corresponding impact of this focus on the much more successful ninety-nine percent of their presentation. “If sales forces across the nation were directed to double the sales in this ultra limited category of the product mix, could your company accept reduced sales in other areas, especially your best sellers?” In fact, this was not an unusual conversation over the years.

There seems to be a tendency for all of us to minimize our risk by telling ourselves we are better protected and more secure by investing valuable resources in areas with little or no potential relating to investment. Meanwhile, time, energy and, at some level, our reputation, are being squandered on what should be considered “obsolete inventory.”

In this time of both unprecedented institutional and personal investment in the stock market and mutual funds, would we consider a similar strategy with our personal investments? Would we continue to accept losses even though our investment broker was also our best friend? These same considerations should be used with regards to the continued profitability of some of our customers. How often do we hold onto a customer due to prior profitability, personal relationships, or simply out of habit, regardless of their current value to the whole?

Once again, the top customers will represent eighty percent of our revenue and probably receive, due to limited schedules, less than fifty percent of our efforts. A similar inventory can be conducted for customers by assigning a value based on the investment required to maintain them. How often are “obsolete customers” retained at the expense of developing a much more profitable customer next door? How often is time invested with a languishing customer at the expense of a new and very profitable presentation to one of our top ten clients? There are only a limited number of productive hours in the day; every decision relating to time is at the expense of a better use of our efforts!

For six years, I toiled over the development of a new division within our company, spending significant time trying to develop this category. Trade shows, the hiring process, problem solving, and hundreds of hours of staff time were invested in this endeavor. After six year’s effort, the division’s gross revenue represented less than ten percent of the whole. The division was ultimately dissolved, and the weight of the world seemed to pass in its wake. That same year, our company went on to have its largest growth year of the previous ten. The focus was back where it belonged.

There are similar situations where sales organizations try to expand into new sales regions. If, after a reasonable period of time, profitability has not been achieved, move on…quickly! You are certainly not doing the staff members in these regions any favors by subsidizing their income or sugarcoating the job’s inherent lack of potential. What we are doing is jeopardizing the balance of our staff, and their livelihood, by reducing the profitability of the whole!

Business will need to be much more streamlined than in the past. Have you ever noticed how much easier it is to increase sales at the top end of your presentation than it is at the bottom? This is certainly a very obvious statement. Equally obvious is our ability to resolve to focus a much greater investment in these areas by reducing “obsolete inventory.” Don’t the investments that we would consider to be our most valuable deserve more?
Poorly producing “assets” are historically the most time consuming aspects of our business. Could it be possible? Is eighty percent of our productivity invested in “assets” representing only twenty percent of our revenue? Sell the farm, Martha, the barn door was left open…

Personal Regards,

Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2010. 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. LIX

Dear Manager,

In my case, I would consider that both the timing and the conclusion of the sale could not have been any more fortuitous. I sincerely believe that all parties have gained in the end result. I also fully understand that this is not always the case. It takes an extraordinary amount of resolve and commitment to create a successful, productive, and seamless transition.

WHEN IS IT TIME?

Hands down, this is the question most asked of me by fellow managers and owners of companies. This is a very individual question that has many factors with varied priorities for all parties. No one can consider this decision for anyone but himself or herself. All too often after selling a business or retiring, many find themselves wanting right back in it. When do you know for sure? I believe that if an important decision is unclear, it is often because you need more information in order to proceed. Wait until it is obvious. I have developed a list of factors that assisted in my own final and successful conclusion. I consider each factor equal, yet some become more equal than others depending on our own sense of priorities and the time frame in our life.

Financial considerations are certainly one of the keys to this decision. While security provides its own set of freedoms, it will be low on some individuals’ lists of reasons for personal transition. Financial freedom never brings happiness. It does provide flexibility, a window of opportunity, and a certain amount of peace of mind. Everyone has a different perception regarding when “they have arrived” financially. Some will never arrive, because as they become closer, uncertainty raises the bar one more notch. As professionals, there will always be new opportunities to produce income. Suffice it to say that this is only one of the considerations. I would strongly suggest it not be the only deciding factor.

Fitness should be one of the considerations in this decision. Getting older certainly presents its own set of challenges. For those whose health is not what it should be, I can think of no better reason to look for higher priorities in your day-to-day life. There is nothing sadder than an individual who works all their life, yet never realizes the opportunity to enjoy their accomplishments. I have an acquaintance who, along with his wife, spent many years working to built a successful business. It was not until his wife’s life threatening illness and painful recovery that they decided to sell the business. This kind of life experience can establish our priorities very quickly. They have now retired at a relatively young age, and are enjoying each day.

Another perspective comes in the form of emotional fitness. There is a time when we, as managers, simply need to move on to new pastures (this is not to be confused with “out to pasture!”). It is not that we no longer enjoy what we do, it is that we become too predictable both personally, and from an organizational point of view. There comes a time in every organization for a fresh spirit and new foundation of ideas. We often see this in the head coaching ranks of college and professional teams. Very high quality individuals move from team to team, often fired from one position only to be hired immediately by another top team. The team’s success often follows. There can be value in change for changes’ sake.

Fulfillment played a role in my own decision to make a change. I found there was no longer the degree of challenge and opportunity for personal growth that I knew I needed to go forward. I had mastered much of the day-to-day operations many years earlier. There never seemed to be enough time for training, pure marketing and writing, the areas I most enjoyed. Over time, it became more and more apparent that I needed to expand on these areas, as they were the areas that brought me the greatest satisfaction and sense of fulfillment.

There also comes a time for many managers when they simply no longer desire the responsibility of running an organization. I believe in our twenties and thirties we are striving to prove ourselves. In our forties and fifties, there is very little left to prove. Some of the rewards become less fulfilling than at an earlier time in our careers. It can be time to once again experience the butterflies we felt when the future was a bit more unsettled, when the victories were only ours, and the decisions only affected us personally.

Future implications are, of course, a very important and often underrated factor for anyone deciding to make a change. My wife was convinced early on in the selling process that I would find myself at loose ends once the sale was complete. While nothing was certain, I had confidence that the wanderlust of new challenges and unfulfilled opportunities would keep me occupied. My current schedule is as satisfying and busy as I choose to keep it.

For others, the challenge is much greater. A good friend recently retired after many years of public service. Within months he was climbing the walls. He asked me, “Are you sure you’re prepared for this time of crisis in your life?” His anxiety encouraged me to develop a more formal set of strategies for the future. I must admit they will take me years to accomplish, and at a slower pace than in the past.

What new and un-thought of opportunities might present themselves if given the chance to be nurtured for the first time? This is the most exciting part of the transition in many respects. Everything is new; it just doesn’t get any more exciting!

I believe these topics provide a good foundation for defining your current and future plans relating to your career. I also believe for many considering change, these areas of review will only strengthen and reinforce their current commitment to their career. It can always look like “greener grass” when others are enjoying the time of their life in their current situation. Don’t take it for granted that the next situation will provide everything on your current “wish list.”

The second area of importance in ones decision to sell their company, or move to a new situation, is in ones commitment to protecting the fiber of the current organization. Its best interests, and the integrity of what you as a manager and your team have accomplished, is your collective heritage. Over the past couple of years I have observed two instances where this was horribly botched through no fault of the purchasing companies. To this day, I am totally bewildered by the lack of integrity and common decency exhibited by the sellers.

In the first situation, a company owner actually vacated the premises the day after the closing was completed! The new owners were completely caught off guard, there was no transition management in place, and their business became a “free for all” – it was total chaos from day one. Employees left, clients lost faith in the new owner, and it took months to right the ship. It may take years for this company to regain its former momentum.

In another instance, the seller agreed to retain their current role as president of the organization for a specified period of time. At a future time, the seller planned to devote increased time and attention to a second business that they also owned. The problem became apparent very early on. Instead of maintaining the role of an active president, the seller effectively “checked out” as soon as the sale was complete. Over a period of months, the vitality, the steady hand, the sense of direction, simply continued to bleed from the organization. When the need was at its greatest, this individual’s spirit was nowhere to be found.

How is it possible that these individuals could show such a lack of respect and integrity for what had been their life’s work for many years? As these individuals reflect back in the years to come, what will be the final chapter of their story? Staff members who assisted in their prior success might have some interesting passages to share!

There can certainly be many rewards in starting over. I am only in; there are no guarantees. I have, in fact, validated one business principal over the past few years. While we may like to convince ourselves of our indispensability, a perception that only seems to grow over a period of years, this belief is as flawed and invalid as we were always afraid it might be. On the other hand, with resolve and some good fortune, there just might be more opportunities out there than we ever dreamed possible … only when the time is right.

Personal Regards,

Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2010. 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. LVIII

Dear Manager,

As mangers, we have all been graced by that very special individual(s) within our organization who, for the lack of another term “simply sparkles.” When you see them or speak with them one can’t help but smile. These individuals bring us unlimited pleasure simply to be in their presence. We can’t seem to have enough of their involvement and participation. These individuals rise above the day-to-day challenges of life.

As life would have it, there are also those at the opposite end of the spectrum. From time to time, management must deal with an individual whose negative approach has the unfortunate posture to turn our highs into lows.

Yes, these are the contrasts of personalities that we all experience. Fortunately, most of us, and those with whom we work, fall somewhere in between these contrasting styles. The balance of styles within an organization can be considered its barometer. The higher the barometer’s reading, the sunnier the skies in your organization’s daily forecast; the lower the reading, the greater the chance for stormy skies ahead. It’s simply amazing how one individual can turn a very sunny day into a natural disaster.

The single greatest factor affecting the character and culture of an organization – yes, every day – is ATTITUDE.

Of even greater concern is the impact a single negative attitude can have on the psyche of others within the organization, including us. Combine this with the inordinate thought process and conversation they control, and you can begin to see how far reaching their impact becomes.

Generally, the stabilizing force of any organization is its managers. We provide the consistency, the global confidence that all is well, that indeed the skies are blue, or will be again soon…

My experience has taught me that failure to address an “attitude issue” directly not only destabilizes one’s ability to manage, but undermines the confidence and morale of others “victims” within the organization. We all get caught up with “what is in our face.” Even though we might have twenty shining stars, a single negative individual wields amazing power. It affects us all.

There is a tendency to work slowly through this challenge. No one enjoys conflict, we simply hope it will all “work itself out” with time. As often as I have tried this approach, I’m afraid that nothing ever worked itself out! In many instances, attitude issues often originate outside the workplace. When this is the case, it is obviously much more difficult to get to the root of the problem. The situations where I have found success, however, have been the result of addressing the issue swiftly, directly and confidently.

Certainly the victory comes with saving a potentially valuable relationship. While this is the goal, it is not always within our control. I recently read a quote from John Malfura, a Portland-area manager, which stuck in my mind. He has challenged his employees by asking, “If your job isn’t fun, then why are you doing it? This is supposed to be a fun place, and if you have fun and exude that, those around will also.”

Yes, it can be as simple as that. Some folks, however, have never learned how to “make their own fun.” They may believe that it’s the responsibility of others to “make it fun for me.” Similar to our holding teachers responsible for “making” us learn, or a spouse for “bringing” us happiness, these individuals are destined for personal dissatisfaction.

I use these examples for the sole purpose of illustrating that this type of attitude will never bring long-term benefit to an organization. These individuals, for no other reason than their own attitude, have taken themselves out. They will never be stars.

SHOW ME A STAR

A star assumes full responsibility for their own happiness and making their own fun. These individuals understand that their circumstances are a result of their choices. If their circumstances can’t be positively improved upon or deemed acceptable, they have the option of considering other choices. What other effective alternatives are there? It all comes down to a positive thought process.

These are the individuals who nourish our soul. It is the stars who often require so little time and focus, and yet deserve the wasted time and energy devoted to the alternative. It’s time to tell the kids that can’t play nice to go home!

KEEPING IT FUN, AND WHERE DID I LOSE IT?

With all the tragedy we see via the news media, I believe it is increasingly difficult to simply keep it fun. Combine this with the constant link of technology, let alone financial pressures, and I believe all of our lives have become a bit more (too) intense. It has become increasingly important to take the time to enjoy and appreciate personal and simple pleasures. In today’s world, these are essential to a well-rounded and successful career, and survival.

As managers, we must take steps to insure that simple pleasures flourish in those with whom we work. The old school of thought would not have considered this life-saving (let alone attitude-saving) approach to business. In the past, we would simply have continued to ask for more. More time, more effort, greater commitment, constant communication and availability on call. We must accept the fact that the professional work place is all ready over committed!

I am not suggesting that all hope is lost, nor am I suggesting that we expect less or take an extended holiday. The professional bar for business success continues to stand tall. If counterproductive attitudes are no longer acceptable, the only question becomes how do we continue to meet our goals and protect the survivors?

We must learn to first appreciate our stars a bit more, and surround them with their peers! Personal growth for us and others holds the key. If we have no more time to give, the only alternative is to be much better and more focused with the time we have! While some with “an attitude” have come to believe they “have arrived” relating to personal abilities and growth, why is it that these are the individuals of whom I’m most suspicious?

Even in the most professional relationships I have, there is no one who does not have their own areas that need attention, this author included. We all need to take the steps to monitor and balance our personal and professional lives. This balance is the evidence that we know how to play. The new standards can then be set for all of those we work with as well. At all costs, save yourself and save your stars. It is the underlining positive attitude that is the true reflection of an organization.

As managers, we frequently can’t see any of the stars that sparkle due to a short term overcast. The overcast will come and go; the stars are constant.

Personal Regards,

Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2010. 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. LVII

Dear Manager,

Today’s strong management is about sharing the responsibilities and the rewards. All members of an organization hold a greater level of accountability. Anything less… and there is no organization.

I considered my role as a manager to be much less than it once was. We hold very little power without the strength of those around us. This position of ultimate power is diminishing at an accelerating rate. Don’t be confused. The balance of power is shifting. We can’t be intimidated by it, we must understand it and find its own rewards.

My memories go back to long before technology took on the role it plays today in all of our lives. In those days, my peers were the customers and our manufacturers. Staff members and field sales associates received their direction from me. This was also a time when our organization was a third of the size it would develop to.

The current layer of field sales management support from our factories did not yet exist. In addition, the only functions provided by computers were invoice entry and manufacturers’ commission statements Annual goals were established by each of our factories for our entire region. As long as we achieved this single number, we were heroes.

In those days, I might have had problems with sales in multiple regions, yet as long as the total region’s sales objectives were achieved, no one seemed to react, or be aware! Once our office was computerized, the information relating to sales was very revealing. For a time, I was aware of sales deficiencies long before our manufacturers. This was a huge advantage. I had the flexibility to solve issues long before they became a specific concern of the manufacturer.

The 90’s changed all of this. This is when the balance of power began its shift. Soon computer-generated reports were spewing from my factories’ computers. Field sales managers appeared frequently to review the reports with our associates and me. The window of opportunity to close the barn door before the cows got out had been seriously diminished.

Additionally, our sales associates were developing much stronger working relationships with their factories. The power continued its shift. In many cases, these strong rep-manufacturer working relationships were a significant benefit to the organization. Over time, these newly developed ties took on much greater meaning.

I now had support from the factories in the management of our organization. All parties now took issues that were considered “only mine” in the past much more seriously. Can you feel the shift in power? I must admit, I needed and appreciated all of the support, as long as it was consistent with my own voice.

My conversations with my managers were now much more specific in nature, as I could no longer “hide” challenging, unresolved territories and issues. This sword was double edged, as it made me a better manager in addition to bringing significant pressure to respond in a timely manner.

With all this additional information and tools, our staff and sales associates were faced with facts, many of them for the first time. Some members were unable to survive this transition. Those who replaced them, along with those who persevered and survived, were now much more professional than their predecessors. We would all need to be better in this world of technology.

I soon began to adjust to the transformation of balance. Quality drives confidence. Doing so is a direct reflection of the distinction of individuals that I enjoyed working with in my organization. It is also a balance that is consistent with, and critical to, our successful business relationships in the future. Along with the changes in the balance of power comes a new balance of responsibility. With this transition, the single adjustment I looked for from my associates was their own ability to:

ASSUME “THEIR” MANAGEMENT ROLE

Before we can ask others to think like a manager we must be willing to perceive them as a manager. None of us will master our objectives without truly assuming full responsibility for our present and our future. This includes full responsibility and empowerment for the decisions relating to their business. As their manager, we continue to have every right to know their plan.

In the past, there may have been no plan. This strategy, or lack of one, will no longer suffice. Good management requires all its members to create a vision for continued growth. Without growth, there is no need for management. Without management there can be no need for anyone to manage.

This suggests that more than at any previous time, we’re in this thing together. There was a time when management’s role was to be a thorn in the side of those they managed. A lot of hand holding and babysitting is required in this form of management. This is truly old news and, in today’s world, demeaning to both parties.

As technology continues to assist us in the management of our territories, this is no place for the faint of heart. The advances in productivity alone will challenge us to produce at an even greater rate per workday than ever before.

My associates have proven the ability to do what I did twenty years ago, often better than I did. All have assumed a role that they deserve, as managers of their sales regions. This is now a fact of doing business in the twenty-first century. Those associates who choose to live in the past, abdicating power due to lack of interest or effort, will not survive. Management of dictatorship heritage will no longer retain first-rate professionals. The management/managee relationship has become, without question, a partnership.

THE HANDWRITTING IS ON THE WALL

As managers, we must continue to relinquish a portion of our power for the good of the organization, let alone our own peace of mind. In doing so, we also relinquish an equal share of the responsibility for our collective success. This certainly sounds like a good trade off to me! The balance of power is now very clear and, more so than ever in the past, it is in balance.

Personal Regards.

Keenan

INTERPERSONAL© is published by INTERPERSONALBIZ.COM, Keenan Longcor, Editor, ©2010. 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