There was a disruption in your business recently and now it is time to do an analysis and report to your Board about the incident. This is your chance to be a Leader or demonstrate that you may not be in charge of your business.
I was working with a client recently and, during a break, I was having a quick conversation with their Director of Finance. He told me how much respect he had for the CEO, and I asked why. He told me that each month he attends the Board Meetings with the CEO to cover off the financial aspects of the business.
He told me that anytime the CEO needed to advise the Board on any recent challenges, he never once pointed the finger at any of the employees. The CEO’s only comment, when asked who had the problem, was that he is in charge and the buck stops here. The Director of Finance also told me that when there was a great accomplishment to discuss, the CEO always gave credit to the employee or employees involved.
After a few meetings, the Director of Finance mentioned what he was observing and hearing to his peers on the management team. They were stunned, they had never worked for a person who was quite like this CEO.
What a great example of a Leader!! Take a look in the mirror and ask yourself if you could be compared to that CEO.
If you are the CEO, President, Owner or Founder, you are in charge. Do you act like it? Do you have the kind of respect and trust that this CEO’s team and Board obviously have of him?
If not, then Who’s in Charge?
Many factors influence the success of an organization’s leader. Skills, opportunity, temperament and intelligence all play a part. I’ve observed and worked with leaders representing a broad spectrum of capability and eventual success. Despite the attributes mentioned above, leaders cannot experience real success unless they manage their direct reports and their employees in a consistent and respectful manner. Here are some of the characteristics that distinguished the successes from the failures.
- Leaders must model management behavior to their immediate subordinates, and from there throughout the organization. Double standards are unhealthy and so the way a leader wants his or her managers and supervisors to behave has to be the way the leader behaves.
- Successful leaders clearly communicate specific performance expectations to their immediate subordinates. For example, if you, as leader “let them do their own thing” you may have to settle for what’s inappropriate or what you don’t want. The belief that specific direction to management constrains individual freedom and initiative is incorrect. If you want to give someone freedom to act, then it’s imperative that you define the limits to that freedom. Managing by Dropping Hints never works.
- The best leaders don’t tolerate incompetence anywhere in their organizations. They hold people accountable for the expected performance.
- Top leaders see that procedures are in place so that direction of the work force is systematic, orderly, managed and not left to chance. By using them, the leader can positively influence how all people in the organization behave and perform.
- Successful leaders are not lazy — they work hard. Research shows that maintaining a healthy management climate requires a high and continuous energy output. A proactive leader can improve the probability of organizational success, whereas a laissez-faire approach is likely to cause the organization’s demise.
- Successful leaders know when to make decisions and they avoid excessive consensus and compromise. Poor leaders tend to avoid decisions if the consequences might upset someone: they defer the responsibility for tough decisions to others.
- In today’s world, leaders must have effective interpersonal skills for coaching their immediate subordinates (management and non-management) and for gently and relentlessly enforcing the organization’s standards of performance.
- Similarly, top leaders recognize and fulfill their responsibility to manage their executives or senior management. Executives require direction, coaching and support — they’re people too. Good leaders are more than aloof figureheads.
- Equity is crucial for trust and morale in an organization. Effective leaders don’t play favorites. They practice a high degree of objectivity and fairness in all their actions, especially with immediate staff.
- Communication is the blood-stream of every organization. The best leaders have control over the communication process between themselves, at the top, and those at the bottom of the organization. Communication blockages are systematically routed out and eliminated. For success, not only do leaders place a very high priority on open, timely and valid communication throughout their organization, but also, they make it happen.
Throughout my career I’ve focused on practical and objective business skills as I transitioned from an engineer to a program manager to a Six Sigma champion to a sourcing professional. However, as an executive leading from a strategic vantage point, I find that soft skills contribute more to success than reams of results and objective data. Aligning functions and establishing partnerships create an atmosphere for better communication, greater teamwork and, ultimately, greater success for supply management and the overall company.
Create a Positive Environment
However, coupling soft skills with transparency, alignment, partnership and accountability can be transformative for any organization. Following is an examination of the importance of those elements and the roles they play in successful leadership.
Transparency. Fear often is created by a simple lack of information. When direct reports are unaware of your goals or how those goals may affect them, the tendency is to “fill in the gaps,” which fuels worry and uncertainty in an organization. A leader should effectively and frequently communicate the goals and objectives of a change initiative, explaining how the change will affect and improve the organization. Transparency also has the added benefit of creating a better understanding of the need for change.
Alignment. Alignment speaks to the “what’s-in-it-for-me” thought process that most people share. Consider how large troop movements are conducted during warfare. The troops are aligned and move in a coordinated and synchronized manner. This concept can carry over to the business world. Aligning separate, functional elements throughout a company requires that each group understands how their contributions support the company and advance their own careers. There is a greater chance for success by finding and creating this “skin-in-the-game” perspective.
I have used the concept of “servant leadership” to help me meet this element. How to first meet the most important needs of others. When I joined a company with a highly engineered product line, I knew that engineering support was critical to our success in supply chain and cost reduction. In my first meeting with the VP of Engineering, I simply asked, “What can Sourcing do for you?” He responded with, “Please improve the turnaround time on quotes, it is way too high.” I employed transparency, tracked and reported on each and every buyer and their individual time to respond to quotes. Over the next three weeks, we went from an average of 60 days to nine days for response. When I recalibrated with him after a month, he was happy and excited and said, “That is the first time Sourcing has ever come to ask Engineering what we can do for you, and I like it.” Our relationship and our results have continued to grow using the same philosophy.
Partnership. True partnerships can only occur when the internal business units are informed and synchronized. For example, when a highly engineered product goes through a cost-reduction initiative, the project can’t be successful unless the engineering, operations, marketing and procurement teams work as partners. Several years ago, I was in charge of a project to reduce costs of a product line. More than 2,000 ideas were generated from staff, but were considered because a partnership among various functions had not been formed. Marketing, for example, rejected many ideas claiming that customers would never accept some of the suggested changes. The engineering department, which had to approve any proposed changes, became defensive about changing the original design plans.
Thus, the project was relaunched for greater success — only this time we changed the approach. Support from senior level management and all functional leaders was conveyed throughout the company. Functional leaders met weekly with their staffs, which kept visibility high and allowed for transparency and alignment. A clearly communicated mandate for cost reduction was issued by senior management. It also was decided the results would be scored by the finance department, which other business units considered an impartial function. We required that all ideas be judged objectively, and found that previously unacceptable ideas were harder to criticize. The result was a high approval rate of the same or similar ideas generated during our first attempt. There also was a better acceleration of results due to partnering and alignment of resources across all functions.
Accountability. Accountability, which includes tracking, monitoring and reporting successes and failures, is an area where many companies fall short. Too often, there is a lack of clear ownership of a task, project or initiative. We all know that “when everyone is responsible, no one is responsible.” That’s why I believe holding others accountable also requires us, as supply chain leaders, to hold ourselves accountable. Without accountability, it is difficult to achieve true success. In the cost reduction example discussed previously, a senior executive was selected to champion each project to be certain that someone owned the end result.
Trust Holds It Together. Transparency, alignment, partnership and accountability are important to successful strategic leadership, but the glue that holds them all together is trust. If a leader at any level in the organization has a hidden agenda or fails to be a true partner, none of the four elements will be effective because trust will have been lost. Ethical behavior and demonstrated consistency is critical for effective leadership.
I recall an incident when a senior procurement leader at a decentralized organization rolled out a purchasing card program to nine separate business unit presidents. He failed to mention the program included a 2% surcharge on the card’s use that would help fund the creation of a centralized procurement organization. When the business leaders realized they had not been consulted or given the option to approve the use of money from their operating budgets, the establishment of a centralized procurement department ceased and ultimately reversed. Because of a hidden agenda and an ethical lapse, trust was lost.
Strong, successful leadership involves many skill sets, and when those skills combine with a leader’s commitment to transparency, alignment, partnership and accountability, amazing results can follow.
A major reason so many small businesses go out of business is due to Cash Flow, even though they have a profitable Gross Margin. How can that happen?
If your business or part of your business is involved in buying or producing and selling products, then this article is for you. Keep reading.
Why are so many businesses struggling with Cash Flow issues?
The answer is in your Balance Sheet and how you manage your Working Capital. The definition of Working Capital is: Current Assets minus Current Liabilities. In simpler terms:
Working Capital = Inventory plus Trade Accounts Receivable minus Trade Accounts Payable
Every business that is growing will experiences growing pain for a simple reason. To achieve higher product Sales, you need to invest in more Inventory, which ties up part of your Cash. Your higher sales of products result in higher Accounts Receivable (A/R) and not all your customers pay in time, which ties up more Cash. On the other hand, your suppliers typically are insisting on timely payment, pushing your Accounts Payable (A/P). The result is a longer Cash cycle of invested money from the time you must pay your supplier to the point when you see the money back in your bank account.
The answer lies in efficient working Capital Management.
You get your first clue by looking at your Balance Sheet and whether your Inventory and Accounts Receivable have grown. Have you invested additional Cash in Inventory and A/R in the last few months or compared to last year?
If the answer is yes, stay tuned, as we will show you how to improve your Cash Flow through Inventory Control, A/R and A/P Management.
Mastering the Follow-Up
Everybody would like a one-call close. However, 99% of sales calls do not close in one call. You have to master the follow-up process.
At Josh Turner’s session on “Follow-Up Funnels” at Ascend 2017, he showed this graphic from a Microsoft study. Take a moment to absorb the graphic.
The Key Takeaways from this study are:
- 85% of sales people give up after the second contact with a prospect
- This is interesting because it typically takes up to five contacts to even become a factor in your prospect’s mind
- By contact number eight, you are most likely the only person to make eight contacts with this prospect (i.e., you’ve officially out-worked the competition)
- By contact number nine, you have a 90% chance of being the one who is called when your prospect is ready to buy
- On average, it can take 12 touchpoints to turn a prospect into a client.
What are you doing to master the follow-up, out-work the competition, and turn a prospect into a client?