Archive for March, 2009

Forbes Layoff Tracker

You know the world is in trouble when a publisher decides to track layoffs.  Few appeared to be tracking hires over the years except for economists and government!

Check out the tracker at http://www.forbes.com/

When I awoke this morning I immediately noticed the sun shining through our windows and not a cloud in the sky. I knew today would be a beautiful day for a bike ride along a path that follows the old Erie Canal.

Like other rides, my goal was to bike in one direction for 30 minutes, then return to my starting point in less than 26 minutes. On a previous trek, I reached a barn, cattle, and some boys playing basketball on a cross road. I wanted to get at least this far today. To succeed, I must start with a faster pace in a lower gear.

I set off with my thoughts on the target.

The last time I rode this course I ran across four beavers, one opossum, one rabbit, two ducks, many birds and one snake. The most I’d ever seen in one trip.

Today however my mind was not completely on the trek but more on other challenges I was facing. I hoped my thoughts would not interfere with my speed; I sensed that I was less in tune with nature.

I biked at what I thought to be a faster pace than my last bike ride. As I approached the 30-minute mark, I believed that quite possibly I had not reached barn yet. I pedaled harder.

28:00, 29:00, 29:30, 29:50, 30…the watch gave chirped its command to stop.

I thought that I must have slowed down and not even realized it. How could I have not reached my goal? Didn’t I have enough carbs this morning? A little frustrated I took a drink and started back with the same zest that got me started. Then it struck me. I had no clue where I was and the scenery was different. I was at a place I’d never been.

I had actually kept my eyes so riveted to the road and my thoughts on my challenges that I blew by the old mark by over at least 1/2 a mile. I could not believe it. By taking my eyes off the extraneous and by not limiting myself to what I had seen, I had kept up the pace and overshot what I had expected to be a challenging goal.

On the ride back I had plenty of time to think about this SINGLE-MINDED FOCUS. How often have I let myself stop, because the scenery was familiar, and I had a goal in mind? If I had done this today, I’d most likely have done it before.

While this was going on, I was pedaling like mad to make sure I hit my starting mark on the way back. It was a slightly upward run compared to the first leg, and I was tired from the first 30 minutes.

As the minutes on my watch passed I knew I had to keep on pedaling hard. At 8 minutes I turned up the steam. At 5 minutes I felt that I may not make it so once again I pumped harder. At 4 minutes, no end in sight. At two minutes I became certain that the finish line was ahead, but could I do it in two? At one minute the entire part was an uphill grade. I put my legs into high gear and with 32 seconds to spare, I reached the end.

I had achieved both my marks—outbound distance and inbound return—and realized some life lessons.

If you focus on a goal, be careful you may achieve it.
With the right tools you can you’d be surprised at what you can achieve.
When you put your nose down, you may miss all the wonders around you.
An adventure/experience is what it is.

My table PC laptop lost its audio while I was traveling for work; this happened on Feb. 17.  I put off arranging for repairs until I could return home and settle down in my office. I wanted to check the warranty expiration date….then I just forgot.  On March 5, I discovered that the warranty had expired on Feb. 21!  My guess is the repair will be on the mother board, so to restore audio capabilities, I could be paying out of pocket for a new board plus the cost of labor.

The lesson: check your warranty’s expiration date as soon as there’s a problem.  The good intentions you have when you purchase an extended warranty are wasted if you don’t take advantage of the service!

As I entered the room, my son invited me to meet his new girl friend yet there was no one in the room. Ah, so 1900′s of me.

This is the year 2009 and my expectations were about to be shattered.  His girl was not in the room but 25 minutes away by car and our introduction was via a webcam.

Internally I was laughing at the realization that our 14 year old was truly in the digital age. Skyping and texting the two had formed a virtual and in person relationship that enables the two to share even when they are not face to face. (They met in person and have since spent weekends together so it’s perfectly normal…and she’s a great girl.)

I absolutely loved the new experience.

Recommendation, try to keep as current as possible by watching how kids live, since our youth may be bringing the next generation of ideas to our business environments.  In this case, our teens consider socializing via cam, text, and AIM as normal as by phone.

Would you?

… opens.”

Bet you thought it was an easy quote to finish.  Well, not only is the quote not finished, the original message is completely different than the quote often used to express the fact that opportunities are always opening.

Now here’s the entire quote as said by Alexander Graham Bell.

“When one door closes another door opens; but we often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.”

Ouch! Such a different meaning!!!!

In the rapid strategizing tool REDEFINING, a key element of great strategy is to create a complete challenge statement.  Here’s an example where the second half of the thought changes the meaning the message entirely.

US Republican Senator Charles Grassley said that he would feel better if AIG’s top managers were to take a page from Japan’s corporate management book.  In Japan, failed execs apologize, step down, and oftentimes commit suicide.  The suicide part of the equation hit a raw nerve with many.  Grassley, unfortunately, misdirected his anger. The employees of AIG, who were to receive $165 million in bonuses, are receiving contractual bonuses, good or bad, like it or not, using funds supplied to the firm by congressmen (in the house and senate) who did not do their homework, or worse yet, ignored facts that were public knowledge back in May of 2008. This is the US Congress’ problem, not AIG’s.  But our government is so used to spinning everything, that they can’t give us straight talk.

Now today, members of our US Congress, in a backlash for their own errors, want to tax individual bonuses for those working in firms that received $5 billion or more. This leadership back peddling does not exemplify leaders who are forward thinking and accurate in their execution, but leaders who believe that they know it all and then play politics when the house of cards falls. If mismanagement of taxpayer funds is the crime deserving punishment, then we should tell congressmen that they, too, should say they are sorry, give back their income, and then fall on their swords. Whether we’re talking about an annual income of one hundred thousand dollars or one million, the rationale should apply to everyone in America if the congressmen are as “American” as they espouse to be in the media.

Here’s the history. On May 8, 2008, AIG disclosed in an SEC filing their plan to pay bonuses.  This information was available while congress deliberated about saving AIG. No smoke and mirrors. On Sept 16^th, $85B was approved as a two-year loan to the institution. In doing so, congressmen made the assumption and the case that AIG needed the support to cover insurance obligations, without completely understanding the complexity of AIG as a corporation, and how some of the funds had to pay payables such as START. Congressmen did not do their homework; if they had, they would have realized that AIG had to continue repaying any obligations it had on its books, not only the programs that congressmen wanted supported.

Mirror this with TARP funding. In haste, congress approved the TARP package to help ailing firms to shore up the economy. In the end, the financial firms that received the funding have given out bonuses in the billions such as Goldman Sachs Group, Morgan Stanley and Merrill Lynch’s distribution of over $36B in bonuses. That’s 173,000 employees without including JP Morgan Chase Citi Group and Bank of America. Don’t forget there are other bonuses that have not made the news.

The reason this unfolded as it did, is that the funding came from congress with no detailed plan as to how the funds should be spent, only the inference that the funds should be allocated to shoring up the housing market. This was a congressional error in leadership as both in the understanding that if you give a firm money it’s tough to ascertain what money goes where and how. Some funds go to operations, some to sales and marketing, some to conferences, some to salaries. Most Americans knew this, so why didn’t those in congress?

What’s even more ironic is the same congressmen also passed, along with President Obama, another trillion dollars worth of spending with 8700 earmarks. In many cases, the earmarks are far worse than the million-dollar bonuses. The only difference here is that theft, and there will be theft, will happen in small amounts all across the country as friends give out deals to friends, quotes are elevated and policy is changed to fit who ever the legislature favors. In my home town of Syracuse New York, our city council just witnessed a NO-BID $8+ million-dollar renovation project for Syracuse’s Hancock International Airport. To allow this to happen, the council also voted to change limits on other policies so that the vendor could take the project. They changed the law to fit the funding?!?!

Lastly, since Rep. Barney Frank is very vocal about most of these policies, then he, too, must fall prey to telling the world he’s sorry , returning of funds, etc. Rep. Frank had his hand in the development of the policy that directed Fanny and Freddy to purchase additional home loans that spurred the housing boom, that created housing wealth, that allowed individuals to pull out “equity” to buy pools, furniture,  vacations, and to invest in the market, that assisted in AIG’s growth and helped to allow Credit Default Swaps to work and CDO’s to be created. And even if some people argue that he didn’t have a hand in some of these problems, he played his part, and in doing so, accepted tax payer money as income and used tax payer money in an inappropriate manner. I don’t have to add, but I will, Rep. Frank pushed for TARP, the Stimulus package and the recently pork-filled “government continuation bill.”

Now add the new 90% SBA loan backing and the $300B in funding to stabilize the mortgage industry, and I believe Obama’s administration and congress are going to be condemning a lot of other executives and employees in years to come. Our own American three-ring circus.

The question is, will congress act in haste through the next 3 years and 9 months and in each judgment error they make will they act as irresponsibly as they are acting today? Congress might even want to have a conference outside of Washington at a 5-star resort to discuss the issues.

This is all just mismanagement, and if it’s to ever stop, we need to require that those in congress slow down, spend more time thinking and less time in front of the cameras, and figure out what the best strategies are to take, including the TACTICS on how the policies should be executed. Remember, these people are PAID TO THINK and they are doing a poor job on both sides of the aisle.

I expect more from our youth than I’m seeing from our public servants. I’m expecting an “I’m sorry” and a return of their paychecks!

I love all news coverage given to the, soon to be dolled out bonuses of $165 Million to AIG employees.  I love the coverage because this is actually old news.  AIG’s management knew that they’d be handing out bonuses to employees as far back as last year. The reason, the bonus contracts were already signed and the ink dried.  Besides, senior management had to use these numbers when creating projections as they when they requested TARP funds. (Bonuses may have been rolled into other expenses to defray comments or lending restrictions.)

Remember, they are financial institutions run by the very same people who were to be receiving the bonuses.  This required the management to be very clandestine in developing tactics so that their expected bonus income would not be in jeopardy.

It’s the same tactic Merrill Lynch & Co.  employees used when they issued $3.6 billion in bonuses.  Keep quiet, have secret meetings, sign the checks and then see what Cuomo or any other government official can do to rescind the payments. Their belief was, distribute the money and then see how the game plays out.

So far the tactic’s worked for Merrill’s former employees.  Bank of America won’t release the names of the recipients and the global public heard little about how or if the bonuses will be affected. AIG is using the same coaching handbook.

What’s even more disturbing is that Obama and Geithner only released this information today. Hours before payment, Before anything could be changed in the loan provisions for AIG. To believe that Obama or Geithner had no knowledge of the situation is the equivalent of a physician not knowing that the heart pumps blood.  It’s the mechanics of how B of A, Chase, Merrill, Bear Sterns, Goldman Sachs, Morgan Stanley and all the other firms hired and fired their staff. Obama and Geithner had to have known this information otherwise Geithner is useless in his position and Obama is not connecting the dots. Government and AIG all participated in the charade.

So the next time you hear about the mismanagement of funds in either the stimulus package or the TARP funding, ask yourself the following questions.  1. How long ago was the information being released actually known about and by whom? 2. What decisions, both strategic and tactical, did those managing the process make to allow this to happen?  3. What would it have taken for those that are PAID TO THINK to have stopped the wasteful spending of taxpayer money from happening in the first place?

It’s my belief that those in government are PAID TO THINK.  Their job is not to build the roads or work in the schools but to think things through all policy well enough so that the future is better than the present.  This is not what’s happening at least for everyone who sitting on the side lines watching not just the $165 million convert to paychecks for a few, but the billions that have already traded hands.

This will happen again!

NOTE: (Over 70% of the worlds largest public companies do not have this bonus structure!)

Use Your Brain

I was hired to consult for the CEO of a regional building-construction firm. Together, we developed a strategy to clean up operations and grow sales. Regarding sales growth, my client had a very specific complaint about a vendor who was hindering progress.

The building-construction firm had an agreement with the manufacturer of built-in items. The agreement went like this; in order for my client to keep his status as a regional distributor of the building products (which totaled nearly a billion dollars a year), he would have to guarantee to meet vendor specified sales quotas. The vendor, in turn, would work as a partner by feeding back sales leads to the distributor. However, my client believed that many sales leads were not being forwarded to his firm, and he wanted fix the problem.

I assumed nothing. My first step was to test the process. I posed as a prospective customer and contacted the manufacturer. Stating that I was in the process of building a facility where at least 30,000 square feet of the building would need the vendor’s product, I requested information. From my estimations, I would be spending $300,000.

The salesperson asked some specifics and said that I would receive follow up information by mail.

Nothing arrived.

I called, again. They promised to mail out information to me, again.

Nothing arrived, again.

Two weeks later, the Northeast Regional Vice President of the vendor firm was to visit my client, their “valued” partner. I asked if I could be included in the meeting.

On the day of the meeting we met in the conference room where the CEO took the head seat, the vendor sat to his right, I sat to his left, and a few other high-ranking employees filled in around the table.  As the conversation entered into the “how’s-business” phase, I stepped in, and the CEO pulled back.  I quietly asked the vendor how his firm works their leads.

Vendor: “Well David, when a lead comes in via the net, phone, fax or mail, we place the information into our system and immediately forward the lead into the channel’s distributor so that the distributor can follow up on the business. Then from our office, we put together some literature and start the process moving so that the customer feels they are being serviced.
“It works pretty nicely and it’s why we are successful.”
(Again realize their revenue is in the billions of dollars.)
David: “If I were to call up and request a quote to fill a 30,000 square-foot facility with your product…how much is that worth?”
Vendor: “Depends on the product, but I’d guess between $250-$400,000.”
David: “Nice size project.”
Vendor: “It’s a very nice size project.”
David: “Then when I call, you take the call, you take down my information, name, address, type of product, and when the build out is to happen.  Right?”
David: “Then you forward on to me some information while at the same time your regional firm would get the lead so that they could follow up.”
Vendor: “Yes.”
David:  “So what if I were to tell you it doesn’t work?”
Vendor: “No, it’s nice process we’ve put in place.”
David: “No, it doesn’t work.”
Vendor: “Oh, it works very well.  It’s how most firms in our industry work.”  At this point he’s getting pretty cocky that he knows his business and everyone at the table sees the display.
David: “No, I’m telling you it does not work.”
David: “What I mean to say is I called your office, gave them the specs on a 30,000 square-foot facility and they sent me nothing. Also, my client received nothing at all in terms of a sales lead.  I even called back a second time to try to get the materials and nothing happened then, either.”
I then shut up as the vendor squirmed for at least 30 seconds, which seamed like 10 minutes.
Vendor: “You caught me by surprise; do you think that was right?”
David: “You tell me?”
Vendor: “Well you could have told me we had a problem.”
David: “You have been told you have a problem, and you insist that the process works. This time, we needed to get your attention.”

At this point the vendor had a completely different stature and position in the room as we outlined several steps to insure that his firm didn’t drop the ball again. The steps included how emails should go to the vendor’s office and to my client’s office at the same time.  There is no need to forward the information considering today’s technological options.

The lesson here is that even though you’ve planned out a process, you have to test it and be willing to improve upon it. Rather than stay married to the concept that something is working well, consider how you can constantly improve what you do using state-of-the-art technologies and methodologies. There’s really no room for overconfidence or sloppiness in today’s world…especially when everyone is fighting for a dwindling pool of prospective buyers.

The president of a regional retail store closed her door tell me she wants to find a phenomenal new sales manager that won’t cost her much up front.  Mind you the old one, a partner in the firm, is not working out.  She did not want to pay too much and she wanted the sales person to also sell.  Additionally, she thought that if she offered some form of partnership in the company, she could attract better talent.

Ouch!

She had no clue where to turn and this was some of the advice I offered.

1. She had to think differently. She’d worked for two years with the current condition so unless she’s desperate, she needs to approach this project with the feeling she’s not rushed.
2. She needed to think about hiring a sales manager and what her expectations were, because often the sales manager skills and the sales person skills are different.  One helps the other succeed, and the other sells.
3.  She might want to reconsider the partner idea, especially in this recession.  There are plenty of people looking for work and they will do it for less.
4.  She may have to cut staff to make the economics work, however, that is a last resort.
5.  She should not give away titles.  They are easy to give and tough to take.  Once someone is a sales manager, are they now a VP of sales?
6.  She needs to define what the role is.  A sales manager should be responsible for setting commission, hiring, firing, tracking, setting up territories, educating sales staff, deciding on strategy for the staff, reviewing profitability, etc.  A lot of work.  Unfortunately, most people believe a sales manager should sell and then TRAIN and MOTIVATE their sales people.  A lower position.
6.5 She also must consider that the new sales manager and the sales people will be at odds if the sales manager also sells and earns his/her money off the floor.  There’s a contradiction in what should be done.  Should the sales manager take the business or let their commissioned sales people take the business???  In this case, I suggested given that she can’t split the territory up so the sales manager gets a territory, she should give extra commission to the new hire for making the sales people successful.
7. She needs do this in private so as to not upset the current condition.  This can be done by setting up an email account outside of her normal business so that she can do the interviewing in private.  Gmail and Yahoo accounts take minutes to set up. Also, a separate phone line can be used so that the voicemail goes to another location or a private box where the prospect does not know the company.
8.  She could use a firm to help find the talent.
9.  I recommended using online posting on Monster, CraigsList, and other online resources to minimize cost and maximize exposure.
10.  A hiring methodology should be drawn out.  1) Review resumes  2) Phone Interview  3) In-person interview at a local restaurant  4) On-premises interview for the final batch.  Inclusive is a set of criteria that she wants filled so that she’s not reacting, but strategically fulfilling needs.  Akin to having a shopping list.  Have one and you get what you need. Don’t or leave it home and you bring home extra and forget the one thing you wanted to purchase.
11. Establish a pay the company can afford with options if need be.
12.  She must prepare a way to tell the current partner/sales manager while thinking both the good and the bad that might arise.  We’re talking human reaction here and it’s not often pretty.
13.  She must create an Up-To-Speed Model to get the new hire up and running as fast as possible.  This means a close connection in the beginning and less supervision as time moves one.  Ask the question, what’s the most important thing the new hire should know?  Make a list and then select #1.  Then teach it.  Then move to #2.

Now looking back it may seem like a long list of activities, however, each one allows for a more precise strategy to get the best sales manager possible.  The cost of doing this wrong could be tens, if not hundreds of thousands of dollars in lost business and productivity.  The cost to set in motion the above is relatively peanuts and worth every minute.