Why Don’t My People Manage ?

Leadership and managing people is seen by many business owners as one of the most challenging aspects of growing a company.

Listen to these series of interviews with Rob McGregor, a leadership coach to CEOs, business owners and military commanders about how to deal with some of the more vexing people problems that flummox the best of intentions. From why your people don’t manage as you would like them to how to manage your board and build high powered teams. Every leader who wants better performance, productivity and an end to the number one frustration of owning a business (do I really have to manage people?) should take 10 minutes out of their day and listen.

Want to find out how Rob would help you sort out your top three management frustrations?

Email Sarah Thomson at SarahT@spiritwest.com to arrange a free 30 minute coaching experience. Then you’ll know if you’ve found the right solution for you.

Podcast #1:  Why Don’t My People Manage ?

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Podcast #2:  Want to Grow Your Company? Learn How to Build High Powered Management Teams

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Podcast #3:  I’ve Got a Board But it’s Become Frustrating to Manage. Now What?

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Go Ahead, Make My Day! Rob’s tips on leadership

Want to be like Clint Eastwood, able to glare an employee into submission?

The Business Leader’s Dilemma
You hired what you thought are great people. Yet when they start working, you find that the results you wanted are not materializing. What is your next step? Fire them? Send them to a course? Wait till they figure it out?

Rob McGregor, Spirit West’s leadership coach says “Often it is not the person you hired that is the problem. It is that they have not received clear expectations nor had the opportunity to fully discuss what is needed. Or perhaps they did ask some questions but didn’t gain anymore clarity than before.”

What we notice with leaders is that they often think they have said what they want and in fact they have. But it was said once, it wasn’t a two-way discussion and what was said lacked the context of the bigger picture.

For instance, Rob notes that one client wanted his managers to organize their department so that they didn’t need as many people to do the work. Two months later, no changes were in evidence. The leader was frustrated and wanted to blame the managers for not following through.

Standing back from the situation, the following patterns are evident. Do you see yourself in this story:

1. The manager didn’t know what problem the reorganization would solve and how she would be able to do any better or differently without the additional staff member.
2. The leader did not explain his expectations and did not invite discussion as to how to achieve the result, what was important about it or how to go about making the change.
3. The leader waited and speculated about why nothing was being done rather than checking in regularly.
4. The manager fretted about losing a valuable employee.
5. The manager did not have experience reorganizing processes in her department. She was great at her technical skill not at process re-engineering.
6. The manager did not ask the right questions to get a full picture, did not assess what help she might need and did not ask for help in putting a plan together.

Hence, nothing happened. Who is responsible? Who is to blame?

McGregor helps business owners and CEOs deal with untangling these confusing situations. He says “The leader and the follower are both responsible for their lack of communication. Blame shuts down conversations so using it in the aftermath of missed expectations will not uncover the problem nor lead to a solution.”

The answer is no one is to blame. But both parties should be held accountable for working together on setting each other up for success.

And what would Clint do in the same situation? Stare himself in the eye and say “what are you going to do about it?”

Think you are a Horrible Boss?

Watching the trailer for the new movie with Jennifer Aniston, Colin Farrell and Kevin Spacey called Horrible Bosses, I wonder how many actual bosses cringe for a moment while remembering someone in their past that just made life hell.

We have probably all had at least one horrible boss still etched in stone in our memory banks. While the movie seems to make stereotypical over blown characterizations, you can’t help but wonder if anyone that reports to you thinks you are a horrible boss. It doesn’t take much to tip that scale from a boss you like or tolerate to actively dislike.

But think about it. Is it that people dislike their boss or feel more disappointed by what they don’t do? And if you have bad days as a boss, who can blame you. We are all juggling more with less (that’s why unemployment is so high right?) hoping to make the numbers work. It’s enough stress to make even the nicest people grumpy, impatient and wear a perma-frown on their forehead.

So, keeping it real, what do you think your people say about you to their colleagues, friends and family? Even if people like you it doesn’t mean they like how you lead or manage them. How bosses communicate guidance, give feedback and notice accomplishments are the real sticky points with most employees. And apparently most of us could do a whole lot better on that front.

We spend thousands on looking better but we spend so little on being better. If you are a boss, leading a company is fraught with people issues. You can keep hoping they go away, but the bigger the company gets the more you have to accelerate your learning to lead them effectively.

Here’s a simple way to determine if you need to add some skills to your bag of tricks. Think about the following situations. If you see the same patterns in your company, realize each one requires a different kind of leadership response. The fact the pattern is exercising its muscles in your world is evidence you may need think about how you want to invest in your leadership game.

Are these events going on in your company?

• Experiencing interpersonal and cross-departmental friction
• Company facing a lot of change and uncertainty
• Working with new managers who lack skill sets
• Never hearing what’s wrong except when it is too late to fix it
• Having a daily parade of people with problems expecting you to sort them out
• Waiting for the day to be over so you can get out of there
• Meetings that never produce an insightful conversation or a plan that gets implemented successful

Will this be your year to stop the Horrible Boss problem from spreading further? Rob McGregor, Spirit West’s leadership coach says that “Every one of these problems is something you can resolve, once you learn the secrets of holding people accountable, communicating expectations and understanding how you get the results you don’t want.” What will you choose?

Could you do a management buy out (MBO) at your company?

We’ve been asked a lot lately about whether a management buy out (MBO) might be possible for many business owners. The real question all owners should be asking is whether your company and you can afford the time and risk it takes to properly execute an MBO plan

Many owners wonder if selling their company to their senior managers might be possible as a way to reward employees and build a succession path for themselves. Before you start planning your exit day, you need to understand what might be involved. This information is useful to you whether you are the manager thinking of buying out the owner or an owner wondering if your employees could be your key to extracting your retirement wealth.

Typically, your business needs to be generating enough cash flow to pay your employee(s) a dividend in return for their performance in growing the company. The employee then uses that dividend to pay you for a percentage of your shares. Depending on the value agreed to, the growth of the company, its own need for capital, your payout might take anywhere from 3-10 years to complete. In the meantime, you have to hope you have picked the right employees and supported them enough that they are able to continue to grow the business.

The FACTS

1. Management buy outs are complicated to set up. Get help to structure them and each party should have their own legal and tax advice.
2. The valuation is based on cash flow.
3. Growth is hard for the company when cash is bled off to pay you out instead of investing in resources needed for growth. Know your growth options. Build Plan A, B, and C. Read here about what happens when you don’t have contingency plans and uncontrollable events rock your best laid plans
4. Sometimes part of the payout can be funded with debt. But be careful, if you don’t make your numbers each quarter, your banker becomes your boss pretty quickly.
5. Employees have to make a long term commitment. You have to learn to think like an investor. You love the company but what future prospects will make it loved by customers?
6. High gross margin businesses are better able to structure an MBO.
7. Risk is shared by both parties so communication amongst all players has to be transparent with a lot of mutual respect and support. No one needs a lawsuit because you haven’t built a relationship where you have learned how to speak freely with each other.

MBOs need all the right ingredients to bare the hoped for fruit. Don’t become attached to expectations and outcomes: try several plans out before committing on the bottom line.

Should I Sell Now or Rejuvenate my Business so it is Saleable?

Many people ask us whether this might be a good time to sell their company. Has the economy stabilized enough to make it worth their while? The short answer is, now is as good a time as any. But the question you really should be asking has nothing to do with what is happening in the economy. The right question should be “Is your company in saleable condition?” It is definitly the right time to rejuvenate and strengthen profitability so that in a year or two, your company is worth buying. And in the meantime, you will be rewarding the current investors… you!

So if you have been cutting costs and waiting in your comfort zone until buying cycles pick up, in hopes that you can survive till then, you have been playing the wrong game. Waiting is the least powerful thing you could do right now. If you really want to be in saleable condition, you need to get up out of that chair and learn how to add more tools to your bag of tricks beyond cutting expenses and paring back staff. Here are the three most powerful things you can do to improve your return on investment that will also help you start down the path of being a company and investor would actually want to buy:

1. Get Back to Basics: GIVE VALUE. Focus on standing in the shoes of your customer. What do they need that would improve the value they receive from your company and what would remove the hassles of doing business with you. Now is the time to innovate your product by building better service around it, helping solve the right problem for your customer. Get out in the field and start learning what frustrates them and then find a way to relieve that frustration. Give back. Be generous. Your efforts will be rewarded.

2. Think Bigger: NOT SMALLER. Build up your gross margin. Think of rounding up prices and mark ups. Do not give volume discounts, solve problems for customers instead. You will never make back a price discount with volume.

3. Forge Partnerships: JOINT VENTURE. You need to get to a broader market. Where can you add value to another company’s product or service? Team up.  Bundle up. You sell their product to your channel, they sell yours to their channel. Now you both have a broader distribution channel. Keep each other warm this winter and it will pay off in spades come spring.

And while you are doing all that, start learning a lot more about what it takes to become saleable. It’s a lot more work than you think. Start by taking this quick quiz from the Globe & Mail It’s your time to get ahead of all the other business owners who prefer their comfort zone over the fast lane.

Smart Succession with an MBO

Do you have a family-owned business and wonder how and who to sell it to? Yes, you should sell it, even if your successor is a relative. Gifting a business is the surest way to erode company value, lose brand leadership (and then pricing power), alienate your loyal employees. This article in the Globe and Mail  details the right way to go about the process of selling to a family member or even a manager in your business.

You will also want to read Tom Deans book, Every Family’s Business

How to Rebuild Your Company Brand

How to regain pricing power when customer loyalty starts to slip or competitors are gaining more of your market share. Lorraine Rieger McGregor was invited to write an article for Business Review Canada’s blog for the July edition on this very topic. Read it here.

Lorraine McGregor Interviewed by Business Review Canada on Merger Integration

In the July 2010 edition of online innovator Business Review Canada, Lorraine Rieger McGregor provides insights into ways to keep the value of an acquisition through the integration.

Will you be able to sell your company?

Will the Great Boomer Business Retirement Migration Actually Happen?

“We’re ready to sell. You know, we’ve kind of done all we can and we’re tired. It’s time for some new blood. So my partner and I want $5 million out of the business. So what are our chances?”

We listened to Trevor a proud and accomplished silver haired 59 year old , the owner of a 15 million dollar industrial company and wondered whether he and his 58 year old partner, Paul realized what getting that exit buyout would require on their part.

“There is only one way you are going to find a buyer willing to invest that much in your business. It’s called Exit Planning and it may take 2-4 years to complete before you’re ready to sell.” I looked over
at my consulting partners as we watched Paul and Trevor’s faces fall. We had seen this reaction many times before.

There is nothing more painful than seeing successful business owners suddenly realize their retirement dreams might remain only a fantasy.

With every phase of life, the baby boomers have had a profound influence on the movement of money across most aspects of our economy. But in their next phase of development will their luck with creating wealth run
out?

The numbers suggesting this is indeed possible are staggering.

By 2011, the first of 70 million boomers are going to turn 65 years old. There are more than 26 million businesses in North America, and 50 percent are owned by boomers, according to the Small Business Administration. And 7 out of 10 of these owners will want to sell their business over the next 10 years, according to the Association for Mergers and Acquisitions Advisors.

That represents $10 trillion in retirement value and 75 percent of that $10 trillion may not be realized according to Richard Jackim in his book “The Ten Trillion Opportunity – Designing Successful Exit Strategies for Middle Market Business Owners”.

Industry Canada and the US Small Business Administration are very concerned that boomer business owners are not paying attention to these statistics and secondly do not have a good understanding of what it takes to sell a business. They have alerted city economic development groups across the country like the City of Nanaimo, BC and the city of Chicago, IL who are now trying to come up with ways to alert owners and help them to get ready.

They are planning for the future to ensure their communities stay economically buoyant according to Jason Boyce in an article entitled “Get Ready for the Big One: Succession Facilitation & the Coming Demographic Wave of Change” published in Making Waves Magazine.

Spirit West Management advises owners what must be done to 
set their house in order.

“It’s much more than succession planning,”
says Lorraine Rieger McGregor, CEO and partner in Spirit West
Management. “It involves reorganizing the company so that an investor
 sees the value. That sounds easy but really what is involved is to stand
 in the shoes of a buyer and ask yourself, would I buy this company? Can 
I easily see that it will continue to grow if the owner leaves so that I
will benefit as the investor? Succession planning is all about how you
 will retire. Exit planning is all about how the business will continue to be successful after the owners leave, which is all important to buyers.”

Rieger McGregor of Spirit West offers these five tips for business
owners who are starting to think about finding a buyer in the coming
 years. First Tip? Start NOW.

1. Change Your Mind Set
Let go of your business now, emotionally. It’s not a reflection of who 
you are; it is an asset that has investment value. The more you can view 
your business from the eyes of an investor, the easier it will be to
make the transition to improving it so it will be attractive to
investors. This is not to say stop being passionate about your business,
it says let it stand on its own two feet.

2. Think Like a Buyer
If you were to buy this company tomorrow, what clues would tell you that
 it would continue to be a successful company? What would you look for to 
tell you that if you didn’t know anything about the company? Buyers want
 to see past evidence of growth: The plans, the result and the effect on
profits. They want to know the industries your company sells to are hale
and hearty especially in this challenging economy. Are your customers 
loyal, buying more regularly and getting your best solutions? Do you
 have a sales pipeline leading to increased revenue? What tools do you 
use for decision making? All of these things show a buyer you run a 
tight ship.

3. Transfer Knowledge and Power
Who will run the company if you’re not there? Can you disappear for six
weeks right now and be sure the company will still be humming when you
return? If not, you’ve got work to do. You may need a management team or
a CEO. You may need to start training and trusting your own people a lot
more than you do now. When you walk into your operation is the
atmosphere tighter than a drum or congenial, tense or excited? How come?

4. Clean Up the Files
For the next three years you’ve got to show increasing profit margins in
a consistent, steady uphill line. That means you will have to clean out
the personal items in your expense account, know where you are missing
 the mark and losing money and fix the problem and then set goals and 
targets that your team is accountable for. Then look at your agreements 
and contracts and get them reviewed by a lawyer. Do your supply 
agreements restrict geographic territory or activities? Do you have the
best suppliers on your team? Are your shareholder and management 
agreements tight or misunderstood? Get the right kind of help to sort
these problems out.

5. Focus on Growth
When was the last time you expanded your market place, launched a new
product or rethought your solution set to better meet customer needs? Is 
it easy for customers to switch from your product to some other company’s?
If so, you better find out why. Get to know your target market. Are 
you solving their problems in the right way? There is opportunity for a
 profit in every hassle you uncover in their business.

Buyers want to see a healthy pipeline of orders and opportunities for
the future. “This is not meant to tell owners what they’ve built isn’t
good enough.” Says Rieger McGregor. “It’s to let owners know that there
will be a huge number of businesses all wanting to sell in the coming
 years. Investors will have their choice of plum opportunities and will
 reject the rest. They will pick the investments where their risks of
 failure have been reduced. Owners need to know how to make that sense of
certainty obvious and reliable.”

It can take 2-4 years to sort out some of these issues. The time flies 
fast. Don’t be resistant to this effort: There’s a business to run
 and there might not be “know how” or time to try and get these ‘value’ 
improvements done properly and without business disruption. But investing the time gives both you and your employees a bright and prosperous future.

Exit planning and execution is something owners will need help with. You may
 need a consultant familiar with exit planning that can help plan and execute these change. Your accountant can devise the best tax strategies. Your lawyer will iron out the agreements and contracts and your board of
advisors should be challenging your decisions and holding you accountable for implementing plans. Then you know you close to having a saleable business.

If owners want to see their retirement plans realized, the time is now. Over the next few years it will be a buyers market, with many more competitors wanting that big exit payoff too.

And what of Paul and Trevor. They are one year into their reorganization and have found a new passion for their business. They know what they want and unlike their competitors, they are well on their way to becoming the right acquisition target for a buyer.

And they aren’t tired anymore.

The Five Essential Elements of a Growth Strategy

1. Customer Focused – It’s based on market research. You’ve got the right product, packaged in the right solution with well thought out support systems that the right target market really needs and wants and you can prove it.

2. The Company is Oriented to Performance – Your people have the kinds of conversations that lead to process improvements through respectful collaborative idea generation. Incentives are aligned to self-responsibility, authority, accountability  and ability to take risks. You provide support and training for those elements to be accessible to all.

3. You’ve Removed the Rub Points – There is a smooth communication flow from what is promised to the customer all the way from sales through order processing, production, billing, delivery and after sales support. You have a feedback loop to ensure what was expected was delivered. And you have policies that set out boundaries for the negotiables and the non-negotiables. You don’t expect your people to dance to the customer always being right (or wrong). Who to blame isn’t a daily way of life in your company: how to solve the right problem with the right solution is.

4. Your People Understand how the Company Makes Money -Sounds simple but it’s not often done. Everyone should know how their expertise and efforts contribute to the bottom line and where they fit in the financial equation. Even the receptionist and the shipper. Each person has a role to play in the efficient delivery of the promise to the customer.

5. You Focus on and Make Decisions Based on the Right Key Performance Indicators – Forward looking, gross margin driven, utilization rates, cash flow and labour tracking. Your indicators should show you where you have cash leaks in the system, before you have to start bailing. First place to look? Do your estimate gross margins on each product become your actual gross margins. Got a variance? Find out why and fix the systemic problems that cause it. (Hint - most problems are systemic, not personal, not one individual’s fault.)

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