Building Business Value | Corporate Management Strategies

The Magic Interview Question

Ok, here it is.  No waiting.  We are all busy, busy, busy this time of year!

"In 18 months, I want you to be on the cover of "HR Magazine" with the tag line ... How to Attract and Retain in the High Tech Industry.  Can you do it?"

That was the magic question.  The one that lead me to making a great hire for our head of Human Resources.  Let's set the stage a bit.

In 1999, I took over as CEO of a company in suburban Washington, DC named CTX.  In my first couple of days on the job I did a lot of listening and asked a bunch of questions.  One person I did not hit it off with was the Director of Human Resources.  During our initial meeting, it became obvious that we were going to butt heads on virtually every cultural and leadership tenant I held dear.  As I began to plan my course of action, she made it easy and quit.  That was my third day on the job.

So we started a search for a new director of HR.  Our search firm narrowed the choices a bit and I ended up interviewing 12 candidates.  On the very first interview, the candidate asked a great question.  "Mr. O'Neill, what are your expectations for this job."  I thought for a moment and asked if they read any trade rags in their profession.  She said she read "HR Magazine".  How creative, I thought!  But, as I would find out, "HR Magazine" is a terrific magazine put out by the Society for Human Resources Management.  So my response to her query was that in 18 months, I wanted her to be on the cover of "HR Magazine" with the tag line ... How to Attract and Retain in the High Tech Industry!

I was onto something!  I quickly turned that into a question and in 11 of the 12 interviews, I watched each candidate crawl under the desk when asked if they could meet my objective.  One candidate, Chip Paddock, jumped at the opportunity to shape a corporate culture.  He talked about the role of HR going beyond benefits management and being an integral part of the leadership team and the formation of the company's culture.  We talked for hours and Chip turned out to be a terrific fit for the company.

Find your magic question when interviewing.  There may be two or three, but you must find a way to determine if each of your hires will build business value for your team and your company.  It should be fulfilling and rewarding career move for the candidate and it should simply be obvious.

Remember, the folks that can't answer the magic question will be found cowering under the table!

Closing an Interview with the FlipVideo

Not every company is fortunate enough to be doing a lot of interviewing these days but there are a couple of midmarket companies that have decided to set themselves apart when closing a candidate.

Image you're a candidate for a key position in an attractive company.  You've just gone through the interview gauntlet and on your way home you notice an email on your Blackberry or iPhone and you decide to check it out.  To your surprise, it's a video email from the CEO of the company you just left.  She addresses you by name, references the staff you interviewed with and lets you know they plan on making a hiring decision right away.  How would you feel?  Would you be a bit more inclined to accept an offer from that company?

It is actually a relatively simple addition to any recruiting and interviewing process.  Just prepare a short script for the CEO and set your FlipVideo for a 10-20 second snippet.

    - Make it personal ... add the names of the candidate and whom they saw in the interview.
    - Make it relevant ... talk about the position and the candidates background.
    - Make it quick ... post the video before the buzz of the interview wears off.

Don't get carried away with production.  We're all used to YouTube quality these days and the idea, like most things on the web, is to be personal and relevant.

 

4 Tips on Managing Your Banking Relationship

A company's finances are only as strong as its banking relationships. A great banking relationship increases business value by giving a company the flexibility to use cash when it most needs it. The worst time to ask for money, of course, is when you need it. You should sit down with your bankers monthly to tell them how great you're doing. You probably learned somewhere along the line that it is never a good idea to surprise your boss. Bankers are similar - they don't like surprises either. If they feel they understand the rhythm of your business, bankers are enticed to come to you with better deals, increase your credit line, and give you banking covenants you can work with.

Midmarket execs must have a good understanding of exactly what covenants your bank has imposed on you, how they work and what they cost.  Armed with this knowledge, execs can keep their part of the deal and find mistakes, oversights and any changes the bank might drop in overnight.

We've recently heard of a string of debt and revolving credit line covenant changes when smaller, regional banks were acquired by larger banks.  Many times, the local banker's hands are tied, but these changes do happen and can cost you money and misery.

A few things to keep in mind as you manage your banking relationship.

   1. Read any agreements you have with the bank.

   2. Meet with the bank (work on developing a personal relationship) and discuss all your current covenants, their meaning, how they are calculated and ramifications should you default on a covenant.

   3. Establish a meeting schedule to keep the bank fully informed on the company's position.  Think of it as "lunch with the lender."

   4. Make sure the banker knows it is their responsibility to keep you abreast of the services (and deals) they offer.

One final note.  Always work on your 'next' banking relationship.  You never know when the regional bank you've worked with for twenty years will become part of a larger entity that has decided not to serve companies in your market.

Are You a Born Entrepreneur?

The question of whether leaders are born for greatness or grow into greatness has raged for years.  The nature side will reference Alexander the Great or General George Patton and point to innate personal characteristics that contributed to their success.  The nurture camp points to Harry Truman, Abraham Lincoln or Sam Walton as successful leaders that seemed to grow into their roles as leaders.

In a recent article in the December, 2009 copy of "Fortune Small Business", Ian Mount picks up the argument as it pertains to entrepreneurs.  Are they made or are they born?

Mount points to research and genetic modeling by Scott Shane of Case Western University that suggests 60% of entrepreneurs are born and 40% are made.  You can quite easily find similar numbers on the nurture side.  The fact that over 500 entrepreneurship programs exist at major American universities suggest academia believes entrepreneurship can be taught.  Either that, or they're just taking your money ... which is not out of the question!

I taught entrepreneurship at UMBC for a couple of years and I have to tell you the whole idea that a textbook even exists on the topic blows my mind!  I do feel strongly however, that an opportunity exists to teach and mold the attributes and tendencies we normally associate with entrepreneurialism.  Similar to developing the leadership abilities in our workforce, we can teach people how to look for opportunities, how to calculate and manage risk, how to find financing, how to write business plans, how to bootstrap and how to structure a business.  We can even show people the benefits of the one attribute I most admire in entrepreneurs  - dogged stick-to-it-tiveness.

Yeah, great leaders and entrepreneurs are born with certain skills, attributes and tendencies that give them an advantage, but we can create environments where these same attributes are encouraged and fostered.

The bottom line?  Don't spend another second thinking about whether leaders or entrepreneurs are made or born.  You've been dealt a hand .... play it!  Whatever talents, skills, attributes and tendencies you have, continue to focus and build the important skills.  Surround yourself with entrepreneurial people and then find ways to help them grow their skills.  Whether they were born into it or not, you still have to nurture the seed for any great results.

Three Reasons to Scrap Executive Bonuses

In a blunt and thought provoking Wall Street Journal article, Dr. Henry Mintzberg, a professor at the Desautels Faculty of Management at McGill University in Montreal, spells out why we should simply eliminate executive bonuses.  I must admit I read it twice before I stopped twitching. It is a must read for leaders who find themselves thinking hard about what motivates their team.  It will certainly get you thinking!

I've always been a big fan of Henry Mintzberg but I flinched a bit when I read the headline - "No More Executive Bonuses! The problem isn't that they are poorly designed. The problem is that they exist."  The first half of the article focuses on the faulty assumptions used when tying corporate performance to CEO pay in publicly traded companies.  So the question for those of us in the midmarket is this:

Does an executive bonus plan drive long term business value in midmarket companies?

Let's put the article to the test.

1. Dr. Mintzberg argues that a company's "health is significantly represented by what accountants call goodwill, which in its basic sense means a company's intrinsic value beyond its tangible assets: the quality of its brands, its overall reputation in the marketplace, the depth of its culture, the commitment of its people, and so on." It is hard enough measuring goodwill in a publicly traded company and almost impossible to do in a privately held company. Everyone has a hard time finding metrics that both show the health of an organization as well as the performance of an individual leader.

Advantage: Mintzberg

2. Commonly accepted business practices say that performance measures, whether short or long term, represent the true strength of the company. Privately held companies normally do not feel the quarter by quarter pressure to produce exemplary financial results and can therefore keep their focus on long term value building objectives. Midmarket execs can almost always "do the right thing" and not be forced to trade off short term gains against long term losses.

Advantage: Bonus Advocates

3. The CEO, with a few other senior executives, is primarily responsible for the company's performance. We read about this sentiment all the time. Wall Street Journal, Forbes and Business Week are more comfortable touting one person's vision rather than a shared vision with an associated actionable strategy. Midmarket execs are not the rock stars their counterparts of publicly traded companies are so I find they have strong commitments to their customers, markets, employees and virtually all the stakeholders.

Advantage: Pick-em

So what do leaders in the midmarket do?  Do you eliminate bonuses altogether?  The old saw that people "act as they are measured" is 100% true.  If you measure and tie bonuses to key management indicators that do not build long term business value, you're in trouble.  But if you start with behaviors you desire such as making raving fans out of your clients or building a workplace culture that attracts and retains the best, you can find ways to measure elements of the behaviors that will lead to the business results you desire.

Five (5) Ways to Stuff your Business Development Stocking

Well you're making a list, checking it twice, trying to find out if your customers think you've been naughty or nice.  Yes, it's that time of year when we begin to put the results of this years sales behind us and look to the future.  Ah, the optimism of a new year!

One critical list to compile is your business development pipeline.  As you're playing around with forecasts and projections for the New Year, have you asked yourself what you can do to grow the top line? Well, here are five very low cost ideas to stuff in your BD stocking.

1. Ask for Referrals.  I spent a very short stint with Oracle in 1990 and the very first meeting I attended had a pleading VP of Sales asking if any of us knew of a customer in the telecommunications vertical market segment willing to give us a reference.  That was almost twenty years ago and Oracle now boasts thousands of references, but it started for Oracle and it will start with you, by asking for the first.  Ask your current clients and customers if they know of someone you should call on.  A referral gives you instant credibility and will shorten your sales cycle.


2. Educate Your Current Customer Base.  Are your customers aware of your entire product line?  Do your clients know each of the offerings you've developed?  Make sure your customer facing staff has a full understanding of your products and services.  You are not selling anything to your customers in this process; rather you are educating them on the skills, competencies, products and service offerings in your portfolio.


3. Stop By For a Visit.  United Airlines used to run an ad showing an out of touch sales force getting to know their customers again by flying all over the country.  Every sales person and manager was given a ticket to visit a customer, including the CEO.  Traditional marketing campaigns can be useful.  An inbound, web based marketing strategy adds a great touch.  Flashy collateral and sales calls still have their place.  All are necessary, but just not sufficient.  Spending time with clients and asking them how they are doing and what they need now and in the future will still distinguish you from most of your competition. 


4. Become an Expert.  People don't care how much you know until they know how much you care.  The combination of caring about your client and fully understanding their position in the market place is paramount when asking for additional business. Vertical market expertise is the table stakes for being added to the short list of providers.


5. Cull the Flock.  This may be a little counter intuitive but not all customers and clients are right for you.  Get rid of the high maintenance ones.  Some may cost more to service than they are really worth.  Geoffrey Moore calls this "bad revenue" and it can be distracting and keep you from adding real value to current or even new clients that really fit your profile.

So there you have it - five stocking stuffer ideas to help you grow the top line in the New Year.  And your business development team was thinking they were getting bonuses!  Ah, the joy of giving!

How's Business?

Well, it's that time of year.  The time of year when those of us in a leadership position attend our fair share of holiday happy hours, client office parties, family gatherings, year-end reviews, tax planning sessions and formal corporate affairs.  The question that normally follows "How ya doin?" is the inevitable "How's business?"  Now perhaps you'll hear close relatives like "Did you have a good year?" or "How are you handling this market?" or even "Are you going to be able to hang on?"  But no matter the words, the tone or the delivery, people just want to know how your business is doing. 

Now some, like your employees, your bank or even your customers, have a real vested interest and deserve an honest, thoughtful answer.  Others may just be nosy or are probing for dirt so feel free to blow them off and have a little fun in the process.  "We had planned to double this year, but since your firm laid off so many people, we were able to hire the cream of the crop and triple our production and earnings!"

The stakeholders you really care about are the ones with whom you should be creating an open and honest dialogue.  If you struggle with sharing information, now is the time to get over it.  If you've had a tough year, share your financial results and ask your team for their support and effort in turning things around.  This is a great opportunity to build long lasting working bonds and loyal allegiances.

If you've had a good year but are nervous about the next year, share that sentiment as well. One company we know is having a very good 2009 because they are completing work they bid on in 2008 while using materials they purchased during a slumping 2009. The company leadership knows 2010 will be a much tougher year because new players have entered their market, and with their entry comes added pressure to lower costs.  Share these market dynamics with your staff so they can also look for ways to drive down  costs while still meeting customer demands.

Take the opportunity to teach your team about your market and your business model.  Share as much information as you can.  If it's not the secret to Coke or personal information, then share the information with your leadership team and perhaps your entire workforce.

If you've created a culture where the performance of the organization is dependent upon just you, now is the time to build a coalition inside your company that will shoulder the burden of leadership.  Now is the time to build a deeper, stronger team that is equipped with the knowledge and tools to move you in the right direction.

So this time next year, your stakeholders won't be asking "How is business?", they'll be telling you the things they are doing to position the company for success!