Employee Empowerment-- What is your employee's role?

  I met the other day with an airport fixed base operator (FBO).  He was extremely frustrated by the challenges he continues to experience with "service providers" in his community, especially regarding catering for aircraft that purchase fuel and then continuing on to their ultimate destination.
  The FBO manager told me a story about a deli that he prefers to use and has had excellent service from in the past.  However, last week, he called, on short notice and asked that 7 complete sandwiches, i.e., sandwich, chips, apple, drink be made for an inbound aircraft that needed fuel to continue on their journey.  The clerk at the deli told him that the "grill was off" and the sandwich  preparation area was being cleaned before closing.  The FBO manager asked, "What time do you close?"  He was told the deli would close in an hour and a half!
   Now, no matter of reasoning with the clerk to get the sandwiches made did any good.  In the end, the manager ended up "working the phones" trying to find someone or some cafe to make his 7 sandwiches for him to fulfill the incoming aircraft's meal needs.
   As we talked about this, the FBO Manager told me that cost was no object.  He did not care what the cost was, the client wanted the sandwiches and was willing to pay whatever!  Wow, when/where do you ever hear that, in today's constrained market?
   As business owners, it is important for you to insure that your staff is empowered to make decisions that will enhance/increase your business sales and business opportunities.  This requires that you provide your staff with the requisite training and understanding of their role in the overall operation of the business.  After all, you cannot be there 24/7/365, however, if you have trained your employees well, they will know exactly what they are authorized to do and how you expect it to be done.
   In the example above, we don't have enough information to ascertain what the deli cleaning  and closing policy was.  However, shutting the grill down and cleaning the sandwich preparation area 1.5 hours before closing does not seem to allow for "last minute" calls that can be very profitable.  In today's environment, one wants to insure that your business is taking advantage of all available opportunities, no matter how they are presented.  In this case, this was a lost opportunity that resulted in profit going down the drain.
   Have you trained all of your employees to be "customer service friendly?"  Do your employees know how much latitude they have in making decisions when you are not physically present on the premises?  Do your employees know that the customer is the individual who pays the bills?
   Although this may seem somewhat simplistic, it is not.  Each employee should have an "Owner" attitude-- insuring that they run the business just like you, the owner, has taught them to do.  Of course, if you have not taught them, then they have no idea of what is acceptable or unacceptable.
   In the case of the FBO Manager, I suggested to him that he visit with the deli owner and explain what happened and how he ultimately resolved his dilemna--- he ended up using a competitor that was not as good as his original deli choice.
   Employee empowerment is the key to great customer satisfaction.  The Ritz Carlton hotel chain empowers their employees to expend up to $2,000, no questions asked, to insure total guest satisfaction.  It makes no difference if the employee is the chamber maid, the bellman or the cocktail waitress, customer satisfaction is the key to Ritz Carlton.
   Although your business may not be in hospitality, the customer service attitude that your firm embodies will tell alot about how you do business.
   Give your staff the tools and training needed to insure that they are able to fulfill any customer requests, within reason, of course!  This is another way in which your business can enhance profitability!

Company Culture Drives Employee Behavior-- Good or Bad!

  I was visiting with a business owner the other day.  He told me that he had installed some video surveillance equipment in his business to ostensibly improve organizational efficiency.  His business is in the medical space, where working with various types of  prescription medicine is a daily occurrence.

  As we visited, I asked how his new video equipment was working.  Interestingly, he told me that the equipment worked well, however, he had already identified some staff procedural errors.  The more we talked, I discovered that all-though his business had established, documented procedures for most tasks, it appeared that the employees did not follow the established procedures.  When he told me about some processes which appeared to be egregious, I suggested that perhaps he may have to terminate some employees.  He told me that if he terminated every employee every time a procedural violation was discovered, he would have no employees and would end up doing all the work himself!
   Now, I fully understand that as humans, we all make mistakes and are prone to errors.  However-------, the corporate climate determines if we continue to make errors or we follow procedures documented in the process and procedures manual.
   I asked if he had documented processes and procedures.  He told me that he did-- and the staff were responsible for reviewing those procedures on a periodic basis.  I suggested that he may wish to increase the frequency of the review process, until such time that staff were both intimately familiar with the processes and minimal, if any errors were detected.
   I am a big fan of checklists.  The Air Force ran by checklists.  Now, some may say that nobody can think and thus, a checklist is needed.  A recent article in Business Week provided another spin.  The recent Business Week article talked about the B-17 Bomber and all of the initial problems that airplane encountered when it was new.  What was discovered was that the B-17 was so complicated for pilots, they could not remember all of the steps required in order to land the plane.  Thus, several crashed early in the program.  Not only were human life lost, the investment in aircraft was also significant.  However, after the development of take off and landing checklists, the accident incident rate was reduced to almost zero and the B-17 continued on to a storied history.
    The same is true of your business.  You should have a documented process and checklist for each and every process in your business or organization.  There should be a process for opening the business, turning on the lights, taking out the trash, setting up the displays-- EVERYTHING and EVERY PROCESS needs to have a documented process and procedure.
    Your next question is WHY?  The real reason is standardization.  If all of your processes and procedures are standardized, there is no question about what is expected, how a task is to be accomplished and what the end result should be.  Process standardization and checklists also increase productivity and decrease training times for new employees.  For a small business, the key to process documentation, standardization and checklist compliance is consistency.  For many small businesses, the owner does everything.  If the owner is hit by the train on his way to work, nobody knows how to do anything.
    Think about your business.  Do you have established processes and procedures?  Do you have process checklists for each and every task?  Do you require your staff to follow the checklist each and every time?  Do you explain during weekly or bi-weekly staff meetings the importance of following processes and procedures?  If the answer is NO to any of these questions, you have the opportunity to increase your efficiency, work to achieve greater profitability and provide standardization of service.
    My health care business owner decided to go back and review his process and procedures with his staff again, after we had our visit.  Remember, the reason you are in business is for GREEN DOLLAR BILLS!  Make sure that you have procedures in place to maximize your acquisition of those bills!

Dollars walking out the door? Do you see them leaving?

Last week I was away at a client engagement.  I stayed at a motel that had a coffee shop/restaurant/bar co-located with it.  On the first morning of the engagement, the waitress offered me a second glass of orange juice.  I said, "Sure, I would love to have another glass of OJ!"  When the bill came, amazingly, the second glass of orange juice was not charged.
  That evening, I stepped into the bar to see who was around!  I met a former student who was in town for business.  We sat and had an adult beverage, and he elected to eat dinner.  At the end of the evening, he picked up the tab and said, "They did not charge us for the second adult beverages!"
   Now, as a professional consultant, my antennae perk up high.  Do we have a problem here?  Is the corporate culture one of "giving" away product?  Do we have extra product in which to give away?  Do we have a staff training issue?  Is the staff giving away product in expectation of a greater tip for themselves?  These are all questions that a professional consultant is interested in knowing.
    Interestingly, the meeting that I attended for our engagement was also attended by the owner of the motel.  I asked her if this is common practice in her business.  Well, you probably know the answer-- NO, it was not a common practice in her business, or so she thought!
    Sadly, it appeared to me that giving product (and PROFIT) away is a common practice in her business, she just did not know it.  Now, I don't find it uncommon to "give" something away occasionally, especially in the hospitality industry.  However, I find this experience probably not a mere coincidence.  It appeared to me that to have "FREE" product "GIVEN" away in the same day by two different staff suggests that perhaps the business has a problem.
    Do you know if any of your dollars are walking out the door?  More importantly, do you know how many dollars are walking in the door and remaining in the business?
    If you cannot answer definitively or clearly on any of these questions, this is the time to engage a professional operations management consultant to help you and your firm regain profitability.  As the owner of the business, you establish the corporate culture in which the business operates.  As I have mentioned in many previous posts, you must be actively involved in all facets of your business each and every day.  This includes knowing what is going on all the time.
    There are very definitely times when "giving" something away makes great business sense and is the right thing to do.  However, those expenses should be carefully and fully documented in the budget and used for marketing and resolving customer challenges.
    Pay real close attention to what is happening in your business.  Interestingly, nobody in this motel knew me, who I was, what I did or where I was from.  This is all the better.  You know, if they are giving "PROFIT" to me, they are giving "PROFIT" to many others as well.  This is a matter that is well worth watching, especially if cash flow appears to be tight or profit appears to be less than it should be.
    With our turbulent economic conditions, paying attention to where the dollars are going every day is something that you, the owner, needs to pay attention to.  If you don't pay attention to the dollars, the dollars will find a way out the door and not into your pocket--where they should be!

Equipment Leasing- A Viable Option in These Turbulent Times

  In today's turbulent economic conditions, many business owners find themselves with short cash positions and a continuing reluctance to commit to the new expense of adding or replacing equipment.  Even though, this may be exactly the right time to replace equipment do to some great deals, the lack of fiscal resources may preclude a business owner from "making a big jump" and spending large sums of money.
  A viable option in today's economic climate is to lease new equipment to allow your business to remain cost competitive and possibly, reduce labor costs and increase organizational efficiency.
  A Fair Market Value (FMV) lease is an equipment lease that establishes portion of equipment purchase value as a "residual" payment at the end of the lease term.  This residual is typically 10-20% of the purchase value.  At the end of the lease term, the lessee has three options:
      A.  Return the equipment to the lessor and potentially replace/upgrade with new equipment
      B.  Pay the residual amount and receive full ownership title to the equipment
      C.  Refinance the residual amount into a monthly payment structure, with ownership transfer at time of payment completion.
   The Internal Revenue Service typically views an operating lease as a "rental" (since the payment structure is not based on full equipment value), 100% of your lease monthly payment can typically be written off as a business expense.  Check with accountant, attorney and tax professional for the exact circumstances of your case.  We don't provide any tax advice!!
    Depending upon your particular business case, it may be more beneficial to take advantage of depreciation, as opposed to a monthly expense.  Equipment leases can be structured as a finance, or capital, lease with a $1.00 residual payment at lease end.  These leases are considered to be "financing", so all of the benefits of ownership are available immediately.

OFFICE BALANCE SHEET TREATMENT


     Your FMV lease payment may be treated as an operating expense on your financial statements.  This approach does not increase your capital equipment purchases and add to your long term debt.

 CASH FLOW

     Leasing provides the flexibility to adjust the residual amount and the length of the lease term, allowing for payment structures that make sense to your business cash flow.  Some new equipment may allow for business expansion, technology upgrading or production capacity increases which may increase cash flow.  With affordable payment structures and the ability to write off payments, leases can essentially pay for themselves.

    Leasing makes sense in a wide variety of applications as you consider enhancing your overall organizational capability.  Like any financial decision, this is one where your accountant and/or tax professional need to be carefully consulted to determine the benefits of leasing to your business.  However, in these turbulent economic times, leasing may be exactly the way to acquire new equipment that can increase and enhance your business operations.  Now is the time to consider these ideas so that when the economic conditions return to normal, which they naturally will, you will be ready to achieve even greater sales and operational productivity.