Archive for September, 2013

About Management
September 18, 2013

Best English band since Oasis. Enjoy.

I am overly qualified to talk about management because I have been good at it for a long time.   Before I was good at management, however, I put in extra time being awful at it.   Downright terrible.  I have managed more than a couple organizations down in to a black hole of failure.  I’m qualified to write about management not because I am good at it now, but because I was able to realize just how awful I used to be at it and make changes.   Most managers are terrible at “managing” things and never realize it.  Thankfully for them, large organizations with poor management have a way of gelling in to mediocre companies so everyone gets off the hook.   It’s all relative.  But if you want to be a good manager you have to realize that – like everything else – when you start at it you are beyond terrible and realizing how terrible you are is the only way to get on the road to improvement.   People who think they are “born leaders” or who were promoted into management because of success in a non-management position start off as awful managers too.  

Anyway, a friend asked me recently for recommendations on management books and I told him I could teach him to be a good manager in 800 words.   It might take a little longer than that but it shouldn’t be by much.   Let’s get started.  

How to be a good manager:

  1. You are their boss, not their friend.   If you want to be “liked” then join some social groups outside of work.   Not to say everyone should hate their boss (and you are the boss) but joining your reports in fantasy football leagues and poker games and chats around the water-cooler is the first step towards hearing about their personal problems and excuses for why they aren’t doing a good job.   And once the door is open a little it will eventually be open a lot and you will be stuck as a bad manager.  
  2. You do not want to manage your business or group “like a family.”  Most people already have a family that drives them nuts and includes drama and craziness and disfunction somewhere in it.   Making your business “a family” is a disservice to them.  It’s a business and employees will be glad that you treat it as one.
  3. Create an environment of success.  From providing tools (CRM software, training, etc.) to making sure the coffee pot works, your first job as a manager is to make sure your reports have everything they need to succeed.  You should create a space where they can focus on their work and not be distracted by annoying things that take away from their individual missions.   
  4. Compensation is the best predictor of behavior.   If you want your salespeople to focus on selling widget X instead of widget Y, pay them more for selling X then Y.  If you want your supply chain to deliver one day ahead of expected schedule, pay your supply chain team more when that happens and less when it doesn’t.   If you want your drivers to return the trucks to the yard with a full tank of gas, pay them more when that happens.   People will do what is in their own best self interest financially.   Pay them extra when things happen EXACTLY as you want them to happen.   Pay them less when they don’t.
  5. Measure absolutely everything.   Every business has a formula for success.   In sales that formula might be something like this:  $20,000 of revenue can be achieved by making 40 outbound cold calls each day, setting 5 appointments each week, and signing one contract each month.   Finding the formula is your job and the only way to do so is to have data that you can measure.  Once you’ve discovered the right formula…
  6. Trust but verify.   Your inventory guy said he counted each item twice as it came through the door?   Excellent!   Subject him to regular spot checks.   Your salesperson said they made 30 calls today?  Great!  Check the CRM software and/or call log.   Your formula will only work if it is being enforced 100% of the time.   And the only person who is going to enforce it is you.  
  7. Be clear on expectations.   Every employee needs to know exactly what you expect of them at all times.  They need to know what part of the formula they are responsible for.   You expect a salesperson to have 10 in-house product demos each week…your accountant is to have the previous day closed by noon the next day…your nurse staff is to have all patient follow-up calls logged by Friday close…your scheduler needs to deliver a build forecast at 4pm every day…whatever.   Be crystal clear on expectations and if the employee doesn’t understand, work with them ASAP until they do.
  8. Be fair.   If you’ve communicated expectations clearly then the employee knows exactly what they are supposed to do.   EXACTLY.   If they don’t meet expectations for the period of one month, tell them you expect immediate improvement and work with them as much as you have to to help them.   If they don’t meet expectations the next month invite them to work somewhere else.   Seriously.  It’s not working for some reason (bad fit, bad employee, bad teaching, whatever.)  But take their badge and walk them to the door.  Two months of poor performance can be covered by other team members and can be recovered from quickly.   Any longer and a culture of failure-acceptance is created and you will NEVER get it out of your organization.  
  9. A quota is the MINIMUM expected level of performance.  Most large organizations set quotas or measurable goals for everything from sales to recruiting to whatever.   ANd many of those organizations don’t put a person on “probation” or “work review” until they have fallen below 80% of quota.   That makes no sense – why not just make the quota 80% of the original number?    A quota should be the benchmark of what you expect; anything less is unacceptable and “missing” two periods in a row (month is shortest, biannual is longest) is an invitation to work somewhere else.  
  10. Meet with your reports all the time.   Most people hate when their boss is always asking what they are doing or what is going on.   If those types of people work for you invite them to work somewhere else.   A boat or airplane only reaches its destination by constantly gathering feedback and recalibrating direction.   Your group/org is the same way.  You must constantly be gathering info…is everyone making enough sales calls or taking enough meetings?  Is everyone pulling inventory for upcoming builds on schedule this morning?  Are they still doing so after lunch?   Go on customer visits with salespeople…listen in to phone calls on the support queue.   EVERYONE in the organization should be held accountable all the time for the work they are expected to do.  And they should know that at any given moment you might be standing over their shoulder making sure they are doing what is expected.  
  11. No one deserves a raise – ever.  If your compensation plan provides for bonuses/commissions that are tied to expected performance than that is enough.  As my friend Rick (VP at a multi-billion $ company) tells his reports: “Your raise becomes effective as soon as you do.”
  12. Do not tolerate excuses.   Experienced workers, especially salespeople, will have excuses for why they need a raise or a larger expense allowance or a day off for something or whatever.   Do not fall for it.   If you have communicated expectations clearly (which includes how much time off people are allowed and how commissions/bonuses are structured and paid) then the rest is none of your concern.  If people can not follow the expectations then invite them to work somewhere else.   
  13. Salespeople – a MAX of a 90 day draw against future commissions.   90 days is enough time to get ramped up and see results.  If you don’t believe me, hire two people of equal talent/experience and give one a 6 month draw and one no draw at all.   The person with the 6 month draw will start selling in month 7.  The person with no draw will start selling right away.   
  14. Don’t hire salespeople that insist on a larger or longer draw.  If your compensation plan shows a realistic path to reaching personal financial goals then that should be all that matters.  You want salespeople that are motivated to get out and work hard and achieve those goals.  People insisting on large base salaries and extended draws are looking for a place to collect a paycheck and will disappoint you and you will eventually invite them to work somewhere else.   The ONLY exception would be if your organization has no existing sales infrastructure and you are starting from scratch.   Getting the ball rolling from absolute zero is a challenge – find the right person to invest in and give them some latitude.
  15. Interview people all the time.   Even if you don’t have any openings its a good idea to interview people and keep a pool of potential candidates available.   If everyone is meeting expectations and following the formula then the business will grow and you will already be set to hire.  Plus your current employees know that they are dispensable – if they aren’t meeting expectations you can have them replaced by tomorrow morning.  As a final benefit, word will get around to your competition that you are hiring (even though you are only interviewing) which will cause their best workers to call you looking for a better job.   Seriously.
  16. Obsess over the “key thing.”   In every business the most important thing is cash flow, which is a result of profitable sales.  However, getting to profitable sales can be a function of having a great product or running an on-time supply chain, etc.  Find that thing and obsess over making it perfect.  If your business is manufacturing, for example, then every minute  that the line is not operating on-schedule is money lost.   You are paying wages to people who are standing around waiting on the line.  You are paying extra freight costs to get the missing component their on time.  You are paying extra long distance to call and apologize to your customer for missing their target date. Find the thing that matters and focus on it all the time.  Make sure your entire team knows how they are doing when measured against that “one thing.”
  17. Show everyone how everyone else is doing.   The metrics that you are obsessively measuring need to be available for all to see.   If Paul is outselling Joanne by 200% then they both need to know it.  If Fran is processing more orders at 100% accuracy then Edgar than they both need to know it.  “Praise in public, critique behind closed doors” is stupid and a waste of time – you don’t have to do either.   Let employee performance serve as the only praise or critique they need.
  18. Run through walls for them and they will do the same for you.  Perhaps my favorite manager ever was a man named Charles.   He now owns some successful restaurants of his own but at the time I worked for him he was the General Manager of Iron Cactus here in Austin.   The place had been open about a month and was PACKED every night from Happy Hour to close.  It was a lot of fun to work there because the money was good and the people were so happy.  Charles followed all the mantras above (although I didn’t realize it at the time) to make sure the place was running at optimal efficiency.   He worked with waiters to make sure we were upselling and worked with cooks to make sure food was consistently good.  He worked 18 hours a day and never complained – he was dedicated to the formula and never let up for a moment.   One night, an argument broke out at the bar.   The place was full as usual and a patron was insisting he had paid for his round of drinks with a $100 bill.  Jeff, the bartender, had given him back change for a $20.    The patron was making quite a scene and swearing and calling Jeff a thief and generally disrupting the good time being had by all.   A crowd of employees and other patrons had gathered.  He asked for the manager and Charles appeared.   The Patron explained the situation saying he’d paid with $100 bill and the “lying” bartender was trying to steal from him.  Charles responded without delay by asking Jeff how the man had paid.   Jeff replied, “I swear to God, Charles.  He gave me a twenty…you can check my drawer.”  WIthout batting an eye (and without checking) Charles pulled five $20 bills out of the drawer, handed them to the Patron, and said, “Get the #### out of my bar” before going back to work.   Looking later confirmed that Jeff had been telling the truth – the man had indeed paid with a twenty.   But from then on, Charles never had a problem getting Jeff or any other employee to work hard; none of us wanted to let him down when we knew he had our backs.  He trusted us to do the jobs he expected us to do, and we knew we could trust him to create an environment for success for each of us.

Some of these rules may seem harsh or not the way you do things.  That’s fine.   You might be able to succeed another way.   But I do know that following each of the rules above works.   Follow all of them all the time and your business will succeed.   Following some of them some of the time may lead to success as a manager, but it will take longer and be harder earned.