Archive for December, 2007
Here’s a belief that’s evolved as I mature (aka getting older). And this belief is frequently lost in the daily grind.
All business is personal.
Earth shattering? Nope. Do we work that way? Always, or most of the time? Let’s look more closely.
Who performs business besides people? Machines? Animals?
Seems obvious. If only people do business, doesn’t that make all business personal? Yes, but.
Business can be performed AS IF we’re dealing only with machines, or animals.
Think about business processes and systems. The goal is to make them as efficient and productive as possible - like a machine. That can make it hard to keep people impacts in mind when focused on efficiency.
How about turnaround execs making fiscal-only decisions ? Short-term financial results produced at the expense of long-term viability? The easiest cuts (people impacts) are to an organization’s support staff and functions. Just the areas that keep the engine of growth and sustainability on the rails. And the new owners (oh yes, there will be new owners) are left holding the bag of a soon to implode business.
What about company policies that try to steer everyone into the same pasture? Customers and employees alike. The goal is to prevent a few strays from leading the herd off a cliff. But do the majority deserve barbed wire?
Whether it’s a business process, exec decision, or company policy, they all affect people. And these people are our customers and employees. Most of them we know, many we respect and enjoy, and hopefully we wish all of them to succeed as we do.
Business is still Business
The “all business is personal” belief isn’t about trying to make everyone happy, and then waiting for record profits and growth to tsunami in.
Business is still business. Companies must make profits, grow revenue, mitigate risk, and increase performance.
But “how” business is performed matters.
The Best Business is Personal
The “all business is personal” belief is about valuing, investing in, even protecting personal interactions and impacts when doing business.
This is a fundamental truth about all businesses. That the best business is personal. Even more so for service businesses.
An Example From the Past
Do you remember Barton Security, the pre-Allied-merger original? Remember their reputation? Their growth?
Barton was a values-based organization. It made all business personal.
Their strategy of taking care of their employees, so they’d then take care of Barton customers, was a chain of personal commitments.
Barton walked the talk about “employees being the company’s most important assets”. They were living their brand promise - first and foremost to their employees. Barton cared about them in ways their employees cared about.
As a result, their employees cared about Barton’s customers.
And those customers cared about Barton the company. Were fervently loyal. And they spread the word. As golden referrals. As word of mouth to colleagues.
Real Results
Barton grew organically to $350 million when it was acquired by Allied in 2004. That was impressive.
At one point Barton was so much in demand they told Silicon Valley prospects they wouldn’t be taking on any new business for a six-month period. Barton wanted to make sure their existing clients were taken care of first, personally, before trying to bring on others. They didn’t want to risk unsuccessful account startups.
Wow! Telling prospects they couldn’t hire you. That immediately made prospects want to hire Barton.
Their “all business is personal” created a strong brand with customers in local markets throughout the country. Their management teams consisted of loyal and committed staff. And their front line employees felt they were treated as people, as individuals, and that their performance mattered. Business for Barton was personal, and their people felt that.
Then they sold the company to Allied.
The Moral of the Story?
I don’t know if there is one. But there is a strategy. For buyers and sellers of facility services, acting and making decisions as if all business is personal pays off.
A long-term commitment to employee incentives and recognition pays off in retaining the best people at market wages.
Making responsible growth decisions pays off in growing at a rate where commitments to customers and employees can be kept.
Engaging contractors in candid and open conversations pays off in long-term relationships with higher productivity and lower total costs of ownership.
In what areas can you make your business more personal?
~~~~~~
Chris Arlen
President, Service Performance
Technorati: security, strategy, management
December 22nd, 2007
Chrysler announced 24,000 job cuts this year.
Motorola cut 3,500 jobs.
WaMu announced 3,100 jobs cut this month.
I’m sure you can add to this list. But it does make me wonder why those employees lost their jobs.
Did they:
- Earn year-end bonuses of $3,000,000 each?
- Receive stock grants worth millions of dollars?
- Use the corporate jet too much?
Silly me, of course they didn’t. They’re victims of decision making, not necessarily theirs.
Strategic vs. Reactive Decision Making
No top executive can infallibly predict a business future.
However, layoffs seem an easy out for some industries and executives. Yes, many attempts at financial viability are likely tried before layoffs. However, job cuts are part of an executive’s toolbox. They’re immediate, short-term decisions to a financial crisis.
But how much of a corporation’s crisis is a result of bad growth decisions - think mortgage industry?
Or being asleep at the wheel - think electric cars & the auto industry post 1973 OPEC oil embargo?
Executives are compensated for strategic decisions, hopefully more so than reactive ones.
What If…
…there was a business practice that required better decision making by top executives?
How about this: The key executive who makes the decision to layoff employees is also laid off.
Imagine how differently they’d work if employee layoffs meant theirs too. Guaranteed, no question.
Think how many creative strategies might be developed. Picture the increase in the quality of decision making. Executive thinking would start out with the endgame in mind of no job losses - theirs or employees.
But you may ask “Don’t executives get fired for their corporate failures? The same ones that lead to large layoffs?”
Obviously, top executives get fired. But they’re in a better position for getting rehired somewhere else - and their employment contracts cushion personal finances. See Bob Nardelli as he left Home Depot with a ton of cash and was hired by Chrysler in the same year. This isn’t the same situation for the 1,000s laid off.
Simplistic?
Of course this is. The devil’s in the details. But there are plenty of smart people who could figure out how to make it work.
It only takes looking at something that’s broken and not accepting it. But working to make it better.
After all that’s what we’re paid for, isn’t?
(For the record, Chris Arlen has never received a year-end cash bonus of $3,000,000, received millions in stock, or flown on a corporate jet)
~~~~~~
Chris Arlen
President, Service Performance
Technorati: change, layoffs, management
December 14th, 2007
Now that’s a serious question.
Whether you’re the contractor invited to bid, or the customer inviting bids, this can be a touchy question. From the contractors’ side, declining to bid invitations can have serious, short and long-term implications.
From the customers’ side, requesting bids can have some risks. What if a party was held (RFP sent out) and no one bid?
Implications for Contractors Declining Bids
The following are a few negatives and positives for contractors when they decline bid invitations.
Selected bids. This doesn’t mean declining most bids, it just means being selective when saying “no”. Here’s what might happen if you decline.
(-) Remove possibility of securing that contract, revenue & profit
(-) Remove possibility of commissions & bonuses from that contract
(-) May be removed from future customer bids for that location
(-) May be removed from future bids for that customer’s other locations
(-) May offend customers who later move on to other companies and exclude the contractor from bids there
(+) Save time and money spent on bids with little chance of winning
(+) Focus efforts on customers that are a better match (in targeted vertical markets, geographies & growth industries)
(+) Keep proposal win rate high
(+) Maintain morale & enthusiasm (more wins & saying no to bad bids)
(+) Require less sales & administration resources
Implications When Not Enough Contractors Bid
Customers have skin in the game too. Here are a few customer pains when not enough contractors bid. Oh yes, this happens. Think about online reverse auctions. There are more than a few contractors not playing that game. When no one bids, customers have to rework their bid process.
Here’s what might happen when not enough contractors bid. Customers are:
(-) Unable to produce savings, negative impact on company’s costs
(-) Unable to meet company timelines for savings
(-) More time & effort required to revise & redo process for successful bid
(-) Delay in getting improvements from new contractors as rebids take time
(-) Bonuses, job stability & promotions in jeopardy
Contractors’ Considerations for Not Bidding
Deciding whether to bid or not is rarely black and white. The exceptions are for illegal or unsafe work.
The following is not an exhaustive list, but helps decision making. Typically, one consideration, by itself, is not a reason to decline a bid. However, when taken together they lead to better decisions.
Online Reverse Auction MINUS
An online reverse auction by itself may not be enough to decline. However, an auction minus the following steps smells like a Hollow RFP.
- Without proposal submissions (where’s the value?) -or-
- Without site visitations (unrealistic specs?) -or-
- Without customer contact to answer questions (shooting in the dark)
Lots of Bidders
Lots of bidders (20-40) at the bid walk/meeting indicates there’s no pre-qualification process. It’s a cattle call. Think twice about this bid unless this is the water you swim in, i.e. government bids.
Customer Reputation for Low Price
It’s a flag, of some sort, when a customer has the reputation for buying low price. However, if you compete on low price, go for it.
Less Than 2 Weeks Bid Turnaround
Proposals due in less than 2 weeks, especially for large bids with multiple sites, can have the look of Hollow RFPs. These bids need more digging to see if you want that 14-day dance.
Customers’ 60+ Day Payable History
If Dun & Bradstreet say this customer typically pays late you’ll want to add that to your calculations. Maybe you accept their slow pays as part of the bargain. Or, you increase your bid price to account for 60-120 day receivables. Or, maybe you decline.
Legality, Safety & Liability Indemnification
No question on declining illegal or unsafe work conditions (which includes unsafe parts of a city where the site is located).
Typically, contract language for liability is handled between counsels; yours and theirs. Best to figure this out before spending the effort bidding.
Not Matching Operational Capabilities
- Do you know how to do this type of work?
- Have you done it before? Do you have great references?
- Do you communicate your capabilities well in your proposal and presentation?
Not a Strategic Match
- Is this customer in one of your targeted vertical markets (i.e., high-tech, healthcare, airports, etc.)?
- Can you support this customer’s location(s)? With existing offices? New ones? Alliance partners?
- Are you willing to invest in new technologies? New processes (i.e. ISO, Green Cleaning, Day Cleaning, etc.)?
Decline Respectfully & Promptly
If you decide to decline a bid invitation, do so with tact, respect, and quickly. No sense getting removed from upcoming bids at this or other locations, or with this customer when they move to another company. And you know they will.
Notify the customer, always in writing (email works), as soon as practical. This means make up your mind if you’ll decline immediately upon receiving the invitation. Prompt notification will give the customer a chance to replace you as a bidder when you decline.
It’s also a good idea to personally call the customer (both procurement and the end-user manager) and let them know you’re not bidding. Keep the personal and professional relationship healthy.
How do you make the decision to bid or not?
~~~~~~
Chris Arlen
President, Service Performance
Technorati: RFPs, selling
December 7th, 2007
