Building a Team

 

As a business leader it is your role to get the most from your staff.  You must become the team coach, not the centre-forward.  You must create the conditions for your team to succeed whilst striving to remove any dependency on your own efforts or technical knowledge.  Here are some guidelines for creating a successful team.

-          Define a shared, clear, worthwhile purpose for the team – and continue to reinforce this

o   Define clear boundaries for the team and empower every member to question things within those boundaries (not only in their own area of responsibility)

o   Define the desired outcomes.  Make these challenging but not demoralisingly difficult

o   Make sure there is regular, objective, actionable feedback on team performance

o   Make improved team functioning, or dynamics, one of the desired outcomes

 

-          Create wholesome team dynamics*

o   The foundation for any high-performing team is trust amongst the members.  People must feel able to be open about fears and failings and to give and receive honest feedback

o   Trust enables constructive conflict, which is necessary to surface and explore options and arrive at optimum decisions

o   Constructive conflict, where everyone has had their opinions heard and debated, allows buy-in from all members to the agreed team goals and decisions and their part in delivering them

o   Because individuals have bought in to the team goals and decisions, individuals are prepared to be held responsible for delivering their elements of the plan and to hold fellow team-members accountable in turn

o   Shared goals and mutual accountability means that the team is focused on results

-          Build in diversity amongst the members

o   Don’t allow superstars to rule the roost.  Everyone, including them, puts the team first.  If your star performers can’t understand and deliver this then drop them from the team

o   Make sure everyone recognises their own strengths and weaknesses and those of their colleagues.  Make sure they understand that great teams are made up of individuals with complementary abilities

o   Respect amongst members starts with individuals having self-respect.  Make sure everyone understands how their contribution is valued and inculcate a sense of belonging and feeling of achievement in all team members

-          Create pride within the team

o   Look for opportunities to build the team’s respect and reputation in the wider organisation and beyond

o   Create opportunities to build team coherence beyond the task – perhaps through  social bonds

o   Acknowledge and reward their achievements

*Based on  “The Five Dysfunctions of a Team”, Patrick Lencioni

Productivity

The terms ‘production’ and ‘productivity’ are not inter-changeable and it would be a mistake to assume that higher production will necessarily result in higher productivity.  In the competitive market of today, it is important to the success of your business that you increase productivity levels. 

So what is meant by ‘production’?  Production is the manufacture of goods or provision of services with the help of resources such as buildings, machinery and manpower and transforming raw materials and components or service skills into the required end products.  However, the emphasis is on quantity rather than on how well or otherwise the input is utilised.

What is meant by ‘productivity’?  Productivity is a measure of output for some measure of input: maintenance visits per hour of direct labour; cakes sold per hour of shop assistant labour; boxes produced per square metre of steel or Helpdesk calls closed per man-month.  It can apply to a person, a department, a company, an industry or even a country.  For your business you can choose whatever measures are most useful

Why is productivity important?  Productivity has huge impact on profitability as shown in the table below.  The company has 8,000 hours per year of productive labour.  The budget is based on these hours producing 100 items which results in a 10% profit.

	Budget	Productivity higher	Productivity lower
Volume produced	100	110	90
Sales revenue	£100,000	£110,000	£90,000
Labour hours used	8,000	8,000	8,000
Labour cost	£80,000	£80,000	£80,000
Gross margin	£20,000	£30,000	£10,000
Overheads	£10,000	£10,000	£10,000
Profit	£10,000	£20,000	£0
Productivity	80 hours/item	73 hours/item	88     ours/item

So a 10% improvement in productivity (each person on average producing 10% more in a given period) results in a doubling of profit; a 10% deterioration in productivity results in no profit at all.

The same model would apply if the cost were raw material (the efficiency in this case being yield or, conversely, wastage) or machine time (utilisation).  This approach applies to services as well as to products.

How can productivity be improved?

-          Decide what it is you produce (the output) – this may not be obvious in a service business

-          Identify the main costs or resources utilised in production (the inputs)

-          Define your productivity measure(s) – in the above table it is labour hours/item

-          Monitor productivity over time and between different employees or resources

-          If the main productivity factor is labour then improvements can be made in training, supervision, communication, standardisation, documentation, tools, systems or support

-          For non-labour measures examine product or process design

The value of employee involvement in achieving success

The recession has led to a re-examination of what creates business success and one important factor to emerge is that ‘good work’ can be at the heart of good performance and is as vital to the small and medium-sized enterprise as to any corporate because a highly competitive global market applies to all.  You need to be prepared for life after recession; to be ready to make the most of it; to be in the front line of your particular area of expertise.

In his “Key Speech” in 1955, Ove Arup spelt out the importance to business success of motivating your employees.  To quote: “There are two ways of looking at the work you do to earn a living:  One is………. Work is a necessary evil………... The other is: To make your work interesting and rewarding. You enjoy both your work and your leisure.  We opt uncompromisingly for the second way.”

Ove Arup established a world-wide company and this fact just emphasises the strength of his argument; his principles apply equally to smaller enterprises.  Indeed, it is probably easier to implement these principles when you have a relatively small workforce.  His point is that you need to inspire your employees to feel important and valuable, but you cannot just assume you know what makes them feel that way.  You need to make the effort to find out and then collaborate with them to achieve those results.  Done properly, it will be time well spent and you will find the enterprise of which you are head has the motivation to surge forward and ahead of competitors.

Surveys referred to in “Good Work in our Times” illustrate that, for employees, a list of priorities is not always topped by wages and bonuses.  High on the list are trust and integrity, pride in the job, career growth opportunities and employee development.

Young people have grown up with technology and are unphased by that particular aspect of modern business; they like team working; flexible working; place high value on learning opportunities and are very environmentally conscious.  Through Facebook and Twitter, they can make comparisons of work experience across a wide area so your success or failure could be advertised - it would therefore be wise to have your employees singing your praises!

So if you build trust and mutual respect; keep your staff involved in developing policies; establish early discussion of any potential problems; allow them to enjoy the satisfaction expressed by clients when their efforts are successful – they will be a potent force for helping you to achieve success.

 

 

 

 

Four steps towards being a success

What’s all this jazz about being ‘trapped’ in your business?

Well, if you feel you are not progressing as you had hoped and planned; you don’t have enough time to do anything about it; you have no-one who could do the job as well and you are therefore no longer enjoying running your business – that’s what it means!

Okay, so what’s to be done?  There are four specific measures you can take to free yourself:

1. Beliefs:  Stop thinking you are the only person who knows how and develop a compelling vision to engage all your employees.  Delegate everything  - but do it well.
2. Purpose:  Think about what you intend to achieve with your business.  It will guide your decision making, clarify which course to take and which to avoid and will provide a focus to draw you on.
3. Systemisation:  Systemisation allows you to get things done through others so your time is released to drive business development and provide a reliable service to customers.
4. Engagement: If your employees are allowed to share in your vision they are easier to manage and will be more productive.   Engaged employees will take ownership of problems and feel encouraged to find solutions.

Of course, these four steps are interdependent.  Each enables the other three, and in turn is enabled by them:

·        Your belief that business leadership is about enabling people to be accountable, a clear and compelling vision and efficient, well-organised processes are all necessary for staff engagement to flourish

·        Productive, self-motivated staff, reliable performance measurement and clear objectives mean that you have the time to focus on developing the business and its strategy

·        A clear purpose, with a well-defined market and proposition, allows you to develop solid repeatable delivery processes and set relevant goals for staff...

However, if your beliefs do not include you as a business leader then you will struggle to define a true purpose.  If you have no clear purpose then how will you design processes to deliver it?  If you have frustrating, inconsistent processes then employees will not engage with the business vision.  Therefore it all starts with the leadership team’s beliefs about people, about what a business is and about the source of their self-worth at work.

The Four Step Programme©

The Four Step Programme© is the proprietary methodology that we use to help SME owners, directors and management teams make significant and permanent improvements to their business.  These changes re-energise the business; improving productivity, engaging employees, focusing business development, leveraging management time and making the business more scalable.

Within each step we select from hundreds of powerful, proven techniques to help you make the changes that are necessary.

Good management = good productivity

SMEs have to find ways to survive and prosper - in spite of difficulties within the economy - but it is very far from easy.  There is greater and greater focus on the importance of management skills, and the longer the UK struggles to head out of recession in the current global economic climate, the more important these skills become.  The importance of good management skills floats to the surface all the time as a key tool for survival and ultimate success in business.  We constantly hear that we lack productivity in this country.  Again, research demonstrates that good management = good productivity.

Some people are born with the talent to be a good leader and manager, but –as with, say, a talented cook – there are still basic rules to absorb which apply to everyone who wants to manage a business successfully and keep the staff on board at the same time.  There are several models which can be followed, but in the end they all boil down to pretty much the same core requirements:

• Providing effective leadership
• Strategy and Planning
• People Management
• Financial Planning
• Risk Management
• Innovation and Creativity

(National Occupational Standards for Leadership and Management)

However, although it is difficult to know what effective management actually looks like, it is a fallacy to suppose that because training costs money (rather than immediately bringing in money) it should be one of the first sacrifices to be made when times are tough.  A modest investment in good management training can significantly increase your efficiency, productivity and ultimate profitability, and is in fact a wise investment.

Time and again research arrives at the same conclusion: poor management practice leads to a high risk of eventual failure – as high as 56% of corporate businesses in the UK.  Conversely, best practice management can result in a 23% increase in organisational performance (take a look at this research paper for a more detailed analysis http://www.bis.gov.uk/assets/biscore/further-education-skills/docs/l/12-923-leadership-management-key-to-sustainable-growth-evidence.)  Although overall business management appears to be improving in the UK, the same is true for our competitors, so it is unwise to be complacent.

Common mistakes

• A perception that you can pick up leadership and management skills as you go along
• You are self-aware so far as your management skills are concerned and consider yourself to be competent
• It is an unnecessary expense to invest in management training
• You should dream up a mission statement and then tell your staff what it is, rather than involve them in its development

Good practice

• Invest in leadership and management skills training for yourself and your staff
• Regularly review and update the training.  This will enable your business better to withstand economic shocks and take advantage of new opportunities.
• Engaged employees are absent less often through sickness; they understand customer needs; they tend to be loyal and ultimately give the business a competitive edge

Nearly 40% of businesses could have been saved if professional advice had been sought earlier (poll carried out by insolvency experts mentioned in the research document referred to above).

Improving leadership and management capabilities makes sound business sense.

How self-aware are you about your management skills?

E stands for Enterprise in SME but ‘enterprise’ means more than business.  It stands for initiative; innovation; boldness and creativity.  You may feel you are achieving all these things in your business but they need to be underpinned by sound management practice.  You need something to hold the kite strings.

A research paper entitled Management Practice and Productivity: Why they matter has recently shown that managers are frequently unaware of how little they know about their own businesses in terms of management techniques but the difference between success and failure in business is how well owners manage, and that needs to be taught.  To quote from this paper, “…surprisingly few firms have made any attempt to gain an insight into the quality of their management behaviours.  Those that do so give themselves the opportunity to access rapid, cost-effective and sustainable competitive advantage.”

The best, most innovative ideas risk floundering on the cold slab of reality.  You need to demonstrate an expertise that is hard for your competitors to copy or achieve; a capability that delivers something valued by your customers but something that can also be used to extend into new products or services that require the same skills.  You also need to know how to motivate your staff and encourage them to feel an integral part of the success of the business.

How do you identify your core competencies?

• Look at your value chain and identify where you add most value from the customers’ perspective
• Which things would be difficult or impossible for you to outsource?
• Do you have computer systems or ways of working that help you beat your competitors?
• Do you have skills or knowledge that are transferable to other markets?
• Create alternative viewpoints; competencies may appear to be locations or relationships

How do you exploit your core competencies?

• Outsource or sub-contract activities that are not core so that you can devote more resources to those that are
• Identify other markets that rely on the same core competence.  For instance, if your business is contract cleaning then viewing your core competence as “managing a low-paid part-time workforce” opens up more possibilities than thinking of your core competence as “cleaning”
• Select the customers most likely to be profitable to you rather than accepting everyone who approaches you with business

As you learn to master these competencies and how to exploit them, you then need constantly to check their relevance and modify them if necessary – there are many management techniques to conquer but if you succeed, your business will develop more strongly.

Are you sure you are managing your business well?

The British Chamber of Commerce states that businesses are growing in spite of a weak economy in the UK.  SMEs can and should play a significant part in improving growth but good management strategies can make the difference between success and failure.  These strategies have to be learned but as a recent paper from Stanford University Management Practice and Productivity: Why they matter concludes, many managers are unaware of how little they know about good management practice and their own abilities to apply them.

As this research paper states, “There is no magic lever for management excellence.”  There are, however, tried and tested key strategies – best practice - which, if employed, can lead the way to this excellence and thereby greatly enhance the possibility of success.  However, these skills need to be acquired and before you can even do that, you have to identify what they are.

Key performance indicators help to show you how your business is doing, to see what progress is being made and whether you are achieving you goals and objectives.  If you are not achieving them they will highlight which areas need attention.

Look at these key management requirements and compare your management practices against them.  How did you fare?

·         Start by writing down the things that limit your growth; the things that limit your profitability; the things that irritate customers in your industry and the things that prevent your staff excelling.  Try to identify a measurement or ratio that captures each factor

·         Some Key Performance Indicators (KPIs), such as revenue or profit growth, are common across most businesses.  Others will be specific to your industry or service, such as billable hours for professional services firms or customer turnover for a mobile phone operator.   Find out how others in your industry measure their performance

·         Review the set of KPIs chosen and check that they cover the major activities of the business.  They should include both forward-looking and historical measures and reflect your strategic objectives

·         You need to be able to measure your chosen KPIs without significant difficulty or expense

·         Review KPI performance at your monthly management meeting

·         Constantly compare progress against your business plan and its objectives

Nick Bettes Consulting provides business coaching for business owners in Reading and Berkshire.  One of the approaches we adopt is to assist in identifying and pursuing KPIs which form the dashboard for your business.  If you invest a little time and effort into learning how to develop your ability to manage you will get a significant payback from improved business performance.  This holds true for SMEs throughout the UK, including those in Berkshire!

What gangs can teach us about employees

Listen to what an ex gang-leader had to say about why disaffected youths join gangs in this wonderful interview on the BBC Today programme yesterday.

For the drugs?  Partially.  For the money?  Partially.

But you know he was speaking from the heart when he said it was because being in a gang gave him a sense of belonging, a sense of pride and a purpose.

We are all the same.  Your employees are the same.  Do they come to work for the money?  Is that it?  Or do they have a sense of purpose, pride and belonging?  If they don't, what are you doing about it?

Get more insights from Nick Bettes Consulting

SELLING ONLINE

Copyright© Online Knowledge Systems Limited 2012

What should you sell online?

• The first and most critical choice is what to sell
• There must be sufficient margin in the product to cover the online marketing and shipping costs – so you are looking at a minimum of £100 price per unit
• It must be sufficiently unique to avoid comparison across other sites – so branded products are out
• It must be something that people are actually searching for in order to purchase but not something that dozens of other sites are already selling
• The product must be available via a drop shipping wholesaler

How does online selling work?

• Decide what you are going to sell
• Identify a drop shipper who will provide the product to your buyers at a competitive price and who has automatic links to your payment provider
• Identify using Google tools the keywords that offer the maximum number of searches and the minimum amount of competition for your product
• Develop a simple business plan that brings together forecast revenue and all costs (including Google advertising and shipping). Test your assumptions and carry out sensitivity analysis to see how robust your idea is under different traffic, conversion and growth scenarios
• Develop a cash flow plan that confirms that you have enough cash at the start to avoid going bust under the most pessimistic scenario
• Buy an appropriate domain ie with a name that matches the keywords
• Set up a website with shopping cart and online payment capability
• Use an SEO expert to optimise the site for searches on your keywords
• Launch your new business
• Set up pay per click campaigns to drive prospects to your site
• If volume grows sufficiently you may be able to achieve significantly lower costs by sourcing direct from the manufacturer. This of course introduces logistics costs and risks to your business

How do I stop others copying me?

• This is a key question. The answer lies in three things
• The unique value that you add for your customers
• The skills, knowledge or resources that you need to serve the market – including website development, SEO and other online marketing
• Possibly volume and price leadership should you achieve, firstly, sufficient volume to procure direct from the manufacturer and, secondly, sufficient volume to achieve uniquely favourable pricing
• If you are unable to identify and build up any of these things, and you attract demand, then your margins on the selected product are not defendable in the long term

The idea for this guide and much of the content came from a brief presentation by Will Humphries of Sitebites

Vision Building Exercise

Purpose of this exercise

A clear, shared vision for the business is essential.  It informs strategic decision-making, underpins performance of the management team and is the basis of effective communication to employees and staff.

This exercise helps you and your colleagues describe your vision for the business in a semi-standardised way.  This will allow you to compare different perspectives as a team and so come to a common vision.

Instructions

Appoint someone to keep track of time.

Read the guidelines below then write down your vision for the business.  Check back against the guidelines to see that you have incorporated them as far as possible.  Read it out to the rest of the team and discuss.

Guidelines - what makes a good Vision Statement?

-          It must be motivating for you.  It must be something that you think is worth achieving and which matches your values and beliefs

-          It should describe a particular point in time.  This might be when you plan to exit or when you plan to achieve “success” as you see it.  It should have a date

-          It should describe what the business will be in concrete terms – how large, what it will be known for, what it will be able to do

-          It should have a personal goal that describes how you will be spending your life.  This might include your working life or your personal life or the options you would have by then

-          It should have some concrete financial dimension – usually sale value, turnover or profit

Discussion
Appoint someone to take notes on a whiteboard or flipchart.

As each person’s vision is explained, look for areas of commonality and difference.  Are the differences fundamental or simply differences of degree?  Where are people’s values appearing?

Coalesce the discussion into bullet points – don’t worry about the detailed wording now.  Check these bullet points against the guidance above.  They will form the skeleton of your Vision Statement

Is Business Growth Optional?

A significant proportion of owner-managers are averse to growing their business.  Often the reasons put forward are lifestyle choice, reluctance to employ more staff or fear that quality will suffer.

They of course have a choice – but here are some reasons why growth is necessary for an owner-managed business:

-         Sub-scale businesses suffer from “feast and famine”.  Even relatively modest wins can overload the organisation whilst a slight downturn in sales can be life-threatening

-         A resilient client base implies a large number of clients and the ability to replace them.  It is less risky to be bigger

-         Clients, particularly  big important clients, are intolerant of suppliers who are unable or unwilling to grow to meet their demands

-        There is a minimum size at which a business becomes self-sustaining; that is, where the organisation survives the loss of any individual or client and the capability to survive and thrive is proceduralised within the business processes

-         To be compelling for staff an organisation has to have a vision of something bigger than just the people involved.  They want to be on a meaningful journey that allows them to achieve their potential

-         An organisation has to adapt, evolve and learn in order to survive in a changing environment.   Whilst smaller organisations may be more agile they struggle to carry the overhead of this development capability

-        The bigger members of a species generally get the most food and their pick of mates.  Business is an ecosystem and, all other things being equal, smaller businesses lose out to larger ones as the latter improve margins through economies of scale and spend more on marketing, product development and so forth

-         Even if you have a unique advantage over your competition it is advisable to sell more, invest in developing that advantage and so exclude competition from that space - or risk losing the advantage.  In this way, a behaviour aimed at survival leads to growth

-         Research shows that survival rates improve with business size, particularly where this is combined with a wider range of products*

So growth may or may not be an end in itself but is a by-product of survival - and in turn makes businesses more likely to survive.  Being too small is not a sustainable position.

 *“When is more better? The impact of business scale and scope on long-term business survival, while controlling for profitability”, Bercovitz & Mitchell, 2007

To learn more, contact Nick Bettes via his website