Stop whingeing and sort out your productivity

We had a presentation at our networking group from our accountant, who analysed the recent budget.

As you might expect from a group of business owners there was considerable unhappiness about the NI increase on top of the minimum wage increase.

Like my business-owner clients, they are all incredibly hard-working and none of them have a yacht or a private jet, as far as I know.  They are feeling hard done by.

I don't think my view that they should stop whingeing and sort out their productvity instead made me very popular.  Nevertheless I stick by it; one of the reasons this countries productvity is low relative to our peers is access to cheap labour and another is a relatively low corporate tax rate. These things don't drive low productivity but they let organisations survive and even thrive despite it.

One consequence is people having low-paid, often precarious, jobs.  These people are less likely to engage at work or in society - and are less likely to buy what you sell.

Another consequence is under-funded infrastructure, education and societal fabric in general, which drives huge, hidden costs for business (and produces a low-skill, poorly-educated, demotivated workforce).

More broadly, we are now starting to realise that unfettered global capitalism results in a small number of increasingly wealthy people and a very large number of increasingly poor people.  This is not sustainable and will result in revolution in non-democracies and the rise of extremist-led governments in democracies (who will then dismantle those democracies as inconvenient to their pursuit of further power and wealth).  If we don't do something to reverse this then perhaps democracy will one day be seen as a short aberration between various forms of autocracy.

This may seem something of an extrapolation from a discussion in a small networking group, and irrelevant when you are worried about £100k or £1m being added to your business' costs this year.  However, to avoid the fate described in the previous paragraph, the UK must find a way to achieve sustainable growth whilst reducing inequality.  The budget was a first small step. 

So, what can you do to improve productivity in your business in this brave new world?  That's a big question to answer in a short blog; can I suggest that you contact me and we can discuss it.

Under the chancellor's cosh

One of my clients wanted to discuss how to deal with the recent changes to NI and the minimum wage.  The direct impact in their SME is going to be about £50k pa off the bottom line before any increase in supplier costs is included.

We talked about operational and strategic changes that could help offset this.

We had already discusssed the operational changes in our work together to improve productivity, but the budget definitely sharpened their focus:

• Offshoring functions that can be easily defined and easily measured - PPC and other online marketing is an example, and they will move more of this to lower-cost countries.
• Clarifying, documenting and measuring processes.  Just doing this will improve productivity even before reviews, coaching and process improvements are added.
• Actively pushing prices.  They have good systems that allow them to track the impact of this on sales.
• Improving their prioritisation of system development by assessing each change against its current-year impact on net profit and making sure those benefits are quantified and managed.
• Continuing to manage salespeople up or out.
• Reducing current-year pay awards where possible (bearing in mind the long-term implications of this)
• Communicating with employees.

Strategically we talked about two possible responses:

• Selling additional, related, products to existing accounts.  This needs to be done with care if they are not to lose their carefully-crafted space in the minds of buyers.
• Designing, from the ground up, a new channel to sell their core products that has much lower, and fixed, labour costs.  They will need to be alert to cannibalising their existing market and they will need to be confident that they can sustain an advantage in what is likely to be a price-based channel.

Of course in the back of my mind during the conversation was the thought that they should have been progressing all of these things more quickly anyway.  However, most business owners are always beset by too many demands on their time, and humans generally respond more urgently to threat than opportunity.  Being coshed by the chancellor was definitely seen as the former.

If you want to learn more about improving productivity in your SME then maybe you should attend one of these events.

Quick - everyone back to the office!

Recent moves by several large employers to eliminate home working are interesting.  These are big companies, with highly-paid CEOs, lots of well-trained managers and loads of data.  Some of them even advise other organisations on how to run their businesses.

So they must be right, then?  Remote working reduces productivity?

An article by Anita Lettink summarises research that shows it's not that simple.  Broadly, fully remote working is less productive whilst hybrid working and FTO (full time office) work are comparable.

So productivity won't change if I force my staff back to the office then?  Not so fast; research by Liverpool John Moores University and others shows that doing this will reduce productivity and increase staff attrition.  It is seen as a reduction in conditions and, unsurprisingly, this leads to resentment.

The argument from the return-to-office advocates is that people must be together in order to develop or ingest the culture, spark ideas and improve communication.  It is not clear to me that having five days to do this is going to be any more effective than having three days to do it.  In fact, if an employee spends forty hours absorbing culture, generating ideas and talking to other employees when do they actually do any work?  If I cast my mind back to when I last worked in an office I can remember having a lot of fun and a lot of meetings - but most of the hard yards were achieved with the door shut or on a customer's site.

It seems to me that the two fundamental reasons underlying this forcing people back to the office full time are:

• Trust, or rather, a lack of it.
• A management mindset based on the number of hours worked and the ability to interfere, instead of one based on clear purpose, empowerment and measurable outcomes (which takes a bit more effort)

So why are all these highly-paid CEOs pursuing this course?  Perhaps because the capabilities required to become a highly-paid CEO don't include anything to do with getting the best from your employees.

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The last thing the UK needs is a 4-day week.

The election result has produced renewed interest in a 4-day week.  The results of trials show that output was maintained at 5-day levels for most organisations that took part, resulting in many of them making the change permanent.  A key point in these trials is that the reduced working hours do not result in reduced pay; this is a one-way bet for employees rather than some work-life balance trade-off they are making.  Hardly surprising then that employees were keen to make a success of it.

The trials were over a short period and very recent, so what the results don't show is whether the benefits are permanent or, as I suspect, temporary.

The big hairy assumption underlying the trials is that there is some immovable curve, some fundamental natural link, between the length of the working week and employee productivity and that organisations are on the wrong part of this curve (5 days) and will achieve better overall productivity if they move to the right part (4 days).  See the figure "Increased Prooductivity Offsets Reduced Hours" below.

But what if the true level of productivity is not set, or even heavily influenced, by the length of the working week?  What if it is set by, say, how much of a dickhead your boss is?  Or how useless your computer systems are?  Or how stressful the daily commute is?  Or how flawed your product?  Or how many multiples of your salary the CEO takes home?  Productivity in practice is a messy, unwritten compromise between employer and employee that settles out at a level where both parties are equally unhappy.

It is surely conceivable that the level of productivity is influenced by some range of factors like this which are not changed at all by shortening the working week, and that the equilibrium position remains pretty much where it was before, perhaps with some marginal improvement.  In this case, the initial improvements are simply first-mover advantage and a sort of Hawthorne effect and the long-term picture might look rather more like the figure "Long-term Productivity Reverts to Former Level", below.

Now a couple of graphs don't make this science - they just illustrate my opinion.  But companies that have already baked a 4-day week in to their employment terms based on these trials are - in my opinion - being brave.  They might argue that they are taking other steps to lock in the productivity gains.  Maybe they are addressing the computer systems and bad leadership as well.  If so, why does that sensible management action have to be tied to a reduction in hours?

Beyond the impact on individual firms, a gradual move to a lower-output 4-day week becoming the norm across the UK would be bad news for GDP growth if, as I suspect, the long-term constant is the equilibrium level of productivity and not the shape of the curve (or, to put it another way, if the problem is how awful each working hour is for the employee and not how many of them there are in the week).

If you'd like to learn more about improving productivity in your business you should attend one of these events.

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Management Teams and Evil Plots

 

Why Should Business Owners Develop an Effective Management Team?

As an SME grows it becomes more difficult for the owner to control and decide everything in the way they used to.  They start to become the main constraint on further growth.

Sensible business owners address this issue by delegating more.  They introduce a more formal structure with reporting lines and clearer accountabilities.  A layer of management starts to form –possibly even people other than the owner with the title “director”.  The organisation moves through the difficult transition from everyone reporting to the owner to something more hierarchical.

The owner introduces regular meetings where those people who report direct to her review business performance.  This is a big step forward, although at this stage the scope will usually be limited to short-term operational matters.

The owner is still the custodian of the organisation’s vision.  She still makes all the important decisions pretty much unaided. The other attendees are reluctant to challenge the owner or each other.  They understand and accept responsibility for their own areas to a greater or lesser degree but feel little involvement in setting or achieving the wider organisation’s long-term objectives.  They may be ill-equipped to contribute to strategic thinking, owing their position to functional experience and having had little invested in their development as managers.

By delegating functional, operational tasks the owner has freed up her time and is no longer a short-term constraint, with insufficient time to control people or do things.  However, she is still a constraint on sustainable, long-term growth, being the only person who sees the big picture, or able to think and plan strategically.

The business once again starts to plateau and stress to build.  The owner starts to realise that although the business is better organised and more scalable than it was, its resilience and value to anyone else is severely limited by the reliance on her to sustain and drive it forward.

To move beyond this, to become scalable, the organisation must develop an effective management team – one that runs the business.  The thing is, like Blackadder’s evil plots, effective management teams don’t just make themselves.

Creating an effective management team will:

• Improve business results by improving business strategy.  As with most things, involving different perspectives and informed discussion will almost always result in better decisions and more buy-in
• Make the business more scalable and productive by underpinning delegation and strengthening accountability
• Reduce reliance and stress on the owner so making the business more resilient
• Make the business more valuable.  Depending on the nature of the transaction, potential acquirers put a high value on the quality and performance of the management team – after all, the owner won’t be there any more

What Does a Management Team Do?

In functional terms, the management team:

• Creates the organisation’s vision
• Defines the most effective strategy to achieve this
• Sets priorities for resources and actions (the plan)
• Reviews performance against plan
• Decides and assigns actions to keep the organisation on track

Creating the Vision

No organisation can perform well without a common vision,whether that is to win the league, put a man on the moon or achieve a sales target.  It follows that a great deal of the management team’s time is spent in discussing the vision, whether that is articulating it in the first place or validating it against real-world results.

Defining Strategy

A vision can only become shared and compelling if there is a credible means to bring it about – a strategy. The formal strategy may exist as a document or a slide deck but the real strategy is a shared mental model of the organisation and its market; a model that exists in the minds of the management team.  This shared set of beliefs about causes and effects emerges not only from formal strategic reviews but also from hundreds of discussions about results good and bad.

Creating the Plan

A long-term strategy requires a plan to make it happen.  A plan requires decisions about priorities and resources.  It sets objectives and completion dates.  It assigns responsibility and co-ordinates activities across the growing business so that marketing, sales and operations budgets and targets match the required financial outcome.

Reviewing Performance

Reviewing performance against what was expected to happen serves two purposes.  Firstly, it identifies where action is required to correct things.  Secondly, it ratifies (or challenges) the vision, strategy and plan created by the management team – the shared mental model.

Taking Corrective Action

The loop is closed by the team deciding what action is required and assigning responsibility and resource to this.  Sometimes the action will lie in a single part of the business, sometimes there will be a choice of actions and sometimes multiple actions must be co-ordinated.

In practice, in an experienced team, these five tasks are not discrete and sequential but iterative and combined.  However, when you are starting to develop your team (and at regular intervals when you have established things) you should set time aside to work on the first three.  Otherwise the danger is that the team slips back into a purely operational focus.

What Makes a Management Team Effective?

A management team is an open-ended, dynamic process rather than a result.  To start with, team members may only feel able to contribute to conversations about their own area– or they may be inexperienced even in that. They may be reluctant to ask questions about other aspects of the business for fear of looking stupid or offending other members.  They may be more concerned with avoiding blame than understanding causes.

Over time, the best teams will start to demonstrate the following behaviours:

Members Are Competent Withing Their Own Functions

Trust underpins teams. Members must know that their colleagues will deliver.  This doesn’t mean that mistakes don’t happen, or that results are never impacted by external factors, or that team members must all be brilliant leaders in their field. It does mean that persistent incompetence or laziness in an individual must be dealt with if the team is to believe in itself.

Members Are Emotionally Intelligent

Trust underpins teams. Members must have the emotional intelligence to empathise with their colleagues, to challenge constructively and to accept challenge without feeling threatened.  They must be supportive of colleagues.  Destructive behaviours or a lack of respect will destroy trust.

Members Think in Terms of the Whole Organisation Not Just Their Own Function

Members accept responsibility for the overall organisational performance not just that of their own function.  This means that they must build up an understanding of the other areas of the business by asking questions of and,when appropriate, constructively challenging, their colleagues.  It means that they must welcome questions and challenge from others on their own functional areas in return.

Should the organisation be struggling to achieve its goal then this is not “Marketing’s problem” or “Operations’ problem” – it is “our problem”.

Conversations Move Easily Between Operational and Strategic Perspectives

In weak teams, regular conversations are almost exclusively operational and short-term whilst strategic conversations are separate events.  The result is that strategy is detached from reality to the point of irrelevance and operational decisions are reactive and directionless.

In stronger teams, operational decisions are informed by strategy and strategy is continuously validated against reality.  This happens implicitly in many conversations throughout the team meetings and elsewhere.

There is a Shared Conceptual Model of the Business and its Strategy

The conversations described in the previous point serve to develop a mental model of the business – cause and effect, where it is going and how – that is shared by all team members. This makes decision-making, co-ordination and prioritisation much more efficient and robust.

The Leader Coaches, They Don’t Control

A leader who dominates the conversation, wins all the arguments and makes all the decisions will be leading a weak team.  This will be the case whether the behaviouris rooted in a psychological need to control, a lack of trust in others,impatience – or simply habit.

Leaders of effective teams see their primary role as developing others.  They are more likely to ask questions than make decisions. They recognise the need to invest time and coach others to understand issues and arrive at decisions.  They balance the need to achieve today’s results with the need to develop individuals and the team for the future.

A Model for Management Teams

Patrick Lencioni, in his book “The Five Dysfunctions of aTeam”, develops an elegant model that informs many of the points in this section:

He says that high-performance teams demonstrate

• Individual accountability based on
• Commitment to the goals of the team gained through
• Challenge and constructive conflict enabled by
• Trust between members

Developing an Effective Management Team

The way to create an effective management team is not to go fire-walking together, fun as that might be. It is to work together on running the business.  We have already looked at what, functionally,this means but to develop an effective team you must work on three things:

1. Managing the performance of the business to achieve the planned results
2. Developing the team, including a common goal, shared commitment to its achievement, a shared understanding of how this is tobe brought about, trust, open communication and accountability
3. Developing the commercial, managerial and leadership capabilities of the individual team members

(John Adair in his book “Effective Leadership” calls this balancing Task, Team and Individual)

For business owners, who are accustomed to make all the decisions and whose own money is at stake, changing to run their business this way is challenging.  It is also a challenge for employees, who are accustomed to the boss making all the decisions (it’s their business, after all).

This means that it won’t happen naturally.  You, the owner, need to take steps to make it happen.  Here are some suggestions:

Prepare the Ground

If you do not already run a regular review meeting with your direct reports or functional heads then set this up – monthly immediately after your accounts are completed is the best time. Get it in everyone’s diaries as a recurring meeting.

If it isn’t already the case, make sure that each part of the meeting uses numbers presented and explained by the person responsible.  If you do most of the talking now, start to reduce this.  Encourage others to talk more and come up with solutions by making sure you ask questions rather than give answers.

Raise Their Horizons

Introduce some longer-term items under any other business or as opportunities present – “What do we think the business is trying to achieve?”  or “What do we think we are good at?”.  Don’t terrify people by saying “Right, now we are going to discuss strategy”.

Return to, reinforce and build on the results of these discussions whenever you can.

Build Trust

Encourage constructive challenge – “Fred, what do you thinkabout Jane’s proposal?” or “I’d like you all to write down the pros and cons of the suggestion I’ve just made.”

Treat performance (good or bad) as an opportunity to improve– “8 is pretty good – what would need to happen to make that a 10?”.  Make sure everyone understands that targets are to promote discussion about performance improvement, not a stick to beat people with.  Make it clear that blame and excuses are Bad Things and unacceptable by calling them out – “Tom, how could you reframe that problem so it is something under your control?”.

Improve Individual Performance

Where necessary improve the contribution of members by providing individual training, feedback and coaching.

If someone is a technical wizard but has no aptitude or desire for leadership, management and teamwork then create them a role wherethey can deliver value and put someone more suitable in charge of their function.

If someone fails to respond to support and development within a reasonable time then don’t keep throwing good money after bad (or keep trying to put in what God left out) – remove them.  Any immediate pain and disruption will be worth it.

Summary

An effective management team is one that is running the business.  Without such a team, the owner becomes a constraint on growth and the business remains fragile.

An effective management team improves business performance, promotes accountability, makes a business scalable, reduces stress and dependence on the owner and makes the business more valuable.

Developing an effective management team is an open-ended process that requires explicit development of the team and the individuals whilst working together to improve business results. 

For more insights on developing your management team you might like to attend one of these events.

Employee Wellness Bollocks

A recent article by Andre Spicer in the Guardian caught my eye.

It points to evidence that employee wellness programmes are mostly nonsense seized on by management too weak or stupid to address the real causes of employee non-wellness.

In essence, the research shows that wellness programmmes (mindfullness, stress-managment, the ubiquitous "apps", away-days, free pushbikes, pot-plants, your own guru...) have no lasting impact on the mental or physical wellbeing of employees.

What does have an impact is better managers, more flexible working arrangements, more autonomy, fewer crap systems, fewer angry customers, more job security, adequate pay...in fact all the things that good employers have known about and striven to put in place for decades.

The trouble is, these things are difficult to do - and getting more difficult as liberal democracies slide further into inequality, under-investment and precarious employment in pursuit of ever-diminishing growth.  Much easier to give everyone a mindfullness app and move on.

After all, we should never let irrelevance or lack of efficacy get in the way of a money-making opportunity or inded the chance to build a whole new industry.  Neither would we want to take away a simple way for managers and HR departments to look as if they are doing something and force the poor darlings to do some of the hard thinking and hard work that might actually make a difference.

Why business coaching is doomed

A while ago I wrote a blog ("What ChatGPT Tells Us about Human Soup") that was relatively upbeat about the future of coaching - that is, relatively downbeat about how much of business coaching could be done by AI.

Since then I have spent more time using it, pretending to be a business owner with the kind of problems I help them address (scalability, systemisation, delegation, structure and so on).  It is safe to say that my views are evolving (although not, presumably, as fast as AI is evolving).

Note:  I have been using Chat-GPT 3.5, which is not the latest version and may not represent what other AI systems can now do.

The quality of the answers really depends on the quality of the questions, and a willingness to develop a conversation.  Typically the first answer will be 10-12 short paragraphs, factually correct but too much information to be useful in a coaching sense to the questioner.  You can drill down by picking up on one of the items and saying, perhaps, "I have already done that" or "I don't understand that" and the machine will respond accordingly (but again, with a large splurge of information).

You can limit the flow of information by saying, perhaps, "I feel overwhelmed by all these answers and don't know which to do first".  This will elicit something that looks like empathy ("Understood. Let's narrow it down to....") and a more limited answer, perhaps with a homily about focus or prioritisation ("Dealing with these issues can be overwhelming, but remember, you don't have to fix everything at once...").

What I have been unable to do is to prompt any sort of questioning ("listening"?) to help with the supposed problem.  Asking it "How do you know this is addressing my real problem?" or even "Why don't you ask me some questions to help me find out my real problem?" just produces the usual 10-12 bullet points of possible causes but this time couched as questions.  A response to any one of these results in....10-12 short paragaraphs about possible causes/actions.

A coach given a problem statement would generally ask the client to expand on it, or give an example, or ask a question to check their understanding, rather than reeling off 12 possible causes.  Often the real problem or cause is hidden and questioning helps the client gain insight.

Neither is there any sense of a sustained conversation, or referring back or identifying themes (different outcrops of the same issue), although the software does have a history of all the "chats".

However, the speed and comprehensiveness of the answers remains impressive, and these bits that I am suggesting are missing from a coaching perspective should be relatively easy to programme (or perhaps teach) in some sort of front-end application (such as this one).  Emotion and mood-sensing algorithms are already in use and will only get more capable.

I thnk that within perhaps two years it will be possible to access an AI business coaching service that is indistiguishable from a human coach (apart, perhaps, from its abilty to use Zoom Whiteboards properly and the absence of a loud tie).

Shortly after that, any small business will be able to have the equivalent of the world's best business coach as a virtual but permanent part of the management team, rather then doled out in coaching sessions.

What will be left for coaches?  No doubt there will be a long tail of people who want to deal with a human, supported perhaps by some sort of Campaign for Real Business Advisors (CaRBA©) or preservation societies.  There will also be a short-lived opportunity to provide coaching input to the development of the aforementioned front-end applications.

After that...?  Well, as someone once wrote, probably about a coaching industry:

"Round the decay of that colossal Wreck, boundless and bare the lone and level sands stretch far away."

If you'd like to get some advice from a human business coach while we still exist then you might want to attend one of these events.

Cheese and the four-day week

Between unexpectedly parting company with my school and joining the Merchant Navy I spent some months working in a cheese distribution centre.  I am reminded of that experience by the current interest in the four-day week.

I worked with two ladies of indeterminate age called Flo and Madge.  Our job was to assemble pallets of cheese in accordance with customer orders, the cheese being picked as required from supplier pallets.

I was young and keen and it soon became apparent to me that we could complete each day's orders in about half a day.  My efforts to prove this did not go down well with Flo and Madge, who made it clear to me that this was not something they would tolerate.  Neither did it seem to be welcomed by the foreman, a placid man in a brown coat who had an artificial foot as a souvenir of the war.

Even at that age I had sense enough to know that being disliked by your colleagues and boss makes for an unpleasant working environment and I quickly fell into line.

I'm pretty sure that the reasons for this poor productivity, or the consequences for the firm concerned or, by extension, the country, did not at the time cross my mind.  Reflecting on it now it seems clear that:

1. The employees concerned allowed the work to expand to fill the time available in order to protect their jobs
2. There was no benefit to them in working harder
3. They saw the rate at which they worked, established by custom and practice, as "fair" - an unwritten contract between them and the firm
4. The supervisor (and presumably the managers above him) accepted this state of affairs in order to preserve the peace and maintain relationahips.

The four-day week discussion really addresses point 2 and, implicitly, point 3.  It does not improve productivity in terms of output over cost, although it may have some benefit in terms of asset utilisation and (transiently) recruitment and retention.  It requires management to say:

• By moving to a four-day week we both accept that you are producing at least 25% less than you could.
• We are rewarding this poor performance by giving you a 25% pay rise.
• We are doing this because a) it's much too difficult to improve actual productivity and b) we are in a dog-fight for staff

What will happen to actual output from the four days over time?  I think there is zero chance it will actually increase beyone what used to be produced in five days and quite a high chance that it will gradually decline to (a wild guess) about where it was before ie about the same output per day and about 80% of the previous overall output.  This is after all seen as the "fair" amount of effort.

To be clear, I can see no inherent logic other than the status quo for any particular work pattern, be it four-day, five day, six day or two-day week and the decision should be left to the organisation concerned.  Clearly a zero day week would have economic consequences and a seven-day week (although not unknown now) would have social consequences.  My concern is that this change is gaining in popularity because as business owners, managers, voters, tax-payers and politicians we are too craven to face up to the real causes of piss-poor productivity in the UK.

BTW, if you would like to learn more about productivity improvement in your business then you should register for one of these events.

Yer actual psychology

The psychology of small business ownership seems to be an area of growing interest for researchers (1,2,3).  As a business coach and consultant who has spent many years trying to improve my performance in those roles by understanding business owners better, I am naturally interested in this sort of stuff.

By way of a disclaimer:  a) I have no psychology qualifications b) my own meta-research into publications in this area has been limited to reading papers that catch my eye - not really what you might call exhaustive.  Even so, I feel a sense of disappointment with the premise and the results of much of this research.  Not sufficient you understand for me to attempt my own doctoral thesis, but sufficient for a short blog.

Most of the research seems to take the following form:  First, choose a set of personality traits for which there exist accepted tests.  Second, choose some easily-measured business success criteria, such as turnover growth, profitability and so on.  Thirdly, put these things into a questionnaire and get a couple of hundred business owners to complete it.  Finally, use a spreadsheet or stats package to look for correlation and publish your results.

My misgivings are:

1. This approach pretty much ignores market factors.  You'd have to use a sample from the same market sector across a complete business cycle, or sample so many owners over that cycle that you could segment by sector, to eliminate this major determinant of success from the equation.
2. The preponderance of "entrepreneurs" in the samples.  Cynically I might suggest that business schools have a ready supply of these retiring creatures to hand, whereas the majority of "real" business owners a) are too busy to take part in surveys and b) have ended up runnimg a business for much more prosaic reasons, and probably wouldn't call themeselves entrepreneurs.
3. The assumption, evident in the use of general personality tests, that business owners are a representative sample of the population who just happened to end up running a business.  In my experience the act of starting a business is often as much a response to a psychological imperative as an economic one, and this foundation has a significant impact on the resulting business performance.
4. The dismal view that business success is down to some inherent combination of personality type and natural aptitude.  You will be wasting your time trying to change either of these things, and if research does not provide a basis for action what on earth is it for?  (Apart from getting your PhD or MBA, I mean).

The last point is the one that troubles me most.  Survey and trait-based research doesn't really shed any light on the complex problems I try to help with.  There will be some flashes of the blindingly obvious (founders who set clear goals fare better than those who don't, for instance) but these don't usually go beyond basic management concepts.

What about the business owner who hires incompetents and spends her time undermining them and then complaining about how much work she has to do (because, my premise is, this gives her a sense of control and worth missing from every other part of her life)?  Her business could be great (it has worldwide sales for its niche specialism) but the problem is so deeply rooted in the owner that almost all attempts to help her make changes to the business or the way she runs it are seen as threatening.  This owner has had psychological support for some years, by the way.  Its main effect seems to be to make her swearier.

Or the business owner who has fashioned a business from caring for an autistic son, is driven to help others in the same boat and has grown a viable market and unique solution to do this - but struggles to use a computer, holds everything in her head, distrusts accountants, distrusts the tax man, doesn't want to employ people and so has every worker as a temp.  This again could be a much more successful business but the challenge is to separate the business problem from the individual, to treat the disease without killing the patient.

Don't get me wrong - I have wonderful, easy, rewarding clients as well.  Clients who push me, learn quickly, apply the learning, and whose businesses surge forward as a result.  Should I just focus on them, qualifying out the problem ones?  I don't want to imply that this would offend some saintly sense of mission but it does seem a bit of a cop-out to simply abandon them - and actually, they are often the more interesting clients to work with (even if they are exhausting and not that profitable).

I don't have the knowledge, time or, frankly, the inclination to do it but seems to me that there is scope for some less superficial research that starts with the why - why is it that some people embark on the hazardous career of a business owner, and how does that why affect their success or lack of it.

I don't think these two things can or should be separated.

PS If you'd like to learn more about systemising and scaling your business take a look at these events.

1. The Psychology of Small Business Owners https://www.frontiersin.org/research-topics/10831/the-psychology-of-small-business-owners

2. Personality correlates of self-employed small business owners' success https://pubmed.ncbi.nlm.nih.gov/23241705/

3. An Investigation of Personality Correlates of Small Business Success https://trace.tennessee.edu/cgi/viewcontent.cgi?article=3760

What ChatGPT tells us about human soup

I've been using ChatGPT to see how it answers business questions.  From the generic ("Why do business owners feel overworked?") through practical ("Give me a method for systemising my business") to the detailed ("How do I improve my sales process?") the answers have been thorough, concise and correct (if we define correct as meaning answers I would be happy to give).

Does that mean business coaches and consultants like me are out of a job?  I don't think so - not yet.

The information provided by the AI system is already available to business owners, in books and blogs.  The system reduces the effort required to locate and correlate it, but if access to information was all that was required for business owners to improve their business then we (coaches and consultants) would have been out of a job long ago.

So whilst information is a necessary part of helping a business owner improve their business, what other things are needed?  I tried thinking about this in two ways; the process and the capabilities.

Here's a model of the "Business owner improving her business" process (omitting repetitions and feedback):

1. Recognise the problem
2. Imagine a solution
3. Formulate the question
4. Understand the answer
5. Plan and organise the change
6. Successfully execute the change

Here's a list of capabilities our business owner might need in order to make change happen, again, omitting linkages for clarity:

• Imagination
• Knowledge
• Intelligence
• Leadership
• Organisation
• Confidence

You can picture these two lista forming a matrix (or maybe it's only business consultants who think like that).  "Understand the answer" requires strength in, say, intelligence, imagination and knowledge.  "Successfully execute the change" might require strength in leadership, organisation and confidence, and so on.

The coach or consultant has to not only provide the necessary information but also help their client overcome any deficiencies in their ability to follow the change process - to fill the gaps in the matrix.  The coach has to provide support, encouragement and focus whilst their client struggles with the human soup and random happenings that make up business.

I am confident that, if we don't destroy the planet first, true AI that can provide more than information will emerge.  But for now, ChatGPT seems like a) a great way to make my life easier and b) an interesting (for me) insight into where I actually provide value.

If you'd like to get some help with your business (from a real human) then contact me through this website.

Better management means better results shock

Research(1) shows that structured management (formalising roles, agreeing targets, measuring results and basing decisions on numbers) results in better business performance.

The impact is about the same as R&D spending and far outweighs that of technology spending.  Hardly surprising when one considers the predictable outcome of combining new technology investment with poor management.

Better management means better results (2) - and yet how much attention do UK business owners devote to improving their management skills?  In my experience, this comes pretty low in the priorities of most business owners and yet holds the key to all the other issues that they spend time on (and probably lie awake worrying about).

Usually, major improvements in performance can be achieved with simple, quick and low-cost interventions.  Clarifying what the business is trying to achieve.  Setting out reporting lines.  Implementing useful (outcome-based) job descriptions.  Standardising processes.  Implementing measurement.  Implementing monthly business reviews.

Creating each of these management artefacts is an opportunity for two-way communication; an opportunty to explain, understand, challenge, improve and involve.   The investment of time required is trivial in comparison to the benefit.  In any case, what else should a leader be spending their time doing?

Seems obvious really.

If you'd like to learn how to improve your management skills take a look at these events.

1) What Drives Differences in Management Practices? Nicholas A. BloomErik BrynjolfssonLucia FosterRon JarminMegha PatnaikItay Saporta-EkstenJohn Van Reenen, American Economic Review May2019 Vol. 109 Issue 5 Pages 1648-1683

2) Management, Skills and Productivity, Emile Cammeraat, Lea Samek and Mariagrazia Squicciarini, OECD SCIENCE, TECHNOLOGY AND INDUSTRY POLICY PAPERS February 2021 No. 101

Rottweilers as managers

A while ago I was talking to my client in his new office on the second floor of his new factory and HQ.

His business is growing fast and was concerned that he hadn’t had time to “do all the HR things I should do” for the past couple of years.

For a while, business growth was hampered by quality and delivery problems. His staff were avoiding answering the phone because they knew it would be an angry customer. Sales, Design and Operations were at loggerheads. The company did have, however, lots of HR stuff going on. Appraisals, reviews, training and so forth ran like clockwork and my client devoted a lot of his time to HR initiatives.  He felt that this was caring for his people and that it would result in better performance.

We spent a lot of time when I started working with him talking about structure and how to solve the customer service issues. He had an effective project manager (he called him “a Rottweiler”) but was nervouse about putting him in charge of operations “because he won’t look after people”. We agreed that the critical thing was to sort out operations and that the business could tolerate a few ruffled feathers for a year or two to achieve this. This approach was adopted more generally, with managers being asked to focus on their “one number” and far less attention being paid to side activities. Management meetings started to focus on performance and coaching, values and beliefs, strategy and vision.

Now the company (mostly) delivers what the customer wants when they want it. My client is spending his time (mostly) on strategy and growth. Staff attrition has not risen, productivity has. The reduction (elimination, really) of the HR machinery seems to have had no negative impact.

What do I take from this story?

• Winning teams focus on a single simple goal.
• Individuals too need to be given a single simple goal – don’t distract them with non-essentials.
• People are motivated by being part of a winning team, feeling that they contribute something important to that success, that they are good at what they do and that their contribution is recognised.
• A very caring boss with a failing team will have unhappy employees whilst a boss who balances concern for people with concern for results will have happier employees.
• Appraisals and formal reviews build on good management, they are not a substitute for it.

If you'd like to find out more about getting more from your people then register for one of these events.

Adapted and updated from a previous post on this website.

Can you be organised and an entrepreneur?

I recently ran a webinar on making your business scalable through systemisation, during which I addressed issues like processes and organisation.  One of the attendees, who runs a marketing agency, asked me whether this approach was suitable for creative people or whether it would inhibit their creativity and entrepreneurial spirit.

I answered that of course it was applicable in any industry.  Subsequently I have reflected on the interesting question and its implied link between creativity and entrepreneurship.

I can divide my clients into three broad camps:  people who are naturally organised and happy to manage others; people who are, frankly, chaotic, and find it difficult to organise others; and people who are in the middle.  The first group take to systemisation quickly – all they really need is to be given some tools and techniques.  The second group are my failures (I do have them) and I will fairly quickly suggest we stop wasting each other’s time.  The third group is the most numerous and will take longer, with more hands-on help and explanation and often many repetitions before light bulbs start to go on and benefits start to accrue.

The point is, I have worked with entrepreneurs in all three categories and so I don’t believe there is necessarily a correlation, direct or inverse, between organisational ability and entrepreneurship.  I have also worked with entrepreneurs in  many sectors, so I don’t believe there is a correlation between creativity (in a functional sense) and entrepreneurship.  Certainly, creative people need to managed in a way that allows them to be creative but then everyone should be managed as an individual.

I also believe that, all other things being equal, an organised creative business will out-compete a disorganised creative business.  Processes, measurement and organisation should be designed to give space to creativity where it adds value, and remove it where it adds only cost through the endless reinvention of wheels.

By the way, if you'd like to learn more about scalability and systemisation then perhaps you should attend one of these events.

Is your business a bit of a circus?

A while ago I started working with a business owner who was sceptical about the quality of his managers.

Like many business owners who have become the bottleneck in their business he was desperate to get out from under all the things that, apparently, only he could do and the decisions that, apparently, only he could make.  He didn’t see his managers as part of the solution but as part of the problem.

Our initial discussion started out along the lines of where and how he would find some “big hitter” from a larger business who would help him achieve his ambitious growth targets.

I asked him how he knew that his managers weren’t up to the task.  As is usual in these cases the answer was a series of anecdotes about failures to do x or inability to understand the importance of y or how they didn't take the success of the business seriously.  A little probing however showed that he had never really explained to them where the business was going, what their role in this was and what success in the role looked like.

Every time someone came to him with a problem he solved it for them – whether that was an angry customer or a blocked sink.  He was training his managers to be helpless.

At this point I suggested that perhaps some or all of them might indeed be incapable of managing but he hadn’t really given them the chance to prove it one way or the other.  Furthermore, replacing them with strangers on twice the salary was, to put it mildly, a risk – particularly when they would be hired into the same dysfunctional setup.

We put in place a framework that allowed my client to develop his managers and quickly establish whether he had indeed been desperately unlucky in hiring nothing but clowns or whether some other common factor was in play.  He involved them in his thinking about the future of the business, got them to create their own job descriptions focused on responsibilities, devised with them simple performance measurements and discussed these in regular management meetings.  He also stopped giving them answers, instead taking every question as a chance to coach them to a solution and reinforce their responsibility.

At subsequent meetings my client said some interesting things.  Firstly, he found he has much more time to focus on the long term, such as his exit plan.  Secondly, after a recent crisis (in which he did have to intervene), the managers concerned have, of their own accord, developed a protocol and checklist to prevent re-occurrence.  This is what Agyris calls double-loop learning, or organisational learning, and is pretty sophisticated for an inexperienced management team.  Thirdly, the business is well ahead of his growth targets, even in difficult times.

He is giving his managers the clarity, structure and support to succeed – and they are all succeeding.  He will still have to hire some more managers but not to learn from them.  He will be teaching them how to do more of what is already working.

If you’d like to learn more about how systemisation can help you get out from underneath your business and turn your clowns into managers then you should attend one of these events.

Revised and updated from a previuos post on this site  Since then the owner has attracted significant external investment and doubled the size of the business.

Do your employees know where the edge is?

I had my first meeting with a new client recently.  One of his objectives is to stop being the first point of call for any employee with a question or problem.

I asked him what he does when this happens and his response was that he answers their question or tells them how to solve the problem.  I could see that before he got to the end of his answer he had started to realise that this was teaching his employees to keep bringing him their questions and problems and eroding their will and capacity to decide for themselves.

We talked about why he behaves this way and his answer was:

• It's quicker to tell them the answer than it is to teach them how to solve it themselves, or to get into a discussion about why they feel they can't decide for themselves
• He worries that if he directs them to their line manager or supervisor then that person might give them the wrong answer (by which he meant, a different answer to the one he would give)
• He does not want to lose control of what is going on in the business

Fixing this issue is of course essential if he wants to achieve his aim of a scalable, sellable business that does not rely upon him.  It also requires sustained effort on a number of levels from the procedural to the behavioural.  However, we have to start somewhere so I asked him how well he thought his employees understood the scope, authority and objectives of their roles.  The answer, after some probing, was "Not very well."  Some symptoms amongst many were missing job descriptions, lack of measurement and infrequent management reviews.

If you are blindfolded and not sure a) where you are and b) where you are going then you are unlikely to take bold decisive steps forward.  Instead you will shuffle forward, feeling for the edge - or just stand still making plaintive bleating noises.  In a business, if employees do not know where they are going or why, or what decisions they are allowed to make, or how something should be done, or who they report to and who reports to them,,,then they won't display initiative, innovate or take responsibility.  Instead, they will form a queue outside your door waiting for you to decide things for them.

If you'd like to learn more about how to make your business systemised, scalable and less dependent on you then register for one of these events.

Eleven barriers to delegation

 Delegation is the single most important skill for a business owner to master (discuss).

That makes it depressing that so many business owners are pants at it.  Here are some excuses and reasons I’ve been given with my responses – feel free to add your own:

1. My employees will make mistakes.  Of course they will.  That’s how you learned.  Support them so that they don’t make big mistakes
2. I do not have the right staff, they are not up to it.  From experience I suggest that this may be the case, but probably isn’t.  Employees’ performance usually reflects their manager’s capability.  Leaders understand that people live up to (or down to) their leader’s expectations.
3. It is quicker to do it myself.  Well, it might take you an hour to show someone else what takes you five minutes – but if you don’t invest that hour you will still be doing it yourself in one year or ten years
4. It’s cheaper to do it myself.  This is clearly nonsense unless your time is worth less than that of your employees
5. I don’t want to waste time “doing management” instead of “doing important stuff”.  Leaders embrace the fact that leading people is their job.  If you would rather spend your time doing technical work then that’s fine but you should accept that you will never be a leader and your business will never grow
6. I don’t have the time to define how things should be done so that others can do it.  Leaders understand that they are building a system to make money.  Building processes that are repeatable and can be carried out by others is an essential part of that.  Leaders recognise the long-term value in developing others to succeed (and get pleasure from doing this).Finally, delegating stuff very quickly frees up your time
7. My staff will reject attempts to give them more responsibility.  Maybe some will – but leaders have high expectations of other people and these expectations are not usually disappointed.  It depends how you go about it
   
8. I’ll spend all this time developing staff and then they’ll leave.  Employees leave because they feel unfulfilled, or put upon, or stressed, or they hate their boss.  Developing and challenging them, becoming a better leader and recognising their increased value to the organisation will make most people more loyal and attract others to work for you.  Leaders accept it when staff do move on to bigger things and see it as proof of how well they have been developed
9. I’m scared of overloading staff.  Leaders see delegation as a gift. They believe that responsibility, delegated well, will be rewarding for the recipient and they will become more productive.  Leaders know they have employees who are not scared to say “No” or to raise workload issues and their solution
10. I need to be seen as “leading from the front”.  This limiting mindset is really a fear that what you do as leader is not valuable.  Even if you are the best widget maker in the world you will only ever be a single widget-maker.  A leader can produce an unlimited number of widget makers who are better than her and bring in the work to keep them busy.  How is that not more valuable?
11. The final barrier is usually unspoken but along the lines of “What am I if l am no longer the best widget maker, or the expert with the answers, or the centre-forward, or the quarterback?”  Leaders have a fulfilling self-image that they are good at hiring and developing people to be better than them at doing stuff and that this is a much bigger and more valuable skill than making widgets

(With apologies to all widget makers).

If you'd like to learn more about how to delegate then perhaps you should sign up for one of these events

I don't like managing people

I was talking to a prospective client recently about the challenges of growth.  He said he had spent twenty years working 60-70 hours per week growing his business and that he was feeling the strain - and his wife had also started to express concern.

I asked him about delegation and whether he was developing employees to take on more responsibility and reduce his load.  The short answer was no.  The slightly longer answer included the following elements (I paraphrase):

"My company is in town x and there just aren't enough of the right people around."

"If you train employees up they will just want more money or leave."

"I can't afford to pay people more."

"I just don't like managing people."

The final point was made almost at the end of our conversation.  I don't know whether it was a momentary insight or something he knew well but was only prepared to share after we had talked for a while but it probably explains the three previous points.

Of course, most employees, much of the time, are baffling, unpredictable, selfish, short-sighted, lazy - in short, humans.  Managing them is a never-ending challenge that requires a consistent, steady will to prevail,  a resilience that can surmount the inevitable disappointments, and some basic management structures and techniques.  But to become leadership, to transcend management, requires something more.  It requires mutual trust and a belief in the ability of ordinary people to do extraordinary things if they want to.

Business owners, and managers generally, get the employees they think they will get.

The tragedy is that many, perhaps most, business owners end up with employees by accident, as a by-product of growth.  They have little time, desire and perhaps knowledge to develop these people and so low expectations are inevitably met and a nasty downward feedback loop created.

After 20 years of 60-70 hour weeks fnally takes its toll and the business owner decides something must change it can be an unwelcome message to hear that the only sustainable way to grow a business is to grow the people.

If you'd like to learn more about sustainable growth, systemisation and making your business scalable then you should register for one of these events.

I don't trust my employees

Often when talking to clients about delegation they work around to telling me that one barrier is “I don’t trust my employees”.  My normal response is to ask “Do you think they trust you?”  We generally then get to the point that my client isn’t accusing his staff of stealing each others’ sandwiches from the kitchen fridge, or selling company secrets online – it’s just that they don’t think they care enough or understand enough to be trusted with more responsibility.

If your staff are overloaded, fed up with getting grief from unhappy customers, feeling unloved and underpaid, resentful towards management (that is, towards you)…don’t try to delegate stuff to them.

If that is the situation in your business then chances are that you too are feeling overloaded, fed up with getting grief from unhappy customers, unloved and underpaid…and resentful towards your staff.

This is a recipe for a downward spiral.

How then to break out of this situation?  And break out of it you must, or things will just get worse and health, wealth and happiness will become a distant memory.

Taking a leaf from the AA handbook (that’s the drink problem people, not the motoring organisation) the first thing to do is acknowledge the problem.  Now they have another eleven steps that aren’t as relevant so here is the delegation creed instead:

1. Acknowledge the problem to yourself.  Turn off your phone, shut down your email, switch off social media notifications – and spend five minutes writing down the things you are not happy about in your business and the impact they are having and will continue to have;
2. Acknowledge the problem publicly – to your employees.  Stand up in front of them and explain how you feel about your business, your performance and their performance;
3. Acknowledge publicly that it is your fault (because it is) and commit to doing things differently as a leader;
4. State your faith in your combined ability to improve things and build a business that will make you all proud.  Admit that you don’t have all the answers, you can’t do it on your own and that you need their help;
5. Commit to better communication on your side, which means blocking out diary time to communicate, listening, and respecting opinions;
6. Ask employees to commit to better communication on their side, which means asking questions, giving opinions and speaking up when they see things going wrong;
7.  Explain that in future you will be asking people to take new things on and each time you do this you will expect them to ask you to change something or do something differently to benefit the business in return.

This creed doesn’t mention delegation – and only in the last point does it start to edge towards it.  The point is that the act of delegation is the last step, not the first.  Trying to delegate in a negative, suspicious, chaotic environment will be seen as an imposition and will simply contribute to more negativity, mistrust and chaos.  First you need to build the conditions for successful delegation – and the foundation for that is trust.  To gain trust you have to give it.

The actual mechanism for successful delegation…well, that is a topic for another blog.  If you can’t wait for that, register for this event on growing your business.

Fill your pipe

 I was helping my client use their computer systems to provide useful management information. We were talking about project tracking and how, by recording the status of each project and the date that it changed they could create a simple traffic-light system that would show at a glance where things were going awry.

We went on to extrapolate from the specific to the general.

1. All businesses can be thought of as a series of flows and balances (or pipes and buckets if you prefer). Management information tracks the speed of these flows, the volume of flow and the level in the buckets.  Examples of flow volume are number of new enquiries per day, value of invoices issued per month or, in my client’s case, projects completed per week.  Examples of flow speed are average project duration, sales lead-time or quote turnaround time.  Examples of levels are debtors, or quote bank, or cash in the bank.
2. Every part of your business can be thought of in this way.  When think of it in this way then you can identify the volume, speed and level measurements that tell you how it is performing.  You can spot leaks, blockages and levels that are too low or too high and fix them.  You can improve things.
3. Efficient management focuses on exceptions.  Your management information at the top level should be designed to highlight exceptions.  If the reports you use are long and detailed, with the issues that require attention hidden amongst lots of other stuff, then the reports need fixing.  If the only way you can control a process (or your whole business) is by checking on every project or transaction then you need better management information.
4. Once you have applied this approach to one process then you can apply it to all your processes.

If you’d like to know more about thinking differently about your business then you should register for this event.

Productivity improvement at gunpoint

I heard a well-known economist and speaker being interviewed on the radio this week.  He was asked about the effect of wage increases on inflation and the risk of an inflationary spiral.  His answer was that increased pay would not lead to inflated prices if productivity increased to match the increased cost.

By chance, a conversation with a client at around the same time resonated with this.  We were talking about how he could afford to give a key employee a pay rise.  He wanted to recognise the employee's contribution and hang on to him but his manufacturing business, like many other businesses, is under pressure from increased material and labour costs and aggressive competition holding down prices.

The employee concerned is willingly (and competently) taking on more responsibility and as a result my client is able to spend more time winning new business.  We were able to construct a simple business case that shared this continued improvement in productivity (that is, profitability) in the business with the employee concerned.

A couple of points struck me:

Firstly, I think my client only talks about productivity when I raise it.  Certainly the economist's point would not to him seem relevant to his business.  The concept of making increased reward conditional upon increased productivity, whilst not startlingly new, would be seen as contentious and likely to upset employees.  In this case it worked because the pay increase followed the productivity increase.

Secondly, the increased productivity of the employee concerned, and more generally across his workforce, has come about after years of effort by my client to manage people differently, dozens of incremental process improvements, implementing structure and standards...and the occasional backwards step.

Sustainable productivity improvement is not something that can be achieved overnight, by fiat, or (I suggest) as part of a pay negotiation.

You can get help, information and resources to improve the productivity of your business here.