Employee Communication- “Why is it so difficult?”

Posted on July 5, 2011 by John F. Dini

I facilitated a recent meeting of business owners where the conversation turned to internal communications. It was a hot button for everyone in the group, and most of them expressed considerable frustration.

“I do everything I can think of to keep my employees informed,” one said. “We have a newsletter that is offered in both print and email versions. There are monthly department meetings where we go over new information. I send out email bulletins, and write a quarterly Letter from the President discussing our plans and initiatives.”

“Yet when I ask an employee for his or her opinion on a new service or policy, I get blank looks. What do I have to do to make sure that I’m getting through?”

As the owner of the business, your primary leadership responsibility is to communicate your vision for the business. Most employees want to know the bigger picture. If you ask whether the company’s financial health, operating plans or future direction is important to them, they will universally answer “of course.” So why, when you try to communicate these things, does so much of it seem to fall on deaf ears?

Enough is enough, and that is too much!

It’s easy to blame the problem on information overload. In an attempt to rise above the din of constant communication, many business owners resort to escalating definitions of importance. This is an important message. This is a really important message. This is a vitally important message. This is an earth shaking, world stopping, straight-from-the-horses-mouth message.

Others prefer the “less is more” approach. Their logic is based on the presumption that, if they only communicate occasionally, those messages will naturally stand out. In the long run, neither approach seems to work much better than the other.

There is nothing that is guaranteed to be entirely effective, but a few guidelines will help employees understand when they need to pay attention.

Strictly limit the number of people who are allowed to broadcast company-wide, and define their communication responsibilities. The President, for example, only delivers big picture messages; those related to vision, mission and game-changing events. Let the Sales Manager talk about customers and deals, while the Human Resources Manager announces all policies. If your business isn’t large enough to divide responsibilities in this manner, name an assistant or key manager to make all announcements that aren’t presidential level.

Prohibit department heads or managers from transmitting anything to the whole company. Make it a requirement that general distribution announcements be submitted to the person designated for that area.

Unless an action requires a specific response, or has a deadline, move it to a passive medium of communication. If most of the “news” is available only on the company intranet or in the monthly newsletter, readership will probably increase.

Communication should be part of the job description

Make it part of the job description for managers and supervisors to facilitate company communications to their direct reports. Employees who are responsible for the actions and productivity of others should also be responsible for making sure they understand what is happening in the company. All too often we let supervisors escape with “None of my people read those things.” Proactive communication should be a key factor in judging any manager’s performance.

No single approach will fix every issue in internal communications. If you help your employees organize and prioritize the information, however, you have a better chance of getting through to them.

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Here Comes Subscription IT…Like it or Not!

Posted on June 27, 2011 by John F. Dini

It was one of those conversations that changes my perception of my business and an industry in minutes.

A client who owns an IT company was discussing his strategic model. “I can’t continue to serve the SMB market like we have for much longer. Qualified, certified technicians require compensation packages that cost me six-figures. Small businesses won’t be able to afford what it costs to send them out to an office just to fix common PC and server problems.”

Computers- Can’t live with ’em…

The small business IT world is changing again. Twenty years ago we began using computers for specific tasks- writing a letter or bookkeeping. Fifteen years ago we began seriously communicating via email. By 1999, everyone in the office had to have a PC or access to one just for company communications.

Ten years ago we began expanding our usage to include scheduling, shared files, calendars and contacts. Five years ago we started pushing that content to our smart phones and added instant messaging. Now, for most of us, even minutes without our electronic tether is enough to start your heart racing with anxiety.

Office technology is more expensive, but at the same time has shrunk in terms of its real cost. The expense of buying or repairing a computer is nothing compared to the expense of an idle employee. For the fully loaded cost of a $35,000 worker, buying a new PC every year is cheaper than 2 days of total downtime.

Like many business owners, I have been resistant to the subscription/service model of computing. While we don’t have an “IT guy” per se, we have sufficient computer skills in our office to handle backup, routine maintenance, upgrades and troubleshooting.

So far I’d looked at the various service models with a gimlet eye. Managed services, terminal services, remote monitoring, and virtual desktops all require that I change my thinking from a capital asset model (buy a PC and use it until it fries) to paying monthly for updated and current software that I don’t really “need.”

Many of my smaller clients are still on XP and Office 2003. Most use Office 2007. Only a few, as of mid 2011, have converted to Office 2010. In a subscription/service model you would presumably have to update constantly. I hate the idea of the Big Brother from Redmond locking me in to every change he wants to force down my throat.

Subscription IT Services

The issue that is coming isn’t whether you can afford to stay current, it is whether you can afford not to. It isn’t about having the latest stuff, whether you need it or not. It’s about bringing your company to a halt.

An employee downloads a virus. The latest service pack locks up your accounting package. The server crashes, the backup is corrupt. For many small service companies, that is essentially being out of business. You call your local IT company and scream -“Get out here and get me running as soon as possible!”

But he doesn’t know what caused the problem, or how long it will take to fix. He hasn’t seen your system in months. He may have to trace your previous changes, or unload things you did while he wasn’t looking.

In the meantime, his technicians are committed to those customers who pay to keep their systems current. He reaches into their systems nightly to take care of routine issues. They represent his recurring revenue, and have far fewer problems. They’ve paid for the right to be prioritized.

His technicians are too expensive to just have hanging around, as in a firehouse. They aren’t the Maytag repairmen. They are fully booked, and it is difficult to commit one to an occasional customer for an indefinite length of time.

What would you do if the answer was “Sorry, we can’t get there today. Maybe tomorrow, or the next day at the latest?”

I know the answer. You would call another vendor. Someone you don’t know, and have no experience with. Presumably, someone who wasn’t as busy, and had technicians sitting around waiting for a call.

I’m not sure that’s the best answer. Like it or not, we are going to be choosing IT providers like we do phone companies.  They will be long term relationships, tied into our businesses directly, and it will be a pain to move from one to another.

Posted in Thoughts and Opinions | Tagged , | 6 Comments

6 Responses to Here Comes Subscription IT…Like it or Not!

  1. Rich Rivera says:
    June 29, 2011 at 8:42 am

    John,

    Excellent read this morning…it is a fine balancing act, I agree. As a business owner who manages the costs of experienced techs…and very savy customer base…the days of having a bench are over. As cloudy the field of providers gets, it comes down to who you trust and who locally can fix the problems or the business falters!

    Reply
  2. DENNIS HAVEL says:
    June 29, 2011 at 9:13 am

    Then there’s “The Cloud” and SA’s own Rackspace.

    Reply
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  4. Brad Elmhorst says:
    June 29, 2011 at 11:51 am

    Well stated. Our company has been in an ‘outsourced’ network administration relationship for 3 years. We pay outsource network administration, patching, backup, disaster recovery, desktop and email support for 25 workstations and 7 servers. Compared to the cost of a full time skilled position including benefits we have a IT budget savings and the added benefit of a ‘resource team’ to turn to for insight on latest and greatest.

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  6. Mike Wright says:
    June 29, 2011 at 1:46 pm

    As you have pointed out timely(or immediate) access to accurate information has become critical to successfully operating our businesses. The break and fix model for maintaining our computer systems is not feasible. If there are any companies in industries that don’t have the need they will very soon. The question is not if a business needs someone to be constantly be monitoring their systems who knows immediately what to do if the is a disruption, but who will it be. It is highly likely that businesses will soon have a combination of internal resources, contracted services and services provided from the cloud (now that 3rd and 4th generation access is constantly at our finger tips.

    Reply

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Who are the Real Business Performers?

Posted on June 20, 2011 by John F. Dini

A business owner told me a story the other day…

“After I was in business a few years, a large corporation made me a terrific offer to come work for them. I left my company in the hands of my manager, and accepted the offer.”

“A friend who works for a large corporation said ‘You will do a great job, but you will fail. You just don’t understand the politics.'”

“A few years later the company ran into some difficult times. We knew that cuts would be coming. I was unconcerned, because my team, despite being in the smallest market in the region, had generated 70% of the business that year. Two of us had produced twice as much revenue as the other eight employees combined.”

“So I was completely unprepared when the regional executive called to tell me that they were cutting one employee to save expenses; me!”

Fortunately, he still had his business intact, and returned to it successfully. Like many entrepreneurs, he is of the opinion that his performance wasn’t recognized or appropriately appreciated in a larger environment. The majority of business founders I know left a job because they felt that they could do better on their own.

So small business owners as a group see themselves as the performers, the ones who make things happen. They look at corporate executives and say “What’s the big deal about doing what you are told, and following the rules for an entire career?” Small business owners are the first to rant against outsized corporate compensation. Why should companies pay millions of dollars to people who have never missed a paycheck, and only been asked to create their own solutions without support or guidance?

I also know some corporate executives. They have climbed a tough and competitive ladder. At every level, they faced off against other talented, educated, ambitious employees who wanted the same promotion they sought. They see themselves as the winners, the best and the brightest, who have been honed in an unforgiving gauntlet.

Are the best and the brightest really more likely to be in the small business world or the corporate world? Are they just different kinds of people? Is it just luck or circumstances that sets them out on one path or the other? I’d like to see your comments here. Please identify whether you are an executive or a business owner, or if you have been both.

I’m also posting this discussion on our Linked In group “Small Business Owners Knowledge Knetwork.”

Posted in Leadership | Tagged , , | 1 Comment

One Response to Who are the Real Business Performers?

  1. Brad Elmhorst says:
    June 20, 2011 at 7:57 am

    John, well stated. You have captured the blueprint of most large corporations who hire managers with advanced degrees and book knowledge, who then manage teams of support staff or support suppliers that do the work. Change for the sake of change in support staff and suppliers is the largest erosion of corporate success which continues plague our American corporations.

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Profits and Savings aren’t the Same Thing

Posted on June 5, 2011 by John F. Dini

How much profit will you make this year?

If you are like many business owners, the answer is “We’ll see.” They consider profit to be the amount left over after all of the business expenses are paid. That’s an accounting definition, not a business definition. The accounting equation is R-E=P. While valid from an arithmetic perspective, that approach causes may businesses to look at profit as an incidental effect of cost control.

Intuitively, calculating profits as a remainder seems to make sense. It is how you approach your household budget. Your take-home income, less your living expenses, equals your savings. Household savings are available for unexpected expenses, lifestyle upgrades (a new car or home) and retirement.

Business profits are intended to be used. They aren’t a rainy day fund, nor are they a code word for owner distributions. Your distributions as an owner are part of your compensation. In the CPA licensed seminar “Making Your Business Really Fly” the Australian entrepreneur interviewee who is the subject of the video, Wally, says “If you are bearing the stress and pain of running a business, and all you are getting is a salary, then you don’t have a business, you have a job.”

From an accounting standpoint, profits fund owner distributions. That is a tax issue, not an operating methodology. Profits also allow the company to grow. They are spent to create more profits. They should be budgeted after appropriate distributions for ownership. Running your business with a philosophy that says “I pay the employees and other bills, and the rest is mine,” leads to two issues that hold back your company’s growth.

The first is starving the company of needed capital. Once you have done your tax calculations, it’s psychologically more difficult to let go of the money. I understand the tax advantages of reinvesting it as a loan to the business, but most of us don’t do that. We put it in our personal account, and withdrawing it from our “savings” to put it back into the company is painful. Most owners would rather cut expenses to the bone before reinvesting on a regular basis.

The second psychological issue revolves around the way in which many owners generate profits. They “squeeze” them out at the expense of good management practices. Employee performance reviews are delayed, because they are usually accompanied by raises. Technology upgrades are deferred or marketing is under funded. The resulting “savings” trickle down to the bottom line as “profits.” 

Your budget should have two profit lines. The first is the planned distributions you deserve as an owner. That should be an amount that gives you a risk-adjusted return on your investment, an appropriate bonus above your executive salary for meeting management objectives, and a payment on the deferred compensation (or sweat equity) that most of us put in at the beginning. That can be considered your savings.

The second line is company profit. That is the money you need to invest in the business for growth, regardless of how you handle it for tax purposes.

Unless your business can fund both profit lines, you really just have a job.

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The Third Factor- A Third Eye?

Posted on May 31, 2011 by John F. Dini

For several years my writing and speaking has focused on two factors that are indispensable for entrepreneurs; creativity and tenacity.

Creativity is the drive that not only makes entrepreneurs see opportunities, but also makes them consider every problem or challenge as solvable. It is the part of the business that entrepreneurs enjoy so much. That’s why so many of them are poor managers.

Tenacity is the refusal to accept failure. Any successful entrepreneur has been told at some time that it just won’t work. Most have felt at some point that things were hopeless. The phenomenon is widespread enough to have axioms that entrepreneurs use frequently. “When the going gets tough, the tough get going.” Or Nietzsche’s “What doesn’t kill you makes you stronger.”

These two traits come together often. Let’s call it “tenacious creativity.” When faced with challenges, entrepreneurs think of solutions. If the solution doesn’t work, they think of another, and another, and another. That’s how they survive long enough to become successful.

The Third Eye
The other day my friend and client, Steve O’Donnell of Hill Country Bakery, offered a third required trait: the ability to navigate in the fog. What a great way to phrase it!

Some folks call it vision, but it is more than just knowing where you want your business to go. It’s knowing how to get it there without sign posts. It’s understanding innately what will get you closer to your goals and what won’t. It’s knowing when to listen to advice, and when to ignore it. It’s having a sense of direction in your gut that lets you instinctively choose the right path.

Many religions have the third eye concept. It appears in Taoism, Hinduism, Confucism and Gnostic Christianity. It refers to an instinctive knowledge that can’t be explained by the usual five senses. It may be clairvoyance, or psychic vision, or foretelling the future. It may be all of those things.

But the Third Eye is clearly part of what makes an entrepreneur successful.

Somehow, when Steve said it, I just knew he was right.

Posted in Entrepreneurship, Leadership, Thoughts and Opinions | Tagged , , , | 3 Comments

3 Responses to The Third Factor- A Third Eye?

  1. Bobbi says:
    June 13, 2011 at 5:29 pm

    What a great post! I’m currently working with an entrepreneur who listens to everyone but herself. I can’t seem to make her understand that, while it’s great to seek advice and suggestions, you can’t always listen to everything everyone says.

    Reply
    • John F. Dini says:
      June 20, 2011 at 6:06 am

      Thanks Bobbi. All too often a business owner tries to do everything that might work. The third eye is developed by creating both a personal vision (“What do I want my life to look like when my company is successful?”) and a company vision. Take a look at the Simon Sinek video at TED.com

      Reply
  2. Srinivas Daram says:
    July 28, 2011 at 9:19 am

    Great Tips, thanks for sharing with us. Especially the way you put together notes on third eye makes sense and in closing you were talking about religion, which brought many memories, where GOD has opened his third eye (my parents used to tell lot of mytholigical stories). Once again thanks for sharing.

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