Cost pressures broadening and growing stronger

by Elisa Spain Comment Closed

The #1 concern noted in Vistage’s recent report Decision Factors H2 2018, is rising costs.

As we near the end of the current economic cycle, for the first time, in a long time, in addition to a typical cyclical tightening, we are also experiencing inflation. Wages are rising, the Fed is raising short term rates, and commodity prices are rising. Add to that the tariffs and businesses are under cost pressure that has not been with us for a long time.

The resulting profit declines are a double-edged sword as the impact is on both you and your customers.

What to do?

Joe Gavin, Vistage chief research officer, offers these suggestions:

  • Raise your prices – 56% of Vistage members are already saying they have, or plan to raise prices. Now is the time to get ahead of the expected continued pressure on price.
  • Talk with customers about their long-term plans – A transparent conversation can lead to a strategic discussion of how you can best serve your customer in this environment.
  • Use technology to lower costs –  Whether its cloud computing, updating your ERP or CRM or even investing in robots and AR, the cost of these technologies is going down while the cost of labor is rising and the labor market is tightening.
  • Restructure your debt. If you haven’t yet restructured your debt, this is probably your last chance to do so at a decent price, says Joseph Quinlan Managing Director and Head of Market Strategy for U.S. Trust, BofA, Quinlan.

And one note of caution. What is happening to you, is also happening to your customers and suppliers. Be sure to monitor both to ensure you don’t extend credit unintentionally. For some insight into which segments of the economy, i.e. industries, to watch most closely, check out this blog from ITR Economics: Director’s Cut: Are Your Profits Following the Crowd?

 

Are You a CEO or President of a Privately Held Business? If you are also a lifetime learner, and want to learn more about Vistage, click here.

You can read more of my blogs and leadership quotes here.

 

What Are CEO’s Most Concerned About Today?

by Elisa Spain Comment Closed

Entering the second half of 2018, Vistage Research compiled a report summarizing the key concerns CEO’s face today. This report draws on data from the Vistage Q2 CEO Confidence Index report and a team of expert economists. Here are the five key areas of concern:

  1. Cost pressures broadening and growing stronger
  2. Talent shortage goes critical
  3. Taxes, trade and tariffs translate to trouble
  4. Cyberattacks are the silent killer of SMBs
  5. A recession is inevitable

Beginning in September, this blog will address each of these concerns in turn. Meanwhile here is the complete report for your consideration  Decision factors: H2 2018 – Economic considerations for SMB executives,

Are You a CEO or President of a Privately Held Business? If you are also a lifetime learner, click here to learn more.

Elisa K Spain

#Strategy
#Vistage Confidence Index

Radical Transparency

by Elisa Spain Comment Closed

In publicly held companies, company performance and executive compensation is, just that, public. All shareholders receive both an annual report and a proxy statement and this information is contained within these documents. Additionally, it is a simple matter for a non-shareholder to obtain this information, sometimes with a simple web search, or at least with an inquiry to the company.

Yet in many, perhaps, most, privately held companies, this information is closely guarded and not shared.

Why not? Lots of reasons.

The reasons differ depending on the stakeholder we are discussing. Focusing on employee stakeholders, some of the responses I typically hear are:

  • Why do they need to know?
  • They won’t understand the financials.
  • There will be resentment if they know what the owner(s) are paid.
  • There will be resentment if they know what their colleagues make.

What if instead, you considered radical transparency? What if:

  • you educate your employees so they understand the balance sheet and the income statement?
  • employees learn the investments the owner has made and the risks she has taken, and continues to take, to finance the business?
  • employees understand the expenses the company must incur to operate the business, beyond the COGS?
  • employees begin to understand the relationship between labor utilization/efficiency and profitability?
  • compensation was based on a combination of market data and performance so that employees understand why they are paid, what they are paid?

Transparency without the accompanying education will not work. Thus, radical transparency requires an investment. The good news is, it’s an investment of time, not dollars.

As the war for talent continues, with no apparent end in sight, is radical transparency an investment that may lead to employee loyalty and therefore increased retention?

Why Vistage Works

Elisa K. Spain

The Power of Not Knowing

by Elisa Spain Comment Closed

Many of us as leaders, especially new leaders, feel we must have all the answers. Some even feel a sense of shame when asked a question, by a client or an employee, and they don’t have the answer.

And, despite these feelings of inadequacy most of us have felt at one time or another, I also hear stories of the magic of saying “I don’t know”.

One of my favorite stories came from one of my clients who grew up in his family business.

I met this man ten years ago and before I knew him, he had worked every job in the company and truly had all the answers. In fact, he was the answer man. Everyone came to him when they needed help figuring out what to do next. This worked fine when he was on the line and even when he was the operations manager.

By the time I met him, he was president of the company and being the answer man wasn’t working so well. He was so focused on solving everyone’s problems and making sure everything was done right in the factory, that he was not doing the job of President. He wasn’t focused on strategy, nor was he meeting with customers, nor was he innovating or coaching (answering folks questions ≠ coaching).

One day after we had talked about his frustration in one of our coaching sessions, he had an idea. He decided starting today, when folks came to his office, he would begin saying “I don’t know”. At first his team became annoyed with him. Over time, they stopped asking.

Today his company is filled with competent executives that run their operations effectively. So effectively that the company has doubled in size and he works fewer hours than he did when the company was half its size.

For some of us, we actually don’t know, others, like this man, do.

In either case, what are we giving up by wanting to, trying to, have all the answers rather than allowing others discover the answers themselves?

Why Vistage Works

Elisa K. Spain

The Way

by Elisa Spain Comment Closed

Most of us learned, “the way” early in life. Some of us learned it from our parents, some from our teachers or other adult role models. The way, we learned, was the way they did it. We observed or they told us, how to live our lives; and in what order to do things. Typically it went something like this, get an education, get a job, get married, pursue/advance in a career, have kids, retire, enjoy our grandkids.

For some this may still be the way, and for more and more people, this is only one of many choices. Today we have more choices and for most of us, a longer time frame during which we might choose multiple ways. For example, I know a grandmother who became a lawyer in her 70’s; and recently heard about an architect who became a restaurant owner in her late 40’s.

So, as you think about your way, whatever stage of life and transition you are in, give some consideration to deciding first what is important to you and then choose the way that supports that.

For me, one of the driving reasons I chose to become an entrepreneur, 20 years ago, (after 20+ years in the corporate world) was flexibility. I wanted control over my day, I didn’t want to live on a schedule and as silly as it sounds today, I didn’t want to put on pantyhose every day. :-).

What drives you? And, are you living your life and career in a way that is consistent with that drive?

Why Vistage Works

Elisa K. Spain

 

 

Time to Make the Donuts

by Elisa Spain Comment Closed

Dunkin’ Donuts ran this ad back in the 70’s and even those born since then, resonate with the concept “time to make the donuts”, as in, get up, get ready, get to work, do the work, go home, start again tomorrow.

Whether working in the factory or working as an executive, it’s easy to fall into the habit of doing, problem solving, doing some more, and then starting again. The good part of this is, we get sh*t done. The challenge is, we sometimes lose sight of the why, i.e. our purpose.

Whether it’s our personal why or our company why that drives us, before we crash into ourselves coming and going, as in the last frame of the ad, perhaps it’s time to stop and ask “why did I choose to start this donut making business, or work for this particular donut making business and why are we making these particular donuts”?

Why Vistage Works

Elisa K. Spain

Begin At The Very Beginning

by Elisa Spain Comment Closed

I am often in conversation with people I coach where the person is focused on action. I hear things like…

  • I am experiencing turnover, what can I do to stop or reduce it?
  • Not sure if my people feel valued or are contributing to their full potential?
  • We have a diverse group, wondering how do I get them to bond and behave like a team?

Much has been written including various techniques to answer these questions. While these are important questions, and I am sure techniques for monitoring and evaluating these challenges are valuable, for me, it is difficult to address these issues without a pause. For me, asking these questions is starting in the middle rather than starting at the beginning.

If we were to start at the beginning, these are questions I would ask:

  • What is the purpose of this team or workgroup?
  • What do I as the leader expect, what is my vision of success?
  • Do I and the team have a shared vision of success?

Once these questions are answered, then we can begin to address the questions above. For example,

  • Does each member of the team understand and support the team purpose?
  • Does the team feel ownership for the project or work effort?
  • Did the people who exited fit the team purpose? If so, did they understand it?
  • Do the team members need each other to succeed, or are they actually a workgroup with individual expectations?

There are many more questions to add to the second list, and the answers only become useful when we begin at the very beginning.

Why Vistage Works

Elisa K. Spain

What If I Can’t Today?

by Elisa Spain Comment Closed

We as leaders are told all the time that everyone is always watching us. A smile, a frown, silence, all are interpreted as “a sign”. And since most of us think in terms of impact on ourselves, our followers interpret these “signs” as a sign of something that impacts them. This of course frequently results in “absent information, people make stuff up”.

As leaders, we hear this and interpret it to mean, we need to be “on” all the time. Yikes, especially the introvert leaders say, that is exhausting!!

What if instead, when we are feeling pressured, angry, sad, depleted, we let our folks know that we are working on whatever problem has put us temporarily out of commission, “I had a tough conversation this morning and I am distracted by that, I will look for you later this afternoon so we can talk about your issue”.

For me, time and time again I have seen this sort of human response draw people toward their leaders…

What has been your experience?

Why Vistage Works

Elisa K. Spain

 

How Do You Know If Your Team Is Living Your Core Values?

by Elisa Spain Comment Closed

These days, most companies have stated core values. Many CEOs intentionally initiate conversations within their companies to ensure these values are front and center in their dealings with customers and employees. When difficult decisions are before us, we often ask ourselves, “what is the right thing to do?”; “how does our value of x or y, apply in this situation?”

  • But what about the day to day?
  • How do we know that the routine services we provide reflect our values?
  • How do we know that what we decide to do is actually executed in a manner consistent with our values?

In this Kellogg Insight article, Bernie Banks, professor of management and associate dean for leadership development, offers these four steps leaders can take to ensure their organizations walk the talk.

  1. Articulate your organization’s core values – referring to these principles routinely before, during and after key projects or regular meetings.
  2. Measure against these standards – ensure your performance evaluation systems apply the same level of scrutiny to examining the “how” of what team members do as to the “what”.
  3. Call out behavior in yourself and others – borrow from the army, conduct “climate surveys” assessing how individual behavior in the aggregate reflects the organization’s core values. Be transparent about sharing and discussing these results.
  4. Invite outsiders to critique the company’s actions – Informally ask for feedback from stakeholders outside your company and even better do it formally, asking “how do you believe our actions align with our stated intentions?”.

Getting all the leaders in your company aligned to truly reflect what you say you want is not an easy task. Like everything else, it requires intention and attention, daily in fact, says Banks.

Why Vistage Works

Elisa K. Spain

 

Here’s To The Crazy Ones…

by Elisa Spain Comment Closed

As my regular readers know, I collect quotes, share them here and on my website. Typically I publish one quote a month, but this month you get a bonus quote.

In the last few weeks, I have been writing about listening. The quote below from Steve Jobs is a wonderful reminder that ideas only come and change only happens, when someone has the courage to speak up and disrupt the status quo and we listen to them.

“Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.”

Steve Jobs

Here’s to the crazy ones! I hope you are one of them and if you aren’t, that you at least have one of them working for you.

Why Vistage Works

Elisa K. Spain