The Key to Effective Delegation: Clear Communication

Male and female coworkers discuss work over a laptop.

Delegating effectively can lift the performance of both you and your company. Strong delegation skills are a vital tool, offering benefits for both the person who delegates and the team member delegated to. However, not all delegation is effective. Here are the common traps and how to avoid them.

Dear CFO,
I keep trying to delegate work to my staff, but they either do it so poorly that it’s easier to do it myself or they ask so many questions that I can’t get anything else done anyway. How can I use better communication for more effective delegation?
– Overwhelmed by Workload in Washington D.C.

Build Your Effective Delegation Skills to Avoid Delegation Traps

It’s easy to fall into what I like to call delegation traps. You may think you’re handing off work with clear instructions, but it’s easy to miscommunicate. Clear communication is the key to avoiding delegation roadblocks. Remember, not all delegation is effective delegation. Part of building your delegation skills is learning how to give clear, concise instructions that set your team members up for success.

Not sure if you need to work on your effective delegation skills? Check out these common delegation traps and see if you’re falling into them.

The Most Common Delegation Traps: Communication Roadblocks

Woman standing in front of her team, moving post-it notes around on a meeting board.

1. Failure to define the project in terms of the SMART goal.

  • The problem: Instructions given are inadequate to complete the project and will likely result in lost time and energy as the project is fixed along the way. This leads to frustration for both parties.  It’s not patronizing to lay out the instructions clearly and if they aren’t clear, it should be no surprise when the team member has additional questions. A negative response from the delegator, in this case, is both demoralizing and unproductive for the team.
  • The fix: Lay out the requirements for the project in a SMART goal format. Follow up with the specifics on responsibilities, levels of authority, reporting and monitoring requirements. Engage the team member in the process and follow through for more effective delegation.

2. Only the dirty jobs get delegated.

  • The problem: You only delegate tedious jobs which are low visibility or just plain boring. The team member may get the impression you perceive these tasks as below you, leading to low morale.
  • The fix: Show the team you are not above any work by completing some of your own tedious tasks. For those delegated, explain the value of each task and recognize although it may not bring a Disney theme park ride to mind, it’s important. This will make the task more palatable for the team member. Effective delegation skills also include recognizing a job well done, team members are more likely to pitch in willingly when they perceive the value to them.

3. Conflicting priorities.

  • The problem: A critical, high visibility project just came up and you need to delegate. Your top team member is best for the job (this, and many others) and you shuffle their pet project to someone else.  In fact, you are always shuffling tasks around; this is damaging the attitude and productivity of your best team members.
  • The fix: Stop doing this! (Just kidding.) Make sure you establish open communication with your employees, encouraging them to bring conflicting priorities to your attention without retribution. When working as an acting Controller in a manufacturing company, I had a very good and hard-working team member who would always get the job done. I wasn’t always aware of what was on her list of priorities, so whenever I assigned or delegated a new project to her, she would simply ask what tasks on her list could get a new priority.  I accepted her process and we worked together to refine priorities and shift tasks.

Blank post-it notes on a board and a woman's hand moving one note.

4. Too little delegation.

  • The problem: You do not know what to delegate or maybe how to delegate effectively, so you keep doing tasks yourself that really should be delegated. Effective delegation skills are good for many reasons: the growth of your team, freeing up your time to help the business grow, and increasing the effectiveness and efficiency of the team by finding the best person for each project.
  • The fix: Make delegation an acceptable management objective by encouraging delegation at all levels of the organization. Train everyone on best practices to develop a set of strong delegation skills in each team member. Enable teams to focus on the higher priorities with regular communication of those priorities.

5. Lack of consistent policies, procedures, and training

  • The problem: Only one person knows how to do it–whatever “it” is. Delegating is hard, even in a growth mode, if you need to start from scratch on the process each time. Up until now, all of the information related to delegation was for a specific outcome such as a project or a report. While several of the traps apply in this scenario, there is a more basic issue in the day-to-day delegation which must be addressed: How can someone step in for your Controller while she takes a vacation if there are no policies to follow? How can you shift work from your accounts payable clerk when you need her on a short project if there are no procedures for his job, nor anyone trained to do it?
  • The fix: Effective delegation skills rely on cultivating flexibility in your team culture as well as following good delegation processes. Cross-train your team members. Setting policies to allow distributed decision making will benefit the entire team.  In the company I ran, the dispatcher had the opportunity to collect past due rents before sending service. We defined what her operating perimeters (delegation) for settling accounts was and I was involved if the customer would not comply.  It eliminated a bottleneck and increased cash flow. Document procedures to assure consistent job performance, accountability and cross-training is beneficial for all jobs. 

6. Forgetting you are accountable too.

  • The problem: Team members think they can use delegation to abdicate responsibility for various policies, procedures, projects, etc. Or, you may be pursuing a big customer and lose track of the day-to-day tasks. Well-trained team members will operate efficiently and, in most cases, get the job completed.  But, it’s important to remember, you can’t delegate accountability.
  • The fix: Team members need to keep you informed whether you like it or not. Your team needs to know you require active approval of the biggest projects, significant changes in policies (those which change a risk scenario), watch financial and operational metrics and schedule regular status meetings to keep a pulse on the business.

Remember, effective delegation skills are a useful tool to strengthen any team. Building on existing skills and helping develop new ones is the key.  Delegation works best in an environment of open and clear communication where team members can give feedback, ask questions and contribute to the final results.  When delegating, remember it is a learning experience and takes practice to implement.

If you happen to fall into any of the traps, you aren’t alone. Tomorrow is a new day and the perfect time to use these tips to improve upon your delegation skills and foster a better, more productive work environment.


How to Manage Team Vacation Requests (and Why You Should Approve Them)

Wondering how to manage team vacation requests, when your staff wants time off? Here’s how to prioritize vacation and why you should promote paid vacation.
Dear CFO,
My company recently implemented a mandatory vacation policy because the CEO believes we will benefit personally from time off, and the company will benefit from a happier, healthier, and more creative workforce. I’m concerned about how to manage team vacation requests. As you know, the workload doesn’t change based on who is in the office. I’m not sure how to make time for my team to take these vacations when we’re already over-worked.
No Vacation in 5 Years, Chattanooga, TN

I can relate to your dilemma. Knowing how to manage team vacation requests is certainly a challenge for any team leader. The workload is constant no matter who is there to perform it.

With a mandatory vacation policy, most employees will (and should) opt to take their vacation. Our company policy was “use it or lose it,” and no one chooses to lose days. With two weeks of vacation, 11 holidays and two personal days, it meant that every employee was out of the office for about a month of each year.

There are two obvious potential answers to the question of how to manage team vacation requests: 1) Staff your team 10% higher to compensate for the “lost” time, or 2) Ask your team to work overtime to make up for the deficit.

While I said those were obvious solutions to the vacation request dilemma, they may not be the right solution. Let’s look at the problem from the perspective of the CEO and get creative, especially since those two costly solutions might not fly anyway.

Why Vacation is Critical for Your Team

Most of your team members are knowledge workers, especially when it comes to their specific role. Optimizing results means relying on the wisdom, experience, and unique perspectives they bring to their job. In addition, chances are high that most of your incoming team is of the Millennial generation. These 20-30-somethings are focused on accomplishment (not time at the office) and using technology to connect and contribute.

In his book The Organized Mind, Daniel J. Levitin discusses the addiction and effects of technology and the fact that the brain uses a disproportionate 20% share of the body’s energy. These two factors support the need for vacations to allow workers to unplug, refuel, and replenish the motivation and creativity needed to perform as knowledge workers.

As a leader, you set the example for your team. If you don’t take your vacation days, or if you’re only taking “working vacations” (i.e. constantly checking your email and calling in), your team knows you don’t value vacation. There is no “do as I say, not as I do” when you are in a leadership role. Additionally, the benefits of vacation extend to managers, CEOs, and team leaders as well as their staff.

Shawn Achor, the author of The Happiness Advantage, found that employees who take time off perform better. Research supports that “when the brain can think positively, productivity improves 31%…and creativity and revenues can triple.”  As a corollary, employee retention increases. Not only are your people happier, healthier, and more productive, but their attitude will influence others on the team.

Addressing the Fears of Encouraging Vacation


Work overload often makes employees hesitant to take vacation time
image via Pixabay

With all these benefits, it seems logical that employers would jump at the chance to promote vacation, but of course, the show (or in this case work) must go on. It’s easy to see the benefits of team vacations on paper. It’s quite another to manage team vacation requests that leave you shorthanded.

The US Travel Association offers some statistics that show just how common the fear is for employees when they fill out their PTO request:

  • 40% of employees are afraid of the mountain of work that they will have upon return.
  • 35% say they are the only ones who can do their jobs.
  • 25% are even afraid of losing their jobs (although the current tight labor situation may impact this stat slightly).

While you may be one of the 28% of leaders who “cringe” at approving time off or the 32% who believe other employees have extra burdens when team members take time off, the fact of the matter is a vacation is still important for morale. If you’re seeking optimal performance from your team members, you need to approve at least some of those requests.

In fact, it could be a fear of judgment or repercussions that is preventing your team from putting in their requests. Yet, if you want to encourage productivity and a positive work environment, vacation is necessary for everyone.

Cruise Planners CEO, Tanya Murphy says, “Before I owned my travel agency, I worked in corporate America. I observed that some of my colleagues wouldn’t take a vacation out of a sense that it would hurt their career ambitions. I took every vacation day I was allowed, and I was promoted several times in my 16-year career. If employees are delivering work while they’re there, then they shouldn’t worry they’ll be seen as a slacker. Take your vacation days!”

As CEO of a small company with a policy of 23 days off per year, I dealt directly with the dilemma of how to manage team vacation requests. The fears of untold piles of work, being the only person who knew the job, or worries about being replaced were very real. In a small company, there are several steps to take to relieve these fears and this is where strong systems and company culture come into play:

    • Every position should have a set of clearly outlined policies and procedures that assure consistent treatment of the company business. This would allow anyone to step in at a moment’s notice to perform the job
    • At least two people should be trained in each position. At my company, we used vacations as an opportunity for “refreshing” the skills of the backup person.
    • Process critical work while a team member is on vacation. For example, the backup person processes cash but filing can wait for the regular team member’s return.
    • Spread some tasks among other team members to alleviate the backlog. All team members recognize that the same consideration applied when they vacationed.
    • Consider hiring a temporary worker to fill the role if circumstances make the aforementioned steps too difficult. If this is a continuing issue, consider ways to streamline some processes.
    • Another option might be to allocate some of your budget to a vacation fund – that the employees may ONLY use for vacation.

How to Encourage and Manage Team Vacation Requests

Encourage your team to take vacation time and make it easy for them to plan around work
image via Pixabay

Vacation policies are usually quite clear on the “what” of the vacation, such as each employee earns one day of vacation a month for the first year, or each employee starts with two weeks of vacation. Often the policy defines the use by an anniversary, fiscal, or calendar year and other details like additional weeks at 5/10/15 years.

However, the application of the “how” of vacations may not be clearly stated in the policy. Many leaders manage team vacation requests by seniority or on a first come/first serve basis. This can be effective, but it may also lead to some tough choices.

To ensure continuity, often departments in an organization have specific times of the month or year where no vacations can be scheduled. For example, retail typically has a no vacation policy for Black Friday. Accounting departments may not allow vacation before the month is closed or at the time of inventory.

It’s important for morale that team members perceive the “how” of vacation use as fair. I found it best to be clear when you outline blackout vacation days. Lay out the schedule at the beginning of the year and allow first come/first serve requests. In my experience, we generally had a policy that two people couldn’t be out at the same time in our small organization. If there was a conflict between vacation requests, it could generally be resolved with a diplomatic conversation.

Alleviating the anxiety around employee vacations requires planning. Once the team member is assured the company has their back with cross-training, policies, and procedures, they should still prepare the team for their absence. Encouraging vacation planning best practices reinforces the message of leadership’s commitment to and the sanctity of vacation time.

Encourage your team to use these vacation planning guidelines:

    • If possible, plan the first day back as a half day to reboot mentally and physically.
    • Review the policies and procedures of the position to ensure that you’re up to date and perform a dry run with the back-up team member.
    • Make the boss or a delegated team member aware of open work and the status of all projects.
    • While no one can predict every concern that comes up, you should share any anticipated hiccups or challenges that might occur during your absence.
    • Clear up as many urgent tasks as possible. Often, the time leading up to a vacation can be very productive, so take advantage and leave the desk clear.
    • Set expectations for action in your emails and voicemail. I would recommend setting the away message to direct correspondence to your backup person. Keep the message brief with just a simple return date.
    • Follow-up with the boss, team members, clients and others at a one week and then three-day timeframe reminding them of the vacation. Offer management an opportunity to resolve any anticipated issues before departure.
    • Only let family or close friends know your whereabouts. There is no need to let the office know where you’re headed.
    • Truly unplug and avoid taking a phone (or at least answering it) on every expedition and excursion within your trip.

These practices encourage employees to really unplug and take a break from the busyness of their position. While it can be tough for some workers to leave the role, ensure them that the office will be just fine without them there for a few days. Focus on the importance of their refreshed return, where they’ll be able to offer a renewed perspective.

This also means, that as a manager, you need to adhere to your vacation policies. Use the opportunity to identify gaps in your cross training and delegation traps. Even when it would be easier to pick up the phone and call a team member on vacation, refrain. Troubleshoot the answer on your own and reinforce your company’s philosophy on vacation time.

Changing your mindset to one that understands and appreciates the benefits of vacation will help you think more creatively and support the full use of vacations for yourself and your team. By encouraging and learning how to effectively manage team vacation requests, you’ll promote a healthy, happy and productive work environment.

Vacations should be a regular (not a once every five years) occurrence. Best wishes that you also get to schedule some time away as you reinforce your company’s new vacation policy.

Featured image via Pixabay. All images licensed for use via Pixabay licensing.

The Best Advice for Entrepreneurs

Looking for the best advice for entrepreneurs who want to succeed? There’s a lot of “noise” telling you what to do. Here’s how to build your business foundation and apply best practices.

Entrepreneurs, we’ve all heard it, haven’t we? When you talk about a stressful situation at work and someone says, “Gee I really wish I could run my own business,” or “I wish I was my own boss.”

Entrepreneurs know it’s not always fun and games. In fact, little does your pal know the 24/7 work and dedication it takes to make your business succeed. If you’re like me, you probably think, “Be careful what you wish for, buddy.”

As an entrepreneur, there’s no simple formula for success, no clear-cut path, or secret. The best advice for entrepreneurs is to learn how to tune out the noise and focus on the day-to-day progress that moves your business forward.

Does the Best Advice for Entrepreneurs Come from Books?

The best advice from entrepreneurs comes from many places; books, mistakes, and more
Image via Burst

Like many self-made business owners, you’ve probably read all the books you can find on leadership and running a business. They make it seem easy, don’t they? “Here are the 7 (or 10, or 13) steps to success,” or “get the right people on the bus in the right seats, going the right direction.” “Simplify your systems, hold people accountable and your business will thrive!” Right?

There’s a lot of books out there that claim to have the best advice for entrepreneurs—the secret formula to success. Many of these books have helpful advice and good takeaways, but it’s often nebulous or incongruent with your reality. How do these great books relate to the day-to-day of the small business? You may browse the business section at the library and wonder, have any of these authors really run a small business? How would Jack Welch or any of the others really know what it’s really like to be a bootstrap entrepreneur? 

The reality is, being an entrepreneur (especially a female entrepreneur) is tough! It requires you to think on your feet, adapt, and roll with the punches. Entrepreneurship isn’t for the faint of heart.

In my small business, I oversaw a staff of 10. This, of course, meant when one person was out, 10% of my workforce was absent. Because each person had multiple roles, as is common in a small business, one absence meant that several “departments” were missing as well. I found myself often wondering, when does a large corporation like GE have that problem? (Answer—never!)

While business experts like Jack Welch, Napoleon Hill. and Stephen Covey espouse the best advice for entrepreneurs and great management concepts, they’re often hard to sync up with the real-world challenges faced by small business owners. After all, it’s hard to imagine implementing everyone’s appropriately colored parachute, when your biggest customer now sources from overseas, one of your machines started a fire, and your controller just quit. At that point, ANY parachute will do (or perhaps a life raft). Okay, so maybe you won’t face all those challenges at once, but even one event can make you wonder how the concepts in these books apply.

As my dad would often say, “When you are up to your behind in alligators, it’s hard to remember that the original mission was to drain the swamp.”

Small Businesses Run Lean but Some Advice Still Applies

Setting smart, attainable goals is some of the best advice for new entrepreneurs
Image via Burst

Looking around your business, you may see you have an almost non-existent management team. You may fit the mold of the “E-myth;” you started a company because you were good at a certain task. Now you have to wear so many other hats and be good at so many other tasks to keep the business afloat… Or, do you? All the books, articles, and TED talks with the best advice for entrepreneurs say don’t try to shoulder it all alone. But that advice is easier said than done, especially when you ARE your business. So, why read the books and seek principles to do better? Is it even possible to do better?

Personally, I think it is. There are important principles that can still be gleaned from these books, even if it doesn’t seem perfectly congruent to your business model. I‘ve read more success books than I can count. Everything from Stephen Covey’s 7 Habits of Highly Effective People to the 13 principles in Napoleon Hill’s Think and Grow Rich, to my current reading of John Maxwell’s The 15 Invaluable Laws of Growth.

Reading and understanding the concepts within those books may not help find a new right-hand person or file and insurance claim, but the concepts withstand the test of time. They really do contain the tried and true best advice for entrepreneurs, business owners, and leaders. In fact, I’ve found that many of these books repackage the same concepts, because they’re so mandatory for success. Napoleon Hill started writing about best practices 100 years ago and many of his principles are used in more modern works. The essential truths don’t change.

Running a small business is HARD. But there are many lessons along the way. Think of the advice you’d give your teenager: learn from your mistakes. You can do the same and learn from others who have gleaned their own experiential wisdom.

Having read too many books to count, (spoiler alert), the majority contain universal truths. Across the board, they all encourage you to:

  • Identify your core values and those of your business. Are you honest, loyal, trustworthy? What do you want to represent? What do you want your company to represent?
  • Define your role and purpose in the market. Do you want to be business that’s the fastest, cheapest, or highest quality? Do you want to serve your customer base better than any competitor does?  
  • Set aside time to identify and plan for:
    • Your long-term vision (3 to 5 years). Do you want to be the market leader or low cost producer? Do you want to change your level of customer dependence, so that no single customer comprises more than 10% of your sales? Do you want to reduce your company’s supplier dependence? Is there anyone that you think would add value to your team that you want to start a dialogue with? Where is your industry going and are you prepared to lead or follow?
    • And, short-term goals (<1 year). How much does your business want/need to sell? Will your staffing support the level of sales and do you have the cash flow to pay the staff, and cover operations, inventory, etc.? What are your contingency plans, should an emergency arise? What are your areas of risk? 
  • Use a defined process to set targets and goals, define specific actions toward their achievement, and hold people accountable within the process.
  • Select a form of project management that fits your team.
  • Recognize that any business plan you develop needs to add competitive differentiation.
  • Motivate and encourage your team. Team members must be aligned to achieve the goals.
  • Realize that your leadership defines the success or failure of your business.

Often, authors offer an abundance of advice on what you should or shouldn’t be doing, and not as much advice on the logistics of “how” to get achieve it. There are two books I’ve found that incorporate the “how” very well and offer some of the best advice for entrepreneurs. The current go to book is Traction: Get a Grip on Your Business by Gino Wickman, explaining the EOS© system. While many reviews talk about the usefulness of this book in the context of start-ups, I believe this a great tool for any small business. Another older resource is Mastering the Rockefeller Habits by Verne Harnish. Harnish does a good job of explaining how to simplify processes and accomplish each business objective based on the practices and teachings of John D. Rockefeller.

How Do You Apply the Advice to Your Own Business?

Fortunately, there are many excellent books out there and we can all find value from various resources that apply to our business.

While the two I mentioned above have some great core advice and offer a “how-to” approach, the real secret is to pick and apply what works best for your business specifically. The basic principles outlined in most best-selling business books hold up over time. A key element in transitioning from the entrepreneur with too many hats to a competent leader is applying the skills preached in the books.

Many entrepreneurs have a plan for this business in their head, but it's getting it into a comprehensive attainable plan that's a struggle
Image via Burst

Many business owners believe they have a plan for success, but when it’s in their head, it’s hard to develop a competent management team with a cohesive mission and strategy to take the plan to fruition. If you want to achieve your plan for success, simply choose a method that’s clear, uncomplicated, and inspires you to lead your team to complete action items, taking you closer to your goals. And, as Nike says, “just do it”.

It is your responsibility to work ON your business, work with your team to establish clear, achievable (SMART) goals, set timeframes, and hold team members accountable.

So, if you’re ready to go, start now. TODAY, get your calendar out and schedule time for yourself (1- 2 days) offsite to really think about your business. This will help you get your vision sketched out and in order. Once you’re clear on your vision, share it with your team. Enlist their help on the process and path to success.

Work out the logistics of “how” by scheduling an offsite strategic planning session where you:

  • Set (in the initial) goal and then review your company’s 3-5 year goals.
  • Decide 1-3 annual company objectives (1-3 is a guideline for small organizations).
  • Establish 5-7 steps to achieve the objectives.
  • Determine the cross-functional teams.
  • Set timelines and a process for reporting.

As you work ON your business, apply the advice and best practices you’ve discovered to identify and address roadblocks as well. Does your company culture allow for all team members to speak honestly and openly about their concerns? Don’t forget that part of the strategic planning process includes identifying areas of concern so that over time you can mitigate risks and bolster strengths. Long-term planning lets you anticipate future hiring needs. When you work with vision, you can look ahead and set strategic actions, like networking and “getting to know” a targeted hire.

Again, like books with the best advice for entrepreneurs, the concepts often sound simple:

  • Priorities defined to allow focus, progress, and management.
  • Data available to manage the Company (firsthand and immediate).
  • Rhythm to maintain alignment and drive accountability.
  • Systems and structures in place to handle complexity.

The challenge is often not finding great advice or the best business practices, but in reining yourself in.

If you are like most entrepreneurs, you will bite off more than you can chew. I would like to encourage you to be conservative (ok, maybe a bit of a stretch) in this first round of strategic planning. This ensures you can achieve your goals and celebrate the success along the way. As you apply the advice, slowly and deliberately, you will see positive change. You’ll be leading and managing not by the seat of your pants, but with intention and inspiration.

Finding success as an entrepreneur means being open to learning more every day. It’s not about finding and applying the very best methodology, goals, and team. Simply pick something and get started. Keep your plan and objectives on the top of your mind. Schedule regular reporting as part of the process to ensure follow-through. Your life will get easier and you’ll find a better balance as you set expectations and manage the business against a set of goals and with accountable team members.

The best advice for entrepreneurs is to keep learning. Whether it’s from the words of wisdom written by business leaders or from your own mistakes. Growth-mindedness will keep you moving forward on the path to success.

Featured image via Burst. All images licensed via Burst licensing.

How to Make Inventory Easier on Your Business

Inventory day is a big day for any business. Make inventory easier with these tips on how to better organize and manage the inventory process

Dear CFO,

As the controller in a very small manufacturing company, taking inventory is the worst job in the world (ok, maybe not the worst, but certainly tedious). The process itself is hard, but the reconciliations are even more difficult. My team uses information provided by the shop floor and sometimes I’m not sure if they really counted. What can I do to make inventory easier?

Inventory Not Managed in New England

You aren’t alone in your frustrations. New ERP (enterprise resource planning) systems can make inventory easier with real-time tracking. But keep in mind, these ERP systems are still dependent on good information. You know the old saying – garbage in/garbage out?

During inventory, many of the inputs are usually completed on the floor and not under your direct control, presenting another problem. Senior management must be involved in improving the inventory process. This takes us back to a discussion of policies and procedures. When there are clear policies and procedures with assigned responsibility, there are fewer errors and much less finger pointing.

How to Make Inventory Easier

Recording inventory is a time sensitive project so make sure your whole team is on board and following inventory procedures to make inventory easier
Photo by SparkFun Electronics

At the heart of it, an effective inventory process comes down to effective management. The discussion points below may seem so obvious and rudimentary that you can’t imagine they create problems, but you’d be surprised. So, let’s go through the tasks and resources included in a successful inventory procedure.

Timely and Accurate Recording in the Inventory System

  • Implement a policy stating who can order inventory and how much inventory they can order at a time. The policy should cover the types of materials and the dollar amount each team member has the authority to use when they purchase. If larger amounts of materials, inventory, or supplies are needed, who is responsible for the escalation? Sophisticated systems control spending policies with set dollar limits based on login authority.
  • Record part numbers for all inventoried items, typically called the Item Master. There should be a policy covering who can set up the numbers on new parts in the system, along with the numbering method and a procedure to record it consistently. Properly identify all the characteristics for each part in the inventory system. Characteristics in inventory systems include:
    • costing for purchase and pricing for sale,
    • units of measure for purchase and use/sale,
    • accounts for transactions,
    • descriptions for purchase and sale,
    • various other information related to vendors, serial numbers, bills of material etc.
  • Place purchase orders through the control system. This assures the recording of inventory orders happens under proper authority. Management can easily see open orders that might influence production or cash flow planning. (This is different than costing methods, which is another discussion.)
  • Receive inventory by recording through the system and against purchase orders, simultaneously implementing procedures to resolve short shipments or other issues. This enables accounts payable to process quickly knowing there is authority to pay for the amount ordered and at the price indicated. Make sure all inventory received prior to month end (or inventory date, if different) has the appropriate invoices processed.
  • Use a bill of materials. If your company makes a product repetitively, whether it’s an assembly, manufactured, or you’re running a construction company, identifying the parts used to make it and recording the bill of materials will automatically relieve inventory. In sophisticated systems, the recording is done as the part is processed. In other systems, a manual input may be required to “complete” the recording. Inventory procedures make clear who, what, where, and when to assure consistency.
  • Record all shipments of finished product through the system along with the related billing.

Physical Space Needed for Inventory

Having the proper storage space for your inventory is one way to make inventory easier for all involved
Photo by Pxhere
  • Control high-value items in a secure place to avoid tempting employees to “walk” off with them. For example, when copper is expensive, the copper wire should be locked in a cage. Not all team members should have access to all inventory.
  • Place high-volume items in an easy to reach space, neatly organized. Clearly label inventory locations. Clearly label all parts. This might require a number, description, or barcode. This inventory organization may also require bins, shelves, buckets, and other receptacles. Neatly organize lower volume and bulky items as well. Limit access to the inventory but ensure if someone is looking for a part, they’re able to find the RIGHT part.
  • If using a Kanban or other inventory staging type of process, allocate adequate space for the inventory staging. A corollary is to limit the amount of inventory movement. (I once had a client who lost a full order during production because someone didn’t put it in the right spot. Several months later, they found it.) Over-capacity is also an issue.
  • Segregate obsolete inventory and overstock inventory. Record your obsolete inventory and preferably sell it off. As an auditor, I once identified that based on current usage the client had 300+ years of a certain part. Don’t make this same inventory mistake! If you have consigned inventory, it should also be segregated.
  • Keep the workspace and production areas clear (I realize this is often a more involved process and there is a need to address the various means of getting inventory to where it is needed). Cell manufacturing looks different from production lines and assembly lines.
  • Use min/max capabilities of the inventory system to avoid keeping too much inventory on hand – an expensive proposition.

Implement Proper Cut-Off and Inventory Procedures

  • Pay attention to work in progress. If you have product that doesn’t complete in the measured timeframe, you must identify how much of the process is complete and properly attribute raw materials not yet relieved from inventory.
  • Measure all processes at the same point. Inventory received has an invoice recorded. Manufactured parts bills of material are processed. Shipments bill in the same timeframe as they are shipped.
  • Develop specific inventory procedures for your organization. This sample inventory procedure uses a pre-printed inventory sheet system and may be more complex than your company requires. Often pre-numbered inventory control tags are used.

Make Inventory Easier by Avoiding Garbage In/Garbage Out

Avoid a complicate inventory day with some simple procedures to help make inventory easier on your business and your team
Photo by SparkFun Electronics

If the policies and procedures defined above aren’t followed, taking the physical inventory, identifying and quantifying the differences becomes extremely time-consuming. That’s not to mention the possibility of generating larger book/physical adjustments. Common inventory problems include:

  • Items ordered in different units of measure than used and a system that doesn’t properly reflect the difference. For example, batteries are purchased by the box containing 4 and used individually. So, receiving 1 box isn’t the same as using 1 battery. Most systems will automatically record the conversion if the item master is set up correctly.
  • Variances in inventoried amounts. In less automated systems or where inventory is taken to a job site and the team members report the usage, it’s imperative that the released amount is compared to the used amount. Management must investigate significant variances, as well as make sure the inventory usage is recorded in the same period as it is actually used.
  • Shrink and theft due to poor oversight. Losses are inevitable without physical control of appealing (high-value, readily marketable, or useable) inventory that can “walk” away.
  • Poor inventory setup. Inventory setup is critical to maintaining the proper dollar account balance associated with the items in the physical inventory list. Make sure the pricing of the physical items is done using the same methodology of the general ledger account. If your dollars move in on a FIFO basis and the inventory list prices at average cost, there will be differences.
  • Inventory system settings that are changed too easily. The ease with which smaller accounting systems are changed is a double-edged sword. Setting security settings (somewhat limited in smaller systems) and turning on the audit trail will make it easier to trace who and when a number is changed.
  • Employee burnout. Physical inventories are tedious for everyone involved and as a result, may meet with resentment. Make inventory easier for everyone. Consider using a cycle counting process to count high value or high-volume items more frequently and lower value/volume less frequently. This does depend on systems in place that assure the completeness and accuracy of the inventory accounting. A cycle counting process is a win/win for all involved: if the activity is recorded timely and accurately, there is less work with the physical inventory.

While I have clients who still take a “full” physical every month, most businesses with proper policies, procedures, and oversight are able to limit the process. Inventory is a big job but there are certainly ways to make the inventory count easier for all involved. I hope your team leaders are willing to work with you to get policies and procedures in place as well as encourage compliance.

Featured image by SparkFun Electronics; post images licensed for use via Flickr CC 2.0 and Pxhere Public Domain.

Employee Onboarding & Orientation: How To Prepare Your New Hire for Success

Employee onboarding is an important aspect of running a business. Here's how to have a successful employee onboarding process.
In today’s tight labor market, employee onboarding has never been more important. It’s often challenging to find and hire the right people for your company.  When you finally hire, it’s essential to have processes in place to help him or her succeed. 

So, you’ve hired the perfect (or near-perfect) employee and they’re ready to start their new and exciting position with your company. Now what happens? Effective employee onboarding is critical to seamlessly integrating new hires into everyday operations and company culture.

If you’re wondering just how important employee onboarding is, put yourself in the mindset of a new employee:

Don't leave your new employee feeling like everyone forgot it was their first day. Make sure to have an employee onboarding process in place for new hires.
Image via Burst

On a typical first day, you show up and show up are greeted by a busy receptionist who says, “Oh, you’re here. I’ll take you down to HR.”

After a deluge of paperwork, HR escorts you to a supervisor who says, “I’ll see where your desk is,” only to end up plopping you into an empty cubicle, noting that your computer should arrive in a day or so. For now, well…. “Here, just sit tight, and I’ll check back with HR.”

As the new employee, you’re probably thinking “What did I get myself into? Did they forget I was starting today? And where is all the excitement they expressed about bringing me in as part of the team?!”

Always remember, for new employees the first day on a new job is exactly like any other first impression – and first impressions matter the most.

When I began a new job in 1982 at Aqua-Chem, I was greeted warmly and welcomed into a fully stocked office with my very own business cards, printed and ready to go. Introductions to my team members were a success and I had a pleasant conversation in the Controller’s office where my expectations were set. To this day I still remember how truly welcomed I felt. My amazing experience is how I knew I had made a great decision and was working for the right company.

Guidelines for Great Employee Onboarding

With varying opinions out there about what qualifies as a positive hiring experience, it seems tough to find clear employee onboarding guidelines.

In the book “You’re Not the Person I Hired! A CEO’s Survival Guide to Hiring Top Talent,” authors Barry Deutsch, Brad Remillard, and Janet Boydell provide useful guidelines for helping new team members feel welcome. This book is an excellent resource. I’ve personally used this book as a guide to establish my own company’s orientation manual and I’ve seen the amazing results throughout my career. The authors recommend a standard orientation process and a straightforward manual as the two key parts to success in the employee onboarding process.

Develop (and Adhere to) a Standard Orientation Process

Orientation is an important piece of successful new employee onboarding. The orientation process should be well documented and available to everyone in the organization. A smart place to store this information is in the company handbook. This establishes the importance of the process and makes the information accessible to anyone in the company. Although the handbook and process outline should be available for all employees, who is involved in the orientation process itself will depend on the size of your company. For a small company it may involve everyone but, for a larger business, it may only include one specific department.

Develop an Orientation Procedure and Manual

This is a one-time investment that will pay big dividends. Effective employee onboarding relies largely on a well put together orientation procedure and manual. After the candidate accepts the job offer, recognize the internal questions they will likely ask themselves: Will this really be right for me? Is leaving my current job a good thing? etc. This is the perfect time to confirm they’ve made a great choice to work for you.

I would encourage your company to create a standard orientation process as well as a personalized manual and procedures right away. Each part should include important steps as well as clear and easy-to-follow guidelines. This should be done before your new team member begins.

How to Prepare BEFORE Your New Team Member Starts

1. Send a Gift

Shortly after the acceptance of your job offer, send a gift to the new employee’s family and/or spouse re-confirming how excited you are to bring them on board. (Define this process for your company and assign responsibility within the procedure.)

2. Craft a Memo for Current Employees

Draft a memo to introduce the team member to existing staff. The employee onboarding process is sometimes tricky and navigating the best ways to ensure both the new and existing employees are happy is no easy task. Consider the expectations of current team members and proceed with caution not to oversell.

An employee onboarding memo might include:

  • Special qualities of the new team member and why they were chosen to fulfill the role.
  • Some interesting outstanding qualities and characteristics of the new team member.
  • The “stats” and how they will contribute to the team.
  • Reasons management likes him/her.

3. Prepare their Workspace with Necessities

Workspace essentials like a tablet, notebook, pen, paper clips, and a cup of coffee.
Image via Burst

Prepare their workstation with all the needed supplies, keys, security cards, and business supplies they may need. Don’t forget to add a touch of CELEBRATION to the space as well! Whether it’s a balloon, a banner, or a small gift, good employee onboarding should help the new hire feel special. A list of team members in the department, as well as those they might work with in other parts of the company, along with a brief description of their roles/responsibilities and types of questions they might answer, should also be included.

4. Schedule Time for Paperwork

Arrange a separate time and place for the overview of benefits and completion of new hire forms (the more general paperwork should be completed online prior to start). Typically, employees will need to provide copies of their identification and bank information (for direct deposit). It’s always helpful to request this ahead of time, so they can be processed with HR before their first day. You may want to offer them access to the copier, so they can copy and scan the materials they need for employment.

5. Define Clear Responsibilities

Remember to delegate tasks and define responsibility (generally the direct supervisor) for preparing for the very important discussion with the new team member by:

  • Reviewing and updating the job requirements and work rules.
  • Developing a draft of the training plan based on the job requirements, previous experience, and any strengths or weaknesses revealed in testing, if applicable.
  • Preparing for a specific discussion for work standards, responsibilities, authority, reporting, and expectations.
  • Other information that the new team member may need such as product, customer, role etc.

6. Define Expectations for Existing Hires

Define the expectations for the current members of your team like determining any expected interactions the new hire may experience with certain employees as well as preparing existing staff members to understand their role in the employee onboarding process/how they ‘re expected to help.

Remember: You should do all of this is BEFORE the new team member arrives!

How to Give Your New Team Member a Great First Day!

Once your team member arrives, it’s important to welcome them and set them up for success. This portion of the employee onboarding process sets out the general objectives of the orientation program and establishes the timeline for accomplishing them. Depending on the scope of influence of the new team member and the size of the company, this may take anywhere from 1 to 3 days.

Set specific objectives for each day as well as a detailed agenda to follow the flow of the day and topics each person will cover. (Check out this sample orientation guide attached here.) A few of my recommendations for the team member welcome phase are:

1. Implement Employee Onboarding Immediately.

Okay, this one may sound obvious but it’s important to remember the process you need to complete to successfully accomplish your goal of bringing on a new employee. The actual start of work is exciting for everyone but can also be disrupting for the team.

Keep in mind, you’re not only making a good impression on the person starting, but you’re also reinforcing your cultural mores, confirming expectations and revisiting what it means to be part of the team for existing employees. Keeping the excitement and interest up for everyone is key. Following the orientation guide will assist with keeping things on the correct employee onboarding track.

2. Start on a Wednesday

Maybe it’s been some time since you started a new job, but trust me when I tell you, it’s hard work! The first week is extremely overwhelming and starting on a Wednesday allows recovery time for the employee. They’re given the weekend to take in all the new information they’ve recently learned. Time to settle in is one of the key concepts of employee onboarding and new job training.

3. Begin the Day with a Tour

Whether it’s the Supervisor or CEO, the person responsible for giving the tour must convey the history and culture of the company. The tour should involve brief introductions as well as cover the physical locations of important areas like the lunchroom and other facilities.

4. Encourage Team Building

New employees meeting their team for the first time is an important step in a new hire feeling welcomed into the workplace.
Image via Burst

New job, new people, new everything. Helping the new team member to feel welcome while engaging the current team to help in doing so is important. Fun yet focused introductions will make the new team member feel included as well as encourage participation by everyone.

My choice was to bring in lunch for everyone and give each person a chance to introduce themselves (new person last) while also sharing something personal (i.e. they have four dogs, or they go to Mexico every February). I wasn’t the leader who organized a cool scavenger hunt, BUT I understood the importance of engaging the new team member to meet and get to know their peers across the company.

Team building exercises and sharing fun facts are entertaining ways to help new employees get familiar with the faces of the building and get a first-hand look at the culture of the company through finding the answers to questions like which employee’s spouse is a stand-up comic? (No one in Wisconsin would use Who is a Green Bay Packer fan?)

5. Set Clear Expectations from the Beginning

Provide a tailored 90-day performance plan with weekly (at the beginning) and then monthly milestones allowing the supervisor to track progress and recognize training needs. The new team member should have clear objectives and, depending on the uniqueness of your business or product, there may be a bit of initial training as well.

6. Every Little Part Matters

Remember it’s all about how you make them feel and if a quantitative person like me buys into it, you know it must be true. Strong employee onboarding processes will help new hires feel welcome, appreciated and engaged from the beginning which sets the stage for job satisfaction.

Remember: Employee Onboarding is Only the Beginning

Getting the new team member started on the right foot is just the beginning. Orientation is only one part of achieving the employee onboarding process. Do research and take a look at other, more out of the box and creative ways to conduct employee onboarding and don’t forget, keeping an entire team engaged and motivated is even more work, so plan ahead and get ready!

Featured image and all post images licensed via Burst.



How Can a CFO Establish Formal Closing Procedures? | RMR Analysts

Implementing formal closing procedures keeps your business running smoothly - no more missing data, reports, or extra time wasted.

Dear CFO,

I am the CFO of a mid-sized manufacturing company with three divisions. I am required to have “final” numbers to Senior Management by the 5th workday. It’s like pulling teeth to get the required information from everyone involved. I’m the one who looks bad when the numbers are late. How do I get the accountability without much authority?

Tired of the battle, Scarsdale, New York

I can empathize, having been in a similar situation. In my case, I was at Corporate and the division accounting people reported up through the division presidents; therefore, I had no direct authority to address the problems. Our issues included those stated in your question, as well as having to correct the poorly made journal entries (this was before the existence of auto-balancing and account verification within systems). That being said, the underlying problems were the same–all the accountability and none of the authority. This is a common delegation trap: where someone is given responsibility without the tools to complete it properly.

In my case, with the approval of the CEO, I took two actions to solve the problems (as I’ll outline below).

If you notice issues in the closing procedures, you may need to get involved with higher management to implement more effective procedures.
Image via Pixabay

Why should you get management involved and why should they care? While a CFO or Controller may drive the closing procedure and checklist, it’s done on the basis of establishing complete and accurate financial statements for all upper management decisions. The responsibility, as well as the need for accurate numbers, is companywide.

Good data (financial and other) is costly to accumulate and verify, but even more costly to correct; not to mention the cost of making a bad decision. Let’s say it costs your staff 10 hours to validate the KPI’s and financial data and the average pay is $40/hour, so the validation costs $400/month or $4,800/year.

Correcting that same data costs $48,000 and a single (just one!) corrective action is $480,000 under a data quality 1-10-100 rule first proposed by George Labovitz and Yu Sang Chang in the 90’s. Whether this rule holds or not, you can see bad data is very expensive and avoiding errors important.

Establishing Formal Closing Procedures and Checklists

After discussing our late closing issues with the division heads, I found they were having the same problems within the division. Information they needed wasn’t submitted in a timely manner and occasionally, it was also submitted inaccurately. They too suffered from facing responsibility without having enough authority. Oh… What to do?

A root cause of the problem was a lack of clear definitions of who was responsible for what task and in what timeframe. They needed a clear checklist and outlined formal closing procedure. It had to be written out and easy to follow, reference, and understand. While the initial process of establishing the formal closing procedures and checklist might seem tedious, the speed and accuracy of the monthly financials improves dramatically once the procedures are implemented.

Establishing a clear list of requirements, timeframes, and most importantly, responsibility cures the problem and eliminates finger-pointing. The checklist should include not only the process of the close but also the needed reports (exception reports) that identify where to look for problems. Each department in the company typically has some responsibility for “close” data, even sales. While there is a presumption all data is entered in a timely fashion (and we know that doesn’t always happen), implementing a clear formal closing procedure for the month’s end assures information needed for management decisions is complete, timely, and accurate.

The key to eliminating delay and implementing a successful formal closing procedure and checklist free of inaccuracies is getting buy-in from those in authority. Management must agree that the people identified are responsible and held accountable for accurate information submitted by the due dates established.

Setting Up the Formal Closing Procedures and Checklists

To set up the closing checklist, begin by thinking of all the roles in the company that affect the financial statements. The objective of the closing checklist is to collect complete information timely and accurately. Another benefit of the closing checklist is the opportunity for confirming internal controls (more about that subject in a future blog). The point is: think broadly.

  • Do sales reports reflect quotes that convert to invoices? Who does the conversion and how do they know that it’s time to invoice? What must happen to make sure these invoices are complete?
  • Are materials ordered directly by production or purchasing? How do you know if the orders are received and/or if the expenses are properly applied to jobs?
  • Does the warehouse record inventory ins and outs, as well as the counts accurately? How can you validate that the counts? Do you see any negative balances? Is the amount of the count out of line with previous adjustments?
  • Was all cash properly applied to accounts receivable? Are the number of credit memos appropriate? Has aging changed?
Here is a sample closing checklist.


Establish Needed Reporting and Analysis

Once formal closing procedures are established and reports begin to flow in more accurately, analysis is needed to determine the effectiveness of your new procedures.
Image via Pixabay

Once you’ve thought of the actions that feed the financial statements, identify the reports that would quickly identify issues. Exception reports identify variances from expected outcomes. There’s no need to identify and review every transaction. Identify how exceptions occur and then look for them. For example, unconverted orders over 30 days may flag a missed billing. However, in a company with manufacturing lead times of 6 weeks, the criteria may be orders over 45 days.

There is analysis and evaluation associated with reports, of course. The person analyzing the report should be the person closest to and/or responsible for the information. Measuring against benchmarks (KPIs) identifies issues and measures performance. For example, if the unconverted order is 60 days past due, the production manager may be aware of a problem obtaining special materials. (This should raise other questions on management broader than this blog.)

Assign a Due Date on All Information

Due dates are dependent on two factors: when information is available (or estimated) and the due dates of the subsequent reports. Often calculating the dates is a matter of backtracking the “need” for financials. I believe the objective should be to get the financial statements as soon as possible, preferably within 2 to 3 business days. While many modern accounting systems seemingly calculate in real time, the reality of the business process still requires some, albeit not significant manual intervention. Due dates usually reflect workdays.

Assign Responsibility for the Closing Checklist

Responsibility is NOT generalized at the department level – it’s assigned to a specific PERSON. This assignment of responsibility and accountability is part of establishing a strong, positive company culture. As Harry Truman said, “the buck stops here.” Or the more modern, “if it is everyone’s job, it is no one’s job.”

If the VP of Purchasing knows the most, then that is the person on the closing checklist. Always assign the person closest to the project as the responsible party for formal closing procedures.

Consequences Should Fall on Those Who Don’t Perform

Are your employees not performing their duties? Consequences should fall on those who don't perform - make sure your employees understand their responsibilities so that all tasks are covered.
Image via Pixabay

As I mentioned above, I had a similar problem with getting information for my company’s month-end closing. My department, as the last step in the process, was typically staying late every month attempting to correct and gather data not properly submitted. We were visible to senior management and had responsibility for corporate reporting.

It didn’t take long for me to realize, one of the reasons for non-performance was that all the consequences were on my department. The employees who submitted poor information were gone at 5 o’clock, while we stayed late to pick up the pieces. After attempting (and failing) several times to resolve the issues and encourage proper information, I had to take drastic action. Again, with the approval of the CEO and the Controller, we decided to let the chips fall where they may.

The result was chaos, but only once! When the division financials came out none of them bore any resemblance to reality… and then the phone calls started. I had a call from each of the division presidents within 10 or 15 minutes of issuance. I calmly explained I had processed the information their division submitted. Suddenly the lights went on! With clear, formal closing procedures implemented, everyone was held responsible for their department’s missing information and the gaps became clear.

As a result, the presidents started taking ownership of their individual divisions. And yes, when the division leadership started to hold their teams accountable our lives became easier (even if we still didn’t leave at 5pm, especially at the end of the month).

Implementing these formal closing procedures and the checklists will not only improve the experience of your team, but will provide consistent, accurate financials enabling timely decisions and accurate trending for decision making. Come month’s end, you won’t be pulling teeth to get the numbers you need to close your reports.

Featured image and post images licensed for use via Pixabay.

Deliberately Creating a Company Culture

Four coworkers standing next to each other, smiling with their arms around each other.
All companies have a culture. Since nature abhors a vacuum, it’s better to select and cultivate the culture you want. Sitting back and allowing your company culture to develop naturally, may result in an unintentional, unprofessional environment inevitably derailing your business.
As Steven Covey says, “Start with the end in mind.”

What is Company Culture?

According to Frances Frei and Anne Morriss at Harvard Business Review: “Culture guides discretionary behavior and it picks up where the employee handbook leaves off. Culture tells us how to respond to an unprecedented service request. It tells us whether to risk telling our bosses about our new ideas, and whether to surface or hide problems. Employees make hundreds of decisions on their own every day, and culture is our guide. Culture tells us what to do when the CEO isn’t in the room, which is, of course, most of the time.”

Building a company culture should be strategic and deliberate. Most importantly, the culture should adapt as your business grows. Experts who write about company culture recognize it at a significant influence on job satisfaction, productivity and even employee retention.

Top Four Types of Company Culture

While many different kinds exist, in the book “Corporate Culture: The Rites and Rituals of Corporate Life” authors Terrence Deal and Allan Kennedy skillfully identify four key company culture categories most companies can be classified in.

1. ‘Work Hard – Play Hard’ Culture

Three coworkers on their laptops, sitting on a coach and working, talking, and laughing.
Photo by Matthew Henry

Both having fun and maintaining action are priorities within this type of company. The attitudes of these employees are all about balancing work and play. An example of this sort of company culture would be Google (or portrayed in the show Mad Men in a more extreme version). Younger employees focus less on hours and take more pride in job performance. Quality of work is important here, but the employee is also looking forward to kicking back and enjoying free time with co-workers. Work-life and social-life are often intertwined in this company culture.

2. ‘Process’ Culture

In this company culture, data, grids, and forms take precedence over all else. Creativity and flexibility are limited, with the focus more aimed at established procedures, corporate bureaucracy and internal hierarchy. In my experience, the larger a company grows, the more likely they will fall into this category.  While I am all about procedure, this type of company does everything by the book, possibly limiting new and innovative idea sharing as well as the opportunity for improvement.

3. ‘All Hands on Deck’ Culture

This “get it done” culture relies on everyone in the organization to participate and work together as a team, no matter what their official title or position. The primary focus is on getting the job done, even if it involves all hands on deck. I would classify most start-ups and entrepreneurial businesses in this category. Nonprofits also fall into this category as well. Titles, job descriptions, and roles are loosely defined and less important than getting the job accomplished. This does not mean there is no structure; it means there’s a great deal of structural flexibility.

4. ‘Tough Guy/Macho’ culture

My experience in the 70’s at Coopers & Lybrand (now PriceWaterhouse Coopers) fell into this category and I am happy to state this does not seem to be the case in the 21st century. This is the type of culture where getting the job done is the most important part, no matter what the cost. This culture expects you to know what you’re doing with little or no direction. Feedback and constructive (sometimes not so constructive) criticism are the norm here. My hope is that this company culture is waning due to its ineffective way of motivating employees and executing projects.

In larger companies, while there is an overall culture, managers within departments may operate across the different types of company cultures described above. For example, the lab area may have a process culture to support the appropriate level of documentation and procedural requirements of outside agencies while the sales department may develop a ‘Work Hard – Play Hard’ culture, exuberantly celebrating victories.

These are general categories and the lines are not definite, but rather quite blurred. There may be elements of each in your business and growth may require some cultural transition. As you build your business, pro-actively developing and adapting your company culture will optimize team performance and growth.

Why does Company Culture Matter?

Team's hands together, showing teamwork and accomplishment.
Photo by Matthew Henry

Family culture defines what the kids do while the parents are out, just as corporate culture defines employee actions outside of the handbook or sight of supervisors. Employees make hundreds of decisions not directly covered in policies, procedures or handbooks. How they act when no one is watching is cultural.

According to Inc. Magazine, “culture is the shared values, attitudes, standards, and beliefs that characterize members of an organization and define its nature. Corporate culture is rooted in an organization’s goals, strategies, structure, and approaches to labor, customers, investors, and the greater community.”

Without a strong overall company culture, employees or whole divisions could find themselves falling off track. A well-established company culture developed to fit specific needs allows for employees and teams to thrive.

For example, a CNN/Money headline described the cause of Wells Fargo employees creating millions of fake accounts as a broken “sales culture” issue. Closing the sale (and getting the subsequent compensation) became the only driving element within their culture, causing them to lose sight of a serious problem.

Embedding culture includes not only stating the vision, mission, and values of the company but also living and breathing them along with reward systems, internal control procedures, and adequate oversight.

How to Create a Great Company Culture

Over the years, I’ve found the smaller and/or newer the business, the more likely it is that an ‘All Hands on Deck’ company culture will be present. There is so much work to do and not enough people around to do it. There is often a sprinkle of ‘Work Hard – Play Hard’ (think: technology start-up) as it reflects the camaraderie of building a business. These cultures are more popular as they bring a small business the most success.

Be aware that as your company grows, the needs of your business will change with it; there will likely be a need for some kind of cultural transition. In my experience, building and transforming a company culture sometimes requires shaking up the status quo. Replace employees who don’t fit with those who do. Replace elements of the business that don’t fit in the new environment.

For example, in transforming a utility culture, I let go of the rigidity of a time clock atmosphere and several employees who could not adapt to a more distributed decision-making model. Once you’ve decided what kind you like best, actually creating the company culture requires consistency of actions. The behaviors you model will drive the perception of the “real” culture.

The Elements of a Great Company Culture

What goes into creating a great company culture, or might I say, sustaining one?

Neil Patel states there are four main elements:

  1. Hire people who fit your culture
  2. Stick to employees who understand the values and mission of your company
  3. Know that good decisions can come from anywhere
  4. Realize you’re a team and not a bunch individuals
A smiling business woman standing in front of a row of employees working on computers.
Photo by Nicole De Khors

To successfully hire people that best fit in with your culture, you’ll have to first create the culture and decide how you’re going to make it great. This step will keep your current performing employees happy and allow you to attract and hire more fantastic employees.

It’s also important to ensure your current employees understand the values and mission of your company before bringing new people on board. Begin the indoctrination in the interview process and follow-up in the training process. Really take the time to feel out whether they’re a good fit (some companies go so far as to have the candidate work in the company for a week).

Delve into their expectations and if your employees (new-hire or otherwise) can’t answer the question, “Why do you want to work here?” you might want to re-evaluate their fit. Ideally, core values between the company and the employee should align.

With many years of consulting under my belt, I fully support the idea that creating a great company culture is about remembering that good ideas and decisions can come from anywhere within the organization. The people who know the job best often have the best ideas.

Remember, no matter what the position title, everyone is an important part of the team. Ensure your team feels respected and appreciated. High-performing members often get frustrated when management makes all the choices or takes credit for everything. It’s often the coach who is fired when the team under-performs. So remember to make sure every member knows their value.

Finally, I strongly believe in a “do as I do” not “do as I say” type of environment. Always model the behavior you’ve defined for your culture. Your actions and expectations will drive the type of company culture you establish.

Culture drives much of the expectations and behavior within your organization. Deliberately decide on the type of culture best for your company and your business will find a more success.

Featured image by Shopify Partners. All image licensed for use via Burst.

How to Improve Profits Through the Use of Quality Control

Business woman with a tablet working on quality control and team management.
Quality control extends well beyond checking for defects of a manufactured product or service prior to delivery. Effective quality control is ubiquitous in an organization. It supports the complete and effective performance of each job while ensuring every interaction with the customer is successful. Expectations made clear for every position as to how each job should be performed and the ways departments should communicate/interact is key to successfully embedding quality control into your organization.

Where does quality start? It starts with the culture of the Company and the procedures in place to achieve the desired quality. If the transfer of poor quality products within your business is not accepted, they will never get outside the organization. Quality control is universally implicit in each process and position. Each person in the Company must understand how to do their job at the highest level of quality possible with the resources to actually do it.

How Strong Quality Control Will Benefit Your Company

Man selection customer feedback from three different faces; happy, sad, and indifferent.
Photo by Tumisu

Quality control involves more than checking for flaws prior to delivery. Whether a manufactured product or a delivered service, if top quality is not being achieved, something in your Company’s process needs fixing. While some make the distinction between Quality Control (removing the inferior parts from the process) and Quality Assurance (the practice of preventing defects), we will use the term quality control as a comprehensive term.

Over the last several decades, many concepts introduced apply directly to quality control, further emphasizing its importance. Kaizan internalizes continuous improvement while ISO certification ensures documentation and consistency of the process/product. However, the real purpose of quality control is to assure customer satisfaction resulting in higher profitability. A lack of quality control is inefficient and extremely costly; it eats away at your profits and hurts your business.

The easy-to-spot costs of a lack of quality control start with the return of a product or dispute in the payment for services. The Company has the obvious costs of accepting the return and resolving the dispute; these costs include shipping costs absorbed, use of internal resources to mitigate the customer dissatisfaction, issuing a credit memo or refund check, restocking the product and review of the process which allowed the low-quality product to be delivered in the first place. The path to correcting these financial burdens and small annoyances within the business starts with a brainstorming process to really understand what went wrong and in which department.

Understanding the Root of a Quality Control Problem

Two business ben brainstorming over a piece of paper with laptops.
Photo by Helloquence

What is the analysis to keep this problem from happening again? A few obvious questions to ask include: How did a defective part get to a customer? Did quality control fail at an inspection point? Does the warehouse have a separate area for defective parts? Did the inspection of material take place? Was there adequate supervision of the shipping department? Was there adequate training for the service provider? Was the supervisor aware of the problem? Have we had issues with this employee in the past?

The more important questions to assure high quality and customer satisfaction start at the beginning of the process. If you refuse to accept the execution of poorly made products, they won’t exist within your organization. Quality must be pervasive and each person in the Company must know how to do their job according to the effective procedures established.

How does each person’s understanding of high-quality performance contribute to profits? Profits improve with the smooth integration of all processes and knowledge transfer of pertinent information. Customer satisfaction is the ultimate objective and setting a high expectation of performance by each team member will improve the overall quality of products and services. Customer satisfaction without costly delays, wasting assets (money, time, materials and equipment) and duplication of effort, results in higher profits. Therefore, each team member has the responsibility of producing high-quality work.

What Does High-Quality Performance Look Like?

With knowledge of high-quality expectations, each department operates correctly with a clear understanding of their role. Defining quality control expectations for each role in the company is an important part of achieving quality.

So, what does high-quality performance look like?

  • Salesperson – As the customer is defining their needs, the salesperson focuses on meeting those needs. Let’s say the customer is looking for an outcome requiring special handling, the salesperson will work closely with manufacturing, pricing and possibly others to solve the problem. They will also document the solution, the costs and pricing to assure customer satisfaction. (We avoid over promise/under deliver and take the first step toward customer satisfaction.)
  • Order Entry – This team is aware of the importance of variances from the norm and clearly notes such in the order. (We avoid misunderstanding the customer’s expectations and move closer to customer satisfaction.)
  • Purchasing – After providing input on the solution, purchasing gives vendors a “heads up” on possible needs. They adjust quality, timing, and quantity of the order, taking into account any special recommendations. (We avoid rush deliveries, prevent quantity and quality issues with raw materials and integrate the customer’s needs with those of manufacturing.)
  • Receiving – They understand the importance of the quality differential in this order and perform a qualitative as well as quantitative test of the material. Thanks to effective procedures, receiving knows to pass on the appropriate “paperwork”. (We avoid expending internal manufacturing resources using the wrong raw material.)
  • Accounts Payable – Properly paid vendors make the process easier for purchasing to arrange special requirements. Quality control procedures and a clear budget for the business help them better understand the Company-wide importance of timely and accurate processing. (We avoid ordering delays and special processing for inaccurate or slow payments.)
  • Manufacturing – Production planning and scheduling is prepared to meet the customer requirements. All processes support the timely, accurate and efficient production of the customer’s needs:  materials are ready in the quantity and of the quality necessary, shop schedules move efficiently through the stages of production with virtually no delays and operations perform without error wasting no material or labor. Production can now fulfill the order with the least resources and waste possible. (We avoid waste and delay to meet the customer’s needs effectively and profitably.)
  • Shipping – Customer satisfaction hinges on the receipt of the right product at the right time. The goods are provided at the time and place required with proper notice to the internal team. (We avoid customer dissatisfaction from delays or inaccuracies, ultimately getting closer to complete satisfaction and higher profits.)
  • Billing – Billing the customer accurately and in a timely manner will assist in the collection of money due to the Company. They send the invoice to the proper customer with the correct amount and mail to the correct address. (We avoid unneeded customer questions, consuming internal resources and collection problems related to improper billing, as well as maintain cash flow to support operations.)
  • Cash Receipts – Accounting posts payments timely and accurately to customer accounts. (We avoid waste of internal resources, answering unneeded customer questions and diluting collections efforts.)

Quality control is a mindset that should be a strategic part of each process in an organization. Random problems are likely to occur in any system causing unforeseen errors to happen, but when quality control is the basis for the performance of each position in the Company, a higher level of work is expected and achieved. Customer satisfaction means higher profits and there is no better reward for a growing business.

Featured image via Pixabay. All images licensed through Unsplash and Pixabay.

No Time to Grow Your Business? Try Delegating Tasks

Two women delegating tasks on post it notes on an ideas board in an office space.

What is holding back the growth of your company?  A surprising answer may be a lack of delegation. Yes, even Superman had limitations. You, along with your team, only have so many hours in the day.

If the entrepreneur doesn’t learn to delegate tasks, the growth stops as soon as her plate is full. When the entrepreneur alone holds the reins, it limits the company’s growth. Effective delegation enables individual and company growth. Delegation allows business owners to focus on the most important goals of the company.

Properly delegating tasks will become more important as the face of the workforce changes. Many Millennials expect a different, more directed experience at work. This differs from workstyles of Boomers and generations in-between. Just as business technology has evolved over time, so have delegation and management styles.

Is a Lack of Delegating Tasks Holding Your Company Back?

As suggested in the book, Don’t Do. Delegate!, it may be time for a hard look at your management style. Answer these questions below from a point of real honesty to see if poor delegation, as it relates to the time available, is holding you and your company back.

Some of your answers might also point to broader issues than delegation, including project management, strategic planning, leadership and process. More than three “yes” answers could indicate there’s trouble with your delegation process.

For you:

  • Do you miss vacations because of your workload or a feeling that no one can stand in for you?
  • Do important projects remain unfinished?
  • Do you have more work than your team members do? Are you always the last to leave?
  • Do you feel you’re constantly putting out fires rather than acting on opportunities?
  • Do you fail to identify and address your company’s top priorities?
  • Do you issue orders rather than accepting input from others?

For your team:

  • Do they consult with you on even minor decisions?
  • Do they follow the letter of any assignment, not the spirit?
  • Do they have the same skills today as a year ago?
  • Do they rarely offer suggestions for improvement or bring new ideas?

For your company:

  • Do even minor decisions come from the top?
  • Is the How (method) more important than the What (result)?
  • Do decisions bottleneck because team members are afraid to make a decision?
  • Are workaholics favored over those who work fewer hours but accomplish more?
  • Are administrative tasks consuming leadership time?

Getting More Done in the Work Day by Delegating Tasks

Business team sharing documents during a business meeting.How do you delegate effectively–feeling you can completely rely on the person to get the job done to your specifications?  As with most big jobs, there’s a process for delegating tasks that requires preparation. Believe me: setting the groundwork for delegation is well worth the benefits.

Some precursors to success:

Identify a tangible outcome or result. To quote Steven Covey, “start with the end in mind.”  You must know what you want to accomplish.

Set specific requirements following SMART goal methodology:

  • Specific & Measurable – I want to see a written report on the reasons for production backlog. The report should include an analysis of the last 5 years status at the same point in the year, interviews with the production and sales teams as to the causes and impacts of the backlog, as well as any outside factors you might find. You can hire outside help at an amount not to exceed $5,000.
  • Achievable – I will make this a priority for the sales and production teams to support your efforts as well as have accounting provide needed access to historical data.
  • Relevant – We’re losing orders to our competitors due to the extended production time frame.
  • Time bound – Due in 3 weeks.

Evaluate team member capabilities. Richard Branson said, “One of the key skills I learned as a young businessman was the power of delegation. That prompted me to bring in strong managers.”

To determine who is the best candidate when delegating tasks, consider the project (value, complexity, urgency and visibility) along with team capabilities.

  • List key activities of the project and the critical skills needed to accomplish them. Per the example above: To prepare the report, I will need analytical and interpersonal interview skills, as well as organization expertise.
  • Match your team member skills to the project – Most teams don’t have the “perfect” fit, so consider the following:
    • What is likely the failure point? Say the best team member has great analytical and interpersonal skill, but is a poor writer.
    • Consider the results of failure and determine how to mitigate them. For example, if writing is critical, can you have another team member perform the report writing step (and if so, you might revise the specifics above to include notes that will be conducive to writing the report or the team will work together to produce the report.)
    • Consider growth opportunities. Devise means to support and monitor what may be different.

Decide HOW you will delegate; this step is the cornerstone of getting what you want while maintaining the motivation of the team members. Remember it’s delegation NOT abdication. In a culture of open communication, much of the following is embedded and is good practice in all environments.

  • Make it clear there is shared responsibility. The team member should participate in defining parts of the delegated project. For example, is the due date reasonable with their current workload? Would they like to take the first run at writing the report and subject it to editing?
  • Make responsibility commensurate with authority. I can’t tell you the number of times I have seen people assigned task/projects beyond their authority. Be clear you have their back. Harry Truman was famous for saying, “the buck stops here.” Unfortunately, not everyone takes that level of responsibility. The task must be achievable. It’s your responsibility to clearly define and provide authority to achieve the outcome.
  • Support the process. Since the buck does stop here, you have the responsibility to support success. In this example, you already noted you would make it clear to sales and production this is a priority project. If this were a longer project, you might attend update meetings or be called upon to increase the budget due to unforeseen circumstances. The team member must be comfortable reporting updates both good and bad. This is support ONLY, the project was already defined and the authority is appropriate.
  • Establish checkpoints. The checkpoints can be deliverables (1st draft, interview notes etc.) or a specific time and frequency (a memo at 9 a.m. or meeting for 10 minutes every Thursday at 9 a.m.) or both. The choice is dependent on a number of factors including length and complexity of a project, experience of a team member, visibility of the project, breadth of scope and perceived risk of success. Establishing a schedule and form of reporting up front puts the burden of reporting on the team member. Be sure to also have a method of follow-up in place as part of your support.
  • Add the WHY of picking the team member. If you were delegating tasks in terms of the SMART goals, when you meet with the team member to complete the actual delegation, provide specific insights as to why they’re the best candidate for the job. This will convey both the sense of urgency and importance of the job.

Drawing of team members, employees, and team roles.By effectively delegating tasks, you will eliminate bottlenecks and free up more time to work on your business. As Richard Branson said, delegation “allowed me to focus on our latest ideas and projects, and on finding the next businesses to start up.”

Since many companies don’t have resources inside the business for delegation of projects that need to get done, you may rely on outside resources. Once answer may be hiring a part-time CFO as a right-hand person to help with bigger projects or someone else to take care of administrative work such as bookkeeping.

Several online sites offer services to help reduce the workload on you and your team.

In the end, it’s important to delegate tasks and move items off your plate. Free yourself up to focus on the big picture. Avoid the temptation to do it all. Remember a true leader LEADS the team to success (no dragging or carrying). By using smart delegation strategies you’ll head a happier, more productive office.

Featured image, first and second post images by rawpixel. All images via Unsplash.

How to Reduce Office Stress During a Cash Flow Crisis

Bbe aware of ways to reduce office stress during a cash flow crisis, so your employees don’t buckle under the pressure.

Nobody wants to admit the business is struggling with cash flow. Moreover, this problem isn’t only a small company problem. Any company can face cash flow problems due to bad planning, unforeseen circumstances or disruptive influences. It’s tough to reduce office stress during a cash flow crisis.

Whether you admit the cash flow problems or not, your team knows. Hopefully, you’ve already established a cohesive, respectful team with good communication skills and an interest in doing what is best for the company. And they’re there to help even in dire times.

When cash flow is a problem, there are steps to lessen the impact on the team. This isn’t the psychologist’s view, but a pragmatic look from the trenches.

Manage your Behavior to Reduce Office Stress During a Cash Flow Crisis

Fear and anger are contagious. You aren’t immune to those feelings, but you need to express them constructively and manage your reactions. Don’t shoot the messenger. As the owner or manager, you’re ultimately responsible for the situation. They need to know the Captain is at the helm and working hard with the crew to avoid crashing into the shoals. Teamwork and cooperation in all areas of the company is critical.

Communicate About Cash Flow Problems

Saving money and managing finances during a cash flow crisis is hard and stressful.Hiding cash flow problems from inside and outside stakeholders often results in bigger problems later. This doesn’t mean broadcast every issue to the front page. Use discretion in what you disclose and more importantly HOW you disclose it.

Internal Communication

Internal team members need assurance and consistency of message at all levels. Your team doesn’t want to hear your doomsday analysis. Don’t kid yourself, they already know, and you have the responsibility of helping them understand what’s being done to resolve the problem, as well as how they can help. Regular team communication is an important part of reducing office stress during a cash flow crisis. Remember, no matter how clearly you communicate, your message is subject to the filters of the person hearing it.

External Communication

Be upfront with lenders and shareholders to ensure they know you’re working on the situation; understand what caused it and how plans will change to avoid the situation in the future. Realistic cash flow forecasts help in persuading external stakeholders to stand by you.

Support the Team During Tough Times

Each team member will feel a different level of responsibility and face different issues surrounding a cash flow crunch. Support is essential at all levels.

Accounts Payable or Bookkeeper

This is typically the person fielding all the angry vendor phone calls. They aren’t paid management salaries yet respond to requests for payment. Depending on the severity of the cash crunch – this might be the worst job in the company, right now. How do you support your bookkeeper?

  • Plan weekly cash flow and determine payments to make allowing commitments and trust building with vendors.
  • Stick to the plan! Broken promises break trust. With personal experience where, in a large ($100 million plus company), we held a weekly cash planning session determining each vendor allocation primarily based on the production needs to finish product, so shipments could meet commitments and generate cash. Several vendors discovered the VP of Purchasing was a soft touch and would call to demand payment, thereby changing cash commitments, destroying the trust of those vendors already promised and often disrupting the ability to complete production. The VP’s input was part of the weekly planning. It required intervention by the President to contain his actions.
  • Offer relief and respect. The incessant phone calls in this situation not only drive up the stress level but prevent effective processing of accounts payable as well. Examples of relief:
    • Allow the person to shut off the phones for certain periods in the week. With the volume of calls and processing workload, you might allow the phones to be silenced two afternoons a week.
    • Make sure the vendors understand you’re working on paying them when phones are quiet. Do this by leaving a detailed voice mail message that says, “We‘re working on processing vendor invoices this afternoon and we will return your call starting at 8am tomorrow.”
    • Pay off small vendors, if possible. These are often the most insistent and time-consuming. The vendor volume and frustration level reduce significantly, thereby producing relief.
    • Stick to the plan. Once an atmosphere of trust established by following through on commitments exists, vendor call volume goes down.
    • Offer to take the most difficult calls.
    • Don’t allow vendors to harass team members. When a caller starts to use foul language, have a process to inform the caller of the need for respect and politely let them know you expected to have a courteous conversation. “Sir, please stop swearing. Sir, you need to discuss this in a respectful way. Sir, if you can’t discuss this in a respectful way, I will need to hang up. Sir, I am hanging up. Please call back when you can speak respectfully.” This approach gives team members control over the situation.
    • Treat the hourly employee to an extra-long lunch hour, paying for both the time and the lunch.
    • Provide a gift card or other form of appreciation for the job they are doing.

Sales and Marketing

Stress-out adult working on a computer.While all areas of the Company feel the stress, sales and marketing drive customer commitment. Often incremental sales are very valuable when cash flow is dire.

  • Plan weekly cash flow including sales pipeline and expected sales and/or deposits.
  • Involve Sales in collections efforts, if possible.
  • Providing additional tools to shorten sales cycles, such as “one-time” or time-limited offers, coupons, etc. may help edge customers to close sooner.
  • If customer expectations aren’t being met, due to late shipments or other issues, communicate to sales and engage them in the customer communication.
  • Offer support and respect. If customer expectations aren’t met and/or sales numbers are off, Sales typically has a more direct pocketbook effect.
    • Depending on the competitiveness of the sales team, a contest may excite them.
    • Provide more recognition for landing a particular customer or improving the speed of a sales close etc.
    • Maintain motivation – it is generally not a good time to revamp the commission structure or cut marketing support (i.e. no sales literature)
    • Temporarily change the advance policy, if production is slowing the sales commission cycle.
    • Consider adjustment to sales compensation when cancellations increase due to slow production.
    • Ask for additional sales and marketing input on shortening the sales cycle or presenting a cost-effective strategy for a new market.


In a cash flow crunch, Production must do more with less. How can they get the product through the cycle faster, allowing quicker billing and collections?  On the surface:

  • Plan weekly cash flow including optimizing the production requirements with the fastest completion, billing, and collections.
  • Identify key inventory shortages hindering production/shipments and include them in the weekly cash planning. This may require ordering in smaller quantities increasing price per unit.
  • Engage the shop floor team to suggest process streamlining or scheduling changes to increase available hours at straight time rates with changes in vacation schedules or shift work adjustments.

Manage your Response to the Cash Flow Crisis

In my experience, cash flow problems bring out either the best or worst. By applying some of these ideas and others you may think of, you can present a confident and calm leader reducing the stressors on your team and yourself.

Featured image by caio_triana. Post images by stevepb and Pexels. Images via Pixabay – licensed under public domain.