The Right People

There are many theories devoted to the best means of achieving business productivity and success. In examining key business success factors you have no doubt been faced with the proposition that ‘people (your employees) are your most important asset’. While this is a nice ‘motherhood’ statement, it is in fact misleading. In truth, the right people are your most important asset. Therefore the question that needs to be answered is: who are the right people for my business? There are as many theories related to getting the right people as there are to business success in general, however, when it comes to selecting and retaining the right people, there are two schools of thought that require closer examination.

 

The first suggests that business owners need to have clear direction as to where they are going and then select (or retain) the people most likely to help them get there. This means that strategic planning with regard to target markets, sales, marketing, technology, and innovation often takes place prior to decisions about who will be the best people to assist in the achievement of established goals.

 

In his book ‘Good To Great’ Jim Collins uses the analogy that leading and managing a business is like taking a bus trip. The scenario above means that business owners need to decide where the bus is going and then get the right people on the bus to help them get to the destination. This raises the question that if people join the bus because of where it is going, what happens if you get ten kilometres down the road and need to change direction? It is highly likely that this will create a misalignment between the new direction of the bus and the skills, values, needs and aspirations of the ‘passengers’?

 

In researching “Good To Great”, Collins assembled a team of twenty researchers who examined twenty eight productive, successful companies and compared them to underperforming companies over a five year period. His research revealed an alternative strategy used by many successful businesses whereby they first decide who is going to be on the bus and then decide what direction the bus is going to take. In other words the right people will help you determine where you need to go and then help you get there.

 

This finding supports the belief that if you start with “who” rather than “what”, you will be able to adapt more readily to change. It also reinforces the fact that if you have the wrong people on the bus it won’t matter if you discover the right direction, you still won’t achieve your goals. As Collins states, “great vision without great people is irrelevant”.

 

So how do you determine who should get on (or stay on) the bus? A good place to start is the need to be clear about values. These guide your business decisions and the way you want to conduct your business. If you recruit or retain staff based on an alignment between their values and your own, in addition to evaluating their technical and other job-related skills, it is more likely that they will make a significant contribution whatever direction the business takes. They will also play a more active role in helping you decide the direction to take.

Are Debtors Costing You Money?

 

A business can have great profitability as traditionally measured, but also have simultaneously great cash flow problems and this is often the prime reason for business failure. We find it interesting that many businesses with cash flow problems devote a lot of energy to increasing sales but pay little attention to the other factors impacting on cash flow such as waste, rostering inefficiencies, stock control and debtor control.

 

Debtors are those customers who owe you money and debtor control is of critical importance in running a business. Greater effort to increase sales often results in more liberal credit arrangements being extended to customers, leading to increased cash flow problems when sales increase. Businesses that achieve increased sales but at the same time increase their overdraft, would be aware of this problem. It seems counter-intuitive but sadly it is often true.

 

While your debtors are an asset, the greater the time these debtors take to pay you, the greater is the likelihood of you having ongoing cash flow problems. The bottom line is that effective debtor control needs to be viewed as fundamental to business success.

 

Many people do not enjoy involvement in debtor control because it has unpleasant connotations. If it is integrated into you regular customer contact program however it can add to the quality of the customer relationship and increase the likelihood of regular prompt payments. If you are not already doing so, you can make a start by:

 

• Ensuring that you have the facility to run and interrogate debtor reports regularly.
• Being disciplined in designating times and responsibilities for debtor control.
• Designing a debtor contact strategy that takes into consideration the amount owed, the period the debt has been outstanding, the value of the client, the form of contact and the person responsible for making contact.
• Designing customer contact scripts to ensure that all issues are covered and that the required message is conveyed.

Try this strategy – You may still have a section of your invoices devoted to notification of outstanding amounts over 30, 60, 90 and even 120+ days. What you are doing is building in an extended credit facility by signalling to your customers that it is OK not to pay immediately because you will tolerate late payment. If they never get a call from you before 90 days then you can be sure that they will be using their available funds to pay those creditors who are more systematic and assertive in ensuring that overdue accounts are addressed appropriately.

 

First insert a ‘due by’ date and remove the 30 day, 60 day etc columns on your invoices. Replace them with a single overdue or outstanding column. Match this strategy with a client notification and contact process when overdue amounts exceed 30 days. You already have an investment in your debtors, you may need to invest more effort into ensuring that your asset is realised within your set terms of trade.