The Howl - Monthly News Letter -Issue #2

 


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The Code of Conduct - It seems almost ludicrous that this is a topic that many of us should consider in privately held distributorships.

When I suggest there may be a need for a “Code of Conduct” I am not talking about a need based on employee behavior, I am talking about the need based on family behavior. The family business is a cornerstone of the US economy. It’s the American way, free enterprise and all that gooey stuff we read about. And, it’s true.

Family owned/privately held organizations in wholesale distribution, both small and large, with succession issues, family preparation and second and third generation leadership issues often have several family members that hold management positions within the company. Often time’s interaction between family members can create problems for the business. In some extreme cases employees may actually begin to takes sides on a variety of issues based on the particular family member they have elected to support. Sometimes, family issues may exist within the minds of the employees and the actual family members have no idea how their interaction has created the problems.

I have seen brothers be vengeful against brothers in the family business to the point that the business suffers and may risk failure. I have seen family relationships destroyed over business issues, jealousy and even greed. I have listened to distraught fathers try to determine succession within the business when two sons believe they are air apparent to the kingdom and Dad just can’t pick one over the other. I have seen family businesses run by second and third generation family members that demonstrated exceptional competency, vision and skills to continue to grow their business. Then again, I have seen a few empty suits and empty dresses when it comes to running the business as well. I have seen sons that couldn’t wait to get their hands on the business just so they could sell it and escape with a fortune.

Then again, I have seen fathers that have elected to sell simply to avoid the family conflict involved in passing the leadership reins down to another family member.

We all have different strengths, different methodologies and different experience in the world of wholesale distribution. These differences will impact our individual approach to any task or project. This can become an area of risk for some of us. We must be conscious of our own unique style. This is especially true when it comes to a family run business. To use a phrase from General Russell Honore when he took over during the Katrina Hurricane crisis, “We can’t afford to get “Stuck on Stupid!” He made that comment to the media when they tried to interrogate him about all the mistakes made during the aftermath of Katrina. As Owners, CEO’s, Presidents or just family share holders, we can not afford to get “Stuck on Stupid” when it comes to running the business. We must put the business needs ahead of our personal needs.

It is absolutely essential that you look forward and not back if you are going to continue to grow the business.

I am not suggesting that a “Code of Conduct” will resolve succession issues. That in itself is an entirely new discussion. However, I am saying that a “Code of Conduct” will not only make the succession transition smoother, it can also circumvent any potential problems related to internal family interaction. Additionally, you might want to consider creating a family business doctrine that outlines the values and principles that you want to maintain in the business. The family business is what built this country. There’s no question about that. But, it is not without its problems. If you are the president of a privately held company and you have absolutely no family issues in running the business, you are in the minority. Consider yourself very lucky and commend yourself on how you have been able to run your business and avoid family challenges.

If you are one of the majorities of privately held businesses that has experienced family issues you might consider a “Family Code of Conduct”.

Family issues and challenges that become easier to manage with a “Code of Conduct” are a great segway into the next topic I’d like to discuss in this issue of The Howl.

Do You Need a Board of Directors? - The question should not be “Why do I need a Board of Directors?

The question should be “Why don’t I have a Board of Directors? Is it because you think you are too small, you see no value in having experienced business people that provide input and advice. Do you think you are the only one that understands your business? Are you so self admired that no one could possibly help you? Do you have ALL the answers? IF you answered yes to any of these

questions with the exception of the first one, (you think you are too small), then you need more than just a Board of Directors. You need some personal coaching and counseling.

First, any business, no matter how small, can benefit from some form of an advisory group. If your business only employs a few people and your sales are less than $1 million dollars you should still have some format to discuss issues outside the day to day realm of normal business. The bigger you become and the more people you employ, the more reason to utilize a Board of Directors for guidance and support.

A Board of Directors, elected by ownership, can provide the kind of support necessary to take the company to the next level. No man is an island and it can become very lonely at the top. Growing an organization is hard work. The president of the corporation not only has to surround himself with an excellent team but he must be able to rely on another power to challenge him and his team.

The Board of

Directors, in exercising its business judgment, acts as an advisor and counselor to the President and his executive team. The Board can help define and enforce standards of accountability, accountability that is often found lacking in a privately held family run organization. A Board can challenge and help the management team execute their responsibilities to the fullest extent in the best interest of the shareholders.

How Do You Release Discretionary Energy in Your Employees? - What is discretionary energy? Discretionary energy is the energy an employee uses when going above and beyond the call of duty to complete a task or get the job done. Every employee has discretionary energy. The amount of energy released and employed at work depends on their attitude, how well they enjoy being at work, how they are treated and how they feel about the company.

Discretionary energy can be the difference between doing what is expected and performing in an outstanding manner. Consequently, our people skills and leadership skills play a paramount role in determining whether employees give freely of their discretionary energy. Does that mean that we must let the inmates run the asylum

and do whatever they want to make them happy? Of course not. But, it does mean that we must utilize effective leadership skills in dealing with issues, problems and

just day to day training, coaching and mentoring.

Here’s an example;

Telling a person what he is doing wrong is not specific enough.

Eliminating undesirable behavior without providing a new substitute pattern leaves the worker open to learn another undesirable set of responses and will encourage

him to withhold his discretionary energy. He may even become demotivated or resentful

It is better to comment on improvement in performance than to comment on the employee’s failure to meet goals.

This can be accomplished by:

  • Frequent feedback

  • Reinforcing small approximations to the desired goal, gradually increasing the number of steps necessary to obtain the positive reinforcement

  • Evaluations should be given for good performance and without too much time delay

  • Employees deserve to know how they are doing no less than on a monthly basis

    To see how this principle is applied to coaching, assume you were on a ride-a-long with a salesman and you just concluded a sales call. You observed the salesman neglected to ask for the order when making a closing statement. If in this critique you mention to the salesman that he did not use the skill correctly you would, in fact, be punishing the salesman.

    A much better approach would be to use the concept of self-feedback. In other words, allow the salesman to self-critique the use of his skills. In the above example, assume the salesman used the supporting skill correctly. You would apply a positive reinforcement technique. Next, ask the salesman to repeat his closing statement as best he can recall.

    You might say, “Can you remember the closing statement you made? I wonder if you could repeat it. ”

    Several things may happen here. First, the salesman may repeat the statement and realize on his own he neglected to ask for the order – a self-realization. At this point ask him to ask for the order and positively reinforce his response. On the other hand, the salesman may not realize he used the skill incorrectly, even after repeating it. In this case ask the salesman what he thinks he could do to improve on the closing.

    Confirm understanding and ask the salesperson to make another closing statement. Once again positively reinforce after correct skill usage. By utilizing this method you avoid falling into the trap of the “Psychological Sandwich. ” That is, after the salesman received praise he is now waiting for the axe to fall, the praise becoming the antecedent to negative consequence.

    Being a mentor or just using effective coaching techniques is key to getting employees to release their discretionary energy. Of course, it all starts with Respect & Trust.

    Make no mistake - Employees will not start trusting you until you start trusting the employee.

    Employees will not start respecting you until you start respecting the employee.

    New Territory Sales Tips

    These are a few sales tips you should follow for a New Territory.

  • Meet and qualify all the accounts in your territory before you begin to focus on a few.

  • Do your homework. Know your company first; the strong points, the weak points. Know who and what your internal resources are. What is your company’s sweet spot? What is your competitive advantage?

  • Do your homework. Know your customers. What do they buy? How do they buy? Who are their five largest customers? Research your customer and their industry on the web. Become an industry expert for your customer. Meet people and cultivate relationships beyond your customers purchasing department.

  • Create a call plan prior to every call. The objective can be as simple as getting an appointment with someone higher up in management to meet with your management.

  • Keep a data record on every buyer at your major accounts. Get to know them as well as their family knows them.

  • Create an itinerary for each week. Know what you are going to do. Set at least two base appointments in the morning and afternoon with major accounts.

    Fill in around these appointments as appropriate. Know your customers’ personality. People buy from people so develop a relationship with each of your customers.

  • Create a territory plan. Establish goals, identify milestones, create a time line and engage all your resources including upper management.

  • Create an action plan for every major account. Know your customers’ “Rules of Engagement. " What keeps them up at night? Create a strategy that involves

    your entire team including the President of your company if appropriate.

  • Set specific goals and objectives. Write them down.

  • Maintain a positive attitude. Don’t procrastinate on anything.

  • Keep your promises. Don’t make promises you can’t keep.

  • Sell yourself first. Develop a trusted relationship, and then sell your company.

  • Study your value proposition and your company’s core competencies.

  • Think creatively. Think outside the box.

  • Listen more – speak less. Get your customer to talk about himself. If your customer spends most of the time in a sales call talking about himself, he can’t help but like you.

    Apply the 80/20 rule – listen 80% of the time.

    Client Corner- Between a Rock and a Hard Spot

    Rick

    I have been an employee of my company for twenty two years now. I am currently the Vice President of Sales but in reality I function as the right hand of the President. The President/Owner has unofficially given me that authority and depends on me for everything short of doing the actual financial statements. We are in the building supply business with sales over $150 million and we have 365 employees. This is a good company and I love working here. However, the owner has a son and a daughter working in the business. They don’t get along and both of them believe they should take over as President when their Dad retires. The father has confided in me that he intends to turn the business over to both his son and daughter as co-presidents. He believes that one is very strong in operations and the other is strong in sales and they compliment each other. (Funny that I run sales, his daughter works for me and she is good but not presidential quality) Neither of them has ever worked for anybody else and

    they have a silver spoon attitude often wearing their name on their sleeve as their title. Their Dad is in complete denial as to how they relate to one another and to our employees. If we were playing the game “Survivor” I believe they would be the first two voted off the island. I am not sure where that leaves me. Should I be looking to move on?

    Patrick

    Dear Patrick

    It does sound like you are between a rock and a hard spot. However, all is not lost. The worst thing you can do right now is to throw away the twenty two years with your company by leaving. Ultimately, that may be an option but there are several things you need to consider before you come to that conclusion. I am assuming you have a very good relationship with the owner since he has given you so much authority in running the business. First you must sit down with the owner and express your concerns. Don’t be afraid to discuss any issues or problems that are a result of the relationship the brother and sister have with one another or with other employees. Request that the owner bring in some outside help in the development of the succession plan for his retirement. There are numerous family business consultants and organizations that can help

    in this area. A primary objective for your initial meeting is to walk away with your future role clearly defined and agreed upon. Once that happens, step back take a breath and plan for a subsequent meeting where you request some assurances about your position in the company when the transition takes place. This is ideally a contract between

    you and the company that provides a generous severance package should the new president/s determine your role must be dramatically changed, your services are no longer needed or things get so bad between the brother and sister that you have to leave. Of course, anytime a contract is involved you should have your personal attorney review it.

    What advice would you give Patrick?

    ANNOUNCEMENT - LONE WOLF to LEAD WOLF “The Evolution of Sales” is finally released and in print.

    This is a book about sales effectiveness that has been tested in the crucible of real life experience. Lone Wolf to Lead Wolf speaks to sales representatives in all industries

    whether they are field sales, inside sales, or counter sales representatives. It even speaks about lessons that managers need to understand. Each chapter is a story, and some

    of them have case studies and other activities to help the reader translate the story to their own situation. The world of sales continues to change and the strategies that created success in the past are failing to maximize success in today's environment. This book tells a simple, but powerful, story of managing change. Creating meaningful change always

    starts with taking responsibility for your own situation. This book was written for those who are driven to success, who may be a little frustrated, but who are open and willing to learn. You have taken personal responsibility for your own career development and you look at sales as a profession rather than just a job.

    Some of the stories deal with sophisticated approaches to supply chain management, including consignment and national account programs. It is fundamentally about building

    and managing customer relationship equity and utilizing all the resources available to create success. The Lead Wolf strategies described in this book will often require that the

    sales rep challenge their own management to be innovative, provide necessary resources and help develop creative solutions that drive profitability for the customer. Learning and personal growth are the only alternatives to the slow death of intellect. This book was written to help those on the path of growth to rise to the next level.

    Ego has No Place in the Golf Swing

    Ego can cause many problems in business but it can also prevent you from playing great golf. The minute I step on the first tee my ego tries to take over. I hear John Daly’s war cry.

    “Grip it and Rip it”. It just does so much to see that little white ball fly off the club and land 260 – 290 yards away in the middle of the fairway. However, when I take that wild John Daly swing, the ball only lands in the fairway about one out of ten tries. Why only a 10% success rate? It’s simple, power doesn’t equal great golf.

    Let me stop here and qualify this golf tip. I am not a pro nor am I an instructor. I have a six handicap but that’s on Florida courses. Up north that six can easily turn into a twelve. So, take this tip with a grain of salt.

    I believe that one of the basic mistakes that will screw up your golf game is letting your ego and being macho get in your way. Golf is a mental game and ego and the macho

    mentality lives in your head. Swinging like John Daly shows power but power doesn’t create a better golf score. Accuracy and control is what it takes to play scratch golf.

    It’s about rhythm, smoothness and a consistent swing plane. Keep your swing under control. Swing easy and freely at the ball. Examine your stance. When you swing like John Daly, chances are you have a wider than necessary stance. Narrow your stance a little and this will reduce your ability to swing for the stars. Relax and swing easy. Trust your club and let it do the work. Try to control your center of gravity by not letting your head move too much.

    If you do it right, it’s sweet. Your swing is smooth and believe it or not, the ball will go just as far as it did with that wild gorilla ego infested swing you use to use.

    The key to success with this nice smooth sweet swing is being relaxed. Don’t brace yourself on your approach. This will cause you to stiffen and there goes your smoothness and your balance. If you can see the club head out of the corner of your eye on your backswing you are definitely over swinging.

    Keep in mind that only the power you have control over is going to help your golf score. One of golf’s oldest clichés is; “It’s not how you hit the ball - it’s how many times you hit it. ”

    There are no pictures on the scorecard. Lack of power will not increase your golf score, lack of control and accuracy is what leads to bogies and double bogies.

    Your longest drives will come when you swing easier, smoother and in control.

    Yes, John Daly can “Grip it and Rip it” and Tiger Woods can hit a seven iron 230 yards but don’t forget - They get paid to do that. They may be able to hit a golf ball farther than you because that’s their career. But, I’ll bet they can’t match your success in wholesale distribution.

    So relax, swing easy and in control. If you do that, all the power you need will be there. And, more importantly, your handicap and golf scores will go down.

    Visit http://www.ceostrategist.com to learn more about the value of a Board of Directors and their functions. Rick received an MBA from Keller Graduate School in Chicago, Illinois and a Bachelor's degree in Operations Management from Capital University, Columbus Ohio. Rick recently completed his dissertation on Strategic Leadership and received his Ph. D. He’s also a published book author with four titles to his credit: “ Toolkit for Improved Business Performance, ” NWFA & NAFCD “Roadmap”, Lone Wolf-Lead Wolf—The Evolution of Sales” and a fiction novel. http://www.ceostrategist.com

    rick@ceostrategist.com

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