successful in business is difficult enough when management is
passionate and committed, but next to impossible when management is
apathetic. An example is
the owner and general manager of a business many readers in New England
would quickly recognize. After
75 years in business, the firm had very little to show for all those
years except their good name. In
fact, over the past five years, their sales have deteriorated by over
an interview, the owner cited two major factors that he believed to be
the cause: 1.) A strong national competitor had entered his market.
2.) A near depression was looming over the community due to the
closure of a large military base. A consultant was brought in to take
a look at the business and began by interviewing and testing each of
the key employees and also interviewing several customers and
prospects. The owner also
shared with the consultant the company’s financial statements from
the past five years.
results should be a warning to every business: management apathy will
kill a business. From the psychological tests that were administered,
it was learned that the organization was not balanced.
Inertia had set in. There
was no spark, no innovation. No
one was initiating change.
employees were good people with excellent product knowledge and years
of experience. The problem
was that they were merely going through the same motions year after
year, expecting different results.
The financial statements revealed that over the past five years
operating expenses had steadily increased while sales and gross margin
had slowly declined, producing a lot of red ink.
interviews revealed that not one of them had a clue that the company
was in trouble. Management
kept profitability a secret unto itself.
Everyone was working hard, but no one was doing any long-term
thinking or planning or keeping score. The core problem was that for
years management had given raises averaging 4% to 5% regardless of
performance. Gross profit
didn’t keep pace, so the stockholder’s equity slowly eroded.
salespeople had noticed that they had lost a few accounts here and
there, but had spent no time on a game plan to replace them. The
operations manager realized that overtime had become a problem, but
limits were never set. The buyer was achieving around five inventory
turns and thought that this was a pretty good job for a business doing
almost $100 million in sales. The customer interviews revealed that
the business did have a great reputation for quality and service, but
most of the customers who weren’t regular customers hadn’t seen
one of this company’s sales reps in years.
To make a long story short, the sales force was in a rut,
calling on the same customers year after year.
The sales force could be described as “content.”
a similar scenario occur in your company?
By putting basic management principles in place now, any
company can avoid this kind of catastrophe.
Just don’t wait until you are in serious trouble to begin.
For example, if your sales force has not produced sufficient
sales for your company to keep up with the growth in your market; that
is, your company is losing market share to the competition, critical
thinking skills are necessary to determine why this is the case.
is often the case that owners and managers are so close to the
business that they can no longer observe it objectively.
They are so much a part of the “day to day” that they
can’t step back and see the business analytically.
If this is the case with you as an owner or manager, it would
be wise to either retain an industry consultant or invite a fellow
owner or manager whom you respect to take a critical look at your
business and make proactive recommendations; such as:
If you are not passionate about sitting at the helm of
your business, hire someone who is.
As market conditions change, alter your strategic plan
Carefully assess your key people to make sure that you
have the necessary talent on your business team to perform each
Begin managing your business against a budget your team
has carefully thought through. To
achieve an optimal level of profitability, you must take time to
hammer out a profit plan.
Keep your people informed as to how the company is
Design a bonus compensation plan that rewards your key
people for achieving both individual and team goals.
Prune lackluster salespeople from your sales force and
replace them with hungry goal-oriented sales professionals.
most profitable companies have a leader at the helm.
All companies have managers in place, but only the most
progressive have placed an emphasis on leadership.
While leaders are also managers, they do more than direct
traffic. By merely telling
their people what to do, the leaders have not developed the critical
thinking skills necessary to determine why their organization is not
performing to high standards.
success is measured by a leader’s ability to achieve an optimal
level of profitability in good times and in times of slower business
activity. Don’t allow
management apathy to rob you and your business of the success it
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