| |
Comturn Philosophy
The following represents lessons
learned from many years in the restart of businesses.
• The three elements of a successful restart
• (culture-process-subject matter)
• The four people drivers
• (money-autonomy-functional
excellence-service)
• Alternatives to personnel reductions
• (short term burden absorption
business customer funded
• development projects)
_____________________________________________________
Restart Philosophy
THE THREE ELEMENTS TO A SUCCESSFUL
RESTART
There are three basic elements to be considered in a restart: culture,
process and subject matter. To successfully restart a company its
first line management and professionals must be receptive to changes
in culture and business processes that
facilitate profitable growth. The company must also be able to find
the appropriate subject matter knowledge to successfully execute
programs.
Cultural change, the single largest element to the successful restart,
must be supported with processes that are efficient, maximize core
competencies, and facilitate active communications between its people
and customers. Generally these companies utilize substitute processes
or workarounds to conduct day to day business and to manage vital
assets and critical projects. Although they may fall short of good
business practices, eliminating these substitute processes or workarounds
prematurely before a new process is ready, will bring everything
to a halt resulting in serious impact on the business. Subject matter
knowledge is the least critical of the three basic elements of a
successful restart in that people with required skill sets are usually
available in the labor market or the consulting community. General
availability varies widely by industry, geography and the general
condition of the economy.
In order to mitigate this risk and to insure as rapid a progress
as possible, it is critical that the new strategic direction of
the company leverages its people’s core competencies and drivers.
THE FOUR PEOPLE DRIVERS
Often times, tools such as Myers Briggs are used to identify the
personality types of the staff to reduce conflict and improve over-all
teamwork. We have found that the identification of their drivers
is a far better first step in developing a cohesive team that will
march together toward the same goals and objectives.
Experience tells us that professionals often do not know their driver,
having been influenced at an early age by a parent, sibling, teacher
or even society in general. Thus, they are educated and trained
in a functional discipline that does not satisfy their driver. Intelligent,
motivated professionals can excel in a discipline that does not
satisfy their driver and eventually get locked into a position that
provides a good income but does not foster happiness and fulfillment,
resulting in eventual burnout.
We believe a professional only has one driver and that there is
no secondary driver. The drivers are money, autonomy, functional
excellence and service. Typically those driven by money are narrowly
focused on wealth opportunities , for example the commodity trader
and stockbroker. Entrepreneurs, CEOs, GMs, or others that seek out
positions where their bosses are several time zones apart are driven
by autonomy. Because there are risks involved, often times these
people obtain wealth but money is not their true driver. Accountants
and engineers are most often driven by functional excellence while
social workers, teachers, ministers and nurses have a service driver.
We believe in making it possible for key professionals to be reassigned
to positions that satisfy their driver without sacrificing their
compensation. This promotes teamwork and facilitates the change
process.
Can you imagine a team consisting of a human resource professional
that is driven by autonomy rather than service, or a controller
driven by service rather than functional excellence, or the line
P&L manager that is driven by service rather than autonomy,
or perhaps, a sales professional that is driven by functional excellence?
By slotting professionals into positions according to their driver,
a cadre of change agents is unleashed into the organization.
ALTERNATIVES TO FURTHER PERSONNEL
REDUCTIONS
Many distressed companies have already undergone several personnel
reductions in an effort to reduce costs and protect cash. Often
times these companies are at critical mass and any further layoffs
can destroy the long-term viability of the business. Concurrently,
while a new long-term strategic direction is being formulated to
drive profitable growth and company valuation, certain short-term
measures can be taken to stabilize the organization, reduce employee
turnover, improve earnings and protect cash.
These include:
Pay as you go R&D for a software business or burden absorption
business for a manufacturing company.
Pay as you go R&D – This requires the leveraging of the
company’s core competencies and relationships with a few strategic
accounts to provide one-time special business solutions for their
critical business needs.
These short-term customer funded development projects absorb engineering
and development overhead preventing a need for further reductions
in the technical staff, thus protecting the company’s most
difficult to replace human resource, it’s technical professionals.
This short term measure benefits both the company and the customer.
In fact, if the projects are evaluated up front based on synergy
with the company’s core product offering, often times successful
new product introduction result from these endeavors. (I like to
call this pay as you go R&D)
Short-term Burden Absorption Business (handle with care)
Most manufacturing business employ a standard cost system with the
sales organization measured on volume and standard margin. In the
downturn there simply is just not enough volume to absorb fixed
costs. Typically management builds inventory to absorb overhead
and protect the bottom line. This chews up cash and significantly
runs the risk of generating obsolete and excess inventory that will
necessitate future write-offs and reserves. Reducing production
manpower in line with lower production volume addresses the inventory
build-up issue but does not solve the fixed cost absorption problem.
Unabsorbed fixed costs manifest itself on the P&L as under-absorbed
overhead variance, which fall directly to the bottom line. Typically
total manufacturing margin erodes while the measured indices (standard
margin) remains on target. The solicitation of short-term burden
absorption custom work will improve overall manufacturing margins.
However this must be done on a one-time basis and only for production
runs on idle equipment to avoid turning away new orders for traditional
product mix that is much more lucrative.
_____________________________________________________
|
|
