The Coach's Corner

The Business Roundtable Joins Owner-Operated Businesses

October 21st, 2019 // Tom Doescher //

Tom Doescher - Doescher Advisors

The August 20, 2019, Wall Street Journal reported that the Business Roundtable, consisting of 188 of the largest corporations in the U.S. including GM and Ford, and led by JPMorgan Chase CEO Jamie Dimon, has changed its statement of purpose. For decades, the Business Roundtable adopted the position Milton Friedman took in his 1970 article entitled “The Social Responsibility of Business is to Increase its Profits” — or, simply stated, The Social Responsibility of Business is to Yield Higher Profits for Shareholders.

Of the Business Roundtable’s 188 members — Mary Barra and Jim Hackett are part of the group — 181 CEOs endorsed the new proposal, which includes the following statements concerning the responsibilities of businesses:

  1. To deliver value to customers.
  2. To invest in our employees.
  3. To deal fairly and ethically with our suppliers.
  4. To support the communities in which we work.
  5. To generate long-term value for shareholders.

I believe these 181 large global corporations are catching up to the owner-operated companies I’ve worked with for the past five decades. I could provide so many examples of where they’ve already embraced these principles for years; here are just a few:

  1. I had a $10 million auto supplier client who solved a critical air bag problem for a Ford Motor Co. vehicle, avoiding an expensive delayed launch.
  2. There are many stories where owners have helped team members and their families. Recently, I experienced an owner who went above and beyond to console an associate whose young wife died in a tragic auto accident.
  3. Many owner-operated businesses are really good with their suppliers. Some pay them very timely — and, as a result, they  often receive priority treatment.
  4. With regard to community involvement, I retrieved excerpts from comments I made at a 2001 Plante Moran Manufacturing Practice presentation to our team:

“Who are our clients? They are men and women who risk their wealth every day to make stuff. Most of them work quietly behind the scenes, providing jobs and career opportunities for millions. They serve on not-for-profit and school boards, and on city councils. They seem to be the ones driving many charitable fundraisers in our communities.”

So, what’s my point? Simply stated, owner-operated companies have been holistic in their approach to business forever. I’m delighted that Jamie Dimon and the Business Roundtable have joined them.

Jobs, Jobs, Jobs

October 7th, 2019 // Tom Doescher //

Tom Doescher - Doescher Advisors

Part of our mission statement says: “Doescher Advisors was founded to help businesses increase profits and jobs …”

After enjoying a very rewarding career at Plante Moran and having the privilege of leading more than 30 global mission teams (and achieving Delta Airlines’ Diamond status by logging over 150,000 Frequent Flyer miles annually), I decided to spend my “next season” advising local business owners. As a free market advocate, I believed the best way to help the world was to help business owners create “great jobs,” especially for the less-skilled workforce. I know you’re thinking “That sounds pretty corny,” but it’s the truth — and, eight years later, I could tell you some great stories.

When I recently read The Coming Jobs War by Jim Clifton, CEO of Gallup, I was encouraged and motivated to continue in this line of work. As you probably know, Gallup is a 75-plus-year-old, highly regarded global polling organization. Clifton’s book supports my decision to combine my business and philanthropic activities into Doescher Advisors.

The following are some fascinating excerpts from his book, with a few editorial comments:

  1. “If you were to ask me, from all the world polling Gallup has done for more than 75 years, what would fix the world … I would say the immediate appearance of 1.8 billion jobs.” (Editorial comment: I know you’re reading this at a time when the U.S. unemployment rate is at a 50-year low, but think about what he didn’t suggest — like peace, democracy, or the alleviation of world hunger.)
  2. Gallup also looks at underemployment, which is at nearly 20 percent. (Editorial comment: We also know that many people have dropped out of the workforce, resulting in a labor participation rate that’s 63 percent down from its peak at 67 percent.)
  3. Very few Americans are aware that small- and medium-sized businesses are responsible for most of the jobs in America.
  4. Don’t allow your local constituencies to look to Washington for support. Free money eventually makes you more dependent. (Editorial comment: I’ve observed this phenomenon all over the world.)
  5. All prosperous cities have a self-organized, unelected group of talented people influencing and guiding them — call them local tribal leaders. These leaders are loyal, highly successful, usually wealthy, respected, well-known people. (Editorial comment: In Detroit, I think of Dan Gilbert, and in Flint, Phil Hagerman.)
  6. Innovation itself doesn’t create sales. Entrepreneurship is the driving phenomenon within the city supercollider. (Editorial comment: In other words, sometimes the innovator can successfully commercialize their idea, but other times, the inventor needs help from someone who can build a business — Clifton calls this person an entrepreneur — around the idea. It takes both.)
  7. Entrepreneurs are the most valuable people in the world, at least as far as the pursuit of economic development, GDP growth, and job-creation.
  8. Approximately 20 percent of workers in the U.S. are actively disengaged. (Editorial comment: I find this statistic very sad, and I actively work with my clients to reduce this phenomenon.)
  9. According to Gallup economic estimates, nearly one in five U.S. managers are dangerously lousy. (Editorial comment: This is another area in which Doescher Advisors spends time assisting our clients.)

Because I work with so many businesses, I’m aware that many of you are struggling to fill openings due to the lack of qualified candidates. Please don’t give up. Hang in there; it’s important that you continue to grow. There are many initiatives to work on this problem, but I’ll save that for another blog.

For those of you who have trusted Doescher Advisors to partner with you, thank you. I promise we’ll continue to do our best!

The Impact of Private Equity Groups

September 23rd, 2019 // Tom Doescher //

Tom Doescher - Doescher Advisors

As I reflect back on my 50 years in the workforce, I can’t think of anything that has affected and impacted businesses, especially middle market businesses, more than private equity groups (PEGs). Most of you know this, but for those who may not, in its simplest form the sponsors of a PEG raise investment monies from pension funds, insurance companies, wealthy individuals, and others. The money is pooled and then invested in the purchase of companies, many owned by their founders. If you own a business, this has created a great avenue for liquidating your investment in your business. Some PEGs will do partial purchases, and a few will even invest without gaining voting control (under 50 percent ownership). For private company owners, it provides another type of buyer in addition to individuals, companies, or going public, which has its pitfalls.

In this blog, I would like to point out one change in commerce that’s a direct result of PEGs: the concept of subscriptions (customer commitments to regular monthly payments, often automatically renewed annually). Obviously, subscriptions existed before PEGs, but if you look at different business sectors, there are many new versions of “subscriptions” that exist today. Some are obvious, others are not.

  1. Many IT product companies have transitioned from selling you their product for $1 million to effectively leasing their product for $20k per month forever.
  2. My partner’s dentist sold out to a dental roll-up group owned by a PEG, and they now offer an annual fee that includes basic cleaning, X-rays, etc., which is automatically charged to a patient’s credit card.
  3. There are a number of businesses that already had an annual, multiyear, or automatic renewal provision — so they already had a subscription. For example, I work with a security firm that provides home and business security alarms and cameras that are in this category.
  4. There are businesses that are attempting to transform what I might call a service into a product that can be sold as a subscription with a monthly fee.
  5. One of my personal favorites has to do with my lifelong passion for alpine skiing. Two companies have created a partnership through the outright purchase of multiple ski resorts or some other “arrangement.” They offer “season lift passes” that allow you to ski at many different major ski resorts throughout North America. The price point is such that with only two trips, it’s worth the investment. So, me being me, I’m trying to figure out what’s going on. They’ve taken a weather-dependent business, snow skiing, and solidified and made the revenue stream less variable and more predictable. Skiers need to purchase the season pass before Thanksgiving. (How’s that for cash management?) In addition, they’ve substantially increased the price of daily lift passes, which makes the season pass even more valuable, or they get premium prices from those who opt for daily passes. Brilliant!!!

Why are the PEGs so focused on subscriptions? The simple answer is that they’re reducing variability in revenues and increasing profit predictability for the purpose of reselling their investment as quickly as possible for as much as possible.

Maybe you should take this concept and apply it to your business. If you do, I’m confident your company will be more valuable.

Are You Looking for Career Advice, or Do You Regularly Give Career Advice?

September 9th, 2019 // Tom Doescher //

Tom Doescher - Doescher Advisors

If your answer is yes, I would highly recommend reading Strategize to Win by Carla A. Harris, vice chair of Morgan Stanley. I try to be careful not to suggest too many books, but Harris provides some common-sense (or not so common) tips regarding jobs — or, as I like to say, careers. She’s a very good writer (or has a great ghost writer), which makes it a quick, easy read. You can tell she’s a consultant because she also offers some great checklists at the end of each chapter, and poses thoughtful rhetorical questions. Maybe the only caution would be that she’s a Wall Street investment banker, so for some her advice may not be as helpful. Here are my takeaways:

  1. Sadly (to me), she suggests people entering the workforce today should plan six to eight five-year modules at different companies. As a guy who spent 40 years at the same awesome firm, that’s hard to hear — but I understand.
  2. I think that much of Harris’s wisdom would be beneficial, even if you’re in a great place and intend to stay. In my experience, today’s workplace reminds me of a fast-forwarded video. There never seems to be enough time. Customers are more demanding than ever, and technology has sped up the way we receive and share information, but humans are still humans. Harris is very clear that you need to take charge of your own career.
  3. Harris is talking about the workforce (both leaders and associates), but I believe her advice applies to customer/client relationships, as well.
  4. Sorry to bring up introverts again, but Harris’s advice will encourage introverts to step out at times. Harris says she often hears people (probably introverts) erroneously say, “I don’t need to go out of my way to build relationships; I’ll let my work speak for itself.” This observation applies to both your company and your customers/clients.
  5. She also provides her spin on being a leader. According to Harris, a leader should have leverage; be efficient in communicating; be willing to act; be diverse; engage; and be responsible.

When I reflect on my daily conversations with owners and associates, I realize that Harris addresses so many of the common challenges faced today. If she lived closer, I would probably figure out a way to meet her, and would use her as an advisor. She has obviously experienced many different “real life” business situations and has an ability to simplify a lot of facts into some practical, logical action steps.

Let me stick my neck out. If you engage in business (as an owner or associate), I would highly recommend reading this book.

Is Your Employee Turnover Too High?

August 26th, 2019 // Tom Doescher //

Tom Doescher - Doescher Advisors

In this historically low unemployment environment, many business owners are struggling to keep their people. According to the leadership coaching team Bliss & Associates, the cost of employee turnover averages 150 percent of the employee’s annual compensation. Wow!

In his book, The Dream Manager, Matthew Kelly offers some very practical advice. The book is a fictional story/fable, similar to Patrick Lencioni books, and it’s a powerful, quick, easy read. Kelly opens the book by quoting Thoreau: “Go confidently in the direction of your dreams. Live the life you have imagined!” He goes on to quote statistics on the high level of disengagement by employees in the workplace today.

Kelly states that people generally do not leave because of money. Remember Marcus Buckingham’s Gallup results and his 12 Questions, now reduced to 8? (You can get a PDF copy of both the 12 and 8 Questions in the Resource section of my website.)

Most of the book is about “dreams,” but the fictional company owner reluctantly agrees to a one-question employee survey, recommended by his COO. Here’s the question: Why do you think so many people come and go from our company? It’s a very simple, but powerful, question, and although the results are shocking, they’re relatively easily dealt with. However, as my mentor, Ken Kunkel, used to warn me, “Be careful what you ask for.” By that, he meant that if you ask, you need to be prepared to do something, and not just “receive and file” the advice. You’ll probably be surprised, and it may cost some money, but do the math. How many people left your company last year? What was their average compensation? Multiply that result times 150 percent, and that’s what it’s costing now, if you do nothing.

Most of the book involves a revolutionary idea that may be more than you’re willing to take on at this time. I would still encourage you to read it; it may stimulate an idea or two that you can implement.

If you’re concerned about your high turnover rate, I would highly recommend you and your leadership team read The Dream Manager.

If you’re a financial/wealth management advisor and you’re looking for ways to use your skills and give back to your community, I would also recommend you read this book.

The Advisor’s Corner

Tom DoescherYou’ll find stories from the trenches, business lessons, and pertinent questions to help you find inspiration, professional growth, and leadership savvy.

Sign up for Our Blog Posts

Sign up to receive our blog posts in your email.

Categories

Archives