The Advisor’s Corner

What Financial Information Should I Share with My Associates?

September 24, 2018/in Nuggets and Encouragement Regarding Strategy and Focus/by Tom Doescher

Tom Doescher - Doescher Advisors

This was actually a question posed to me by one of my clients. To be perfectly candid, I didn’t give him a very good answer. Thinking about how I could have responded better led me to purchase an old book, Open-Book Management: The Coming Business Revolution (Open-Book), written by John Case in 1995. I also bought The Great Game of Business: Unlocking the Power and Profitability of Open-Book Management, by Jack Stack, and I intend to study the Scanlon plan. So far, here are my takeaways from Open-Book, along with some editorial comments.

I would lean toward sharing information. In my experience with all types of businesses, the associates generally seem to think the company is more profitable than it really is. For example, if everyone hears the company has been awarded a million-dollar contract, they may think the owner will get $500,000. But if the company’s EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization) is 10 percent (a pretty common result for a good company), the actual profit is far less.
Start out slowly and share just a few metrics, like sales/revenue.
Before getting too deep into sharing, think about reporting when you have either a world-class year or a near-bankruptcy year, and anticipate questions. Sharing too much information could become a slippery slope that results in unnecessary concerns or expectations.
NEVER FUDGE THE NUMBERS!!!! Rather than fudging numbers, it would be better not to share at all.
Open-Book appropriately describes the old Industrial Revolution command and control management styles versus today’s knowledge workers, even on the factory floor. Have you been on a shop floor recently? Most machines today are computer-controlled and the operators are required to be very skilled to diagnose issues and/or problems. Command and control would never work.
Open-Book also recommends that owners view their associates as “partners.” I can relate to this because that’s how Frank Moran, founding partner of Plante Moran, made me feel from the day I started there as an intern.
Open Book suggests rewarding people for making money. In other words, teach them that profit is necessary to maintain a sustainable business.
“What gets measured gets done,” according to Open-Book. Louis Gerstner, former IBM CEO, loved to say, “People do what you inspect, not what you expect.”
Keep it simple. People don’t trust what they don’t understand.

The last half of the book provides specific examples of private companies that have adopted some type of open-book management style.

When I reflect upon today’s workforce, I think some version of open-book management makes a lot of sense. I would probably suggest reading up on the subject, attending some seminars, and getting outside help to get started. A misstep could be quite painful for you and your associates.

Making Your Bed Is Important? Are You Kidding Me?

September 10, 2018/in Nuggets and Encouragement Regarding Strategy and Focus/by Tom Doescher

Tom Doescher - Doescher Advisors

Recently I finished The School of Greatness by Lewis Howes, a former All-American who is currently on the USA men’s national handball team. He’s also a motivational speaker, author, and executive coach. His book was similar to many others I’ve read and, halfway through the book, I concluded I wouldn’t blog about it. Then I got to Chapter 6, where Howes recommends making your bed every morning. As support for his position, he references the 2014 commencement address at the University of Texas, which was delivered by Adm. William McRaven, a retired Navy Seal. I had listened to McRaven’s address a few years ago, and I highly recommend it to you. In fact, here’s a six-minute portion of the address, where the admiral’s first recommendation to the graduates is that they make their beds.

Howes also quotes from The Happiness Project by New York Times best-selling author and blogger Gretchen Rubin. I’m sure you’ll be skeptical, but Rubin reports that many of the readers who have communicated with her in response to her happiness project report that making their beds had the biggest impact on their happiness. Paraphrasing Rubin, “Making your bed is a step that’s quick and easy, yet makes a big difference. Everything looks neater. It’s easier to find your shoes. Your bedroom is a more peaceful environment.” She goes on to say, “Because making my bed is one of the first things I do in the morning, I start the day feeling efficient, productive, and disciplined.”

Wow, very interesting. I’ll leave it up to you whether you decide to read the Howes or Rubin books, but if you haven’t heard Adm. McRaven’s address, I would definitely recommend listening to it.

Hopefully you’ll accept this post in the spirit it is offered.

Looking for Topics for Your Annual Planning Meeting?

August 20, 2018/in Nuggets and Encouragement Regarding Strategy and Focus/by Tom Doescher

Tom Doescher - Doescher Advisors

I would recommend using It’s Not What You Sell, It’s What You Stand For by Roy M. Spence, Jr., as a resource. If you’re like me, after years of attending annual planning meetings you’re often looking for something new and fresh. Spence and his colleagues have advised some highly regarded companies, like Southwest Airlines, and have come up with a list of great questions you could use during your leadership team’s annual retreat/planning session.

I’ve written several times about a company’s “why” or “purpose,” including in my January 11, 2016, post. The primary subject of It’s Not What You Sell is “purpose,” and Spence organizes his suggested questions into four categories:

Are purpose principles alive and well in your organization?
Are you building an organization that makes a difference?
Are you a leader of great purpose?
Are you bringing your purpose to life in the marketplace?

Each of these categories provides 10 questions that could be used as part of a team-building, vision-casting session.

In addition, Spence references numerous books and research studies that you may want to obtain as advanced reading material for your team.

Spence and his colleagues assist businesses with marketing services including branding. As I read their client stories, I reflected back upon sitting in company lobbies, reading the plaques on the walls (yes, this was before digital displays). It wasn’t uncommon for companies to incorporate Bible verses into their messages (purpose, vision, principles, etc.). On more than one occasion, when I was sitting in a meeting with the company’s executives, I had a totally different experience than what I had expected based on the values their lobby displays touted.

So, what’s my point? I’m probably playing big brother here, but I believe it would be better to not say certain things if, in fact, they aren’t the standards your business (and all its team members) adheres to. The plaques or video displays on the lobby walls should accurately reflect the company’s culture. Be careful not to overstate it.

What Financial Information Should I Share with My Associates?

Making Your Bed Is Important? Are You Kidding Me?

Looking for Topics for Your Annual Planning Meeting?

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