Progressive Distributor - Economic downturn: A culling of the herd

Economic downturn: A culling of the herd

Companies that document their best biz ways can enhance profitability and position themselves to better survive economic downturns.

by Abe WalkingBear Sanchez

Scientists believe that about 150,000 years ago a huge volcanic eruption created a cloud of ash that covered most of the Earth for six years. Not all sunlight was blocked but enough so that most plants and animals died.

Those life forms that survived "the long winter" were the smart and the strong. Those life forms that perished were the weak and those who couldn't adapt to the change. It's kind of that way in business.

We are in an economic downturn and a culling of the herd is taking place.

Never time enough
Errors, glitches, screw ups, misunderstandings, omissions, the left hand not knowing that the right hand exists, much less knowing what it's doing, all drive up the total cost of doing business. Vendors, sellers and customers all pay for inefficiency.

Too often the unofficial motto of some companies seems to be "we never have time to do things right, the first time." A "redo" is the most expensive and most often unprofitable work that a business does. Some businesses make money in spite of themselves.

By documenting the knowledge it takes to get things done right the first time, their best biz ways, companies can improve their efficiency and better prepare themselves to deal with reduced sales, slow cash flow, thinner margins and major business disruptions. Moving from word-of-mouth operations to written policies and procedures promotes efficiency of action.

Five Organizational Ps
The Five Organizational Ps is a method for the documenting of policies and procedures for business functions.

Purpose: Must support the company's overall strategy and answer the question, "Why incur the costs?"

Policies: Goal driven guidelines for each of the major components within a business function.

Procedures/process: The steps that lead to achieving the goal(s) for each of the major components.

People requirements: Based on the steps (process), what skills and the personality traits are required?

Process monitoring/performance measurements: Monitor for the key steps in the process (quality control) and measure against the goal(s) established by the policies.

If your goals are valid and are not achieved, it's either your procedures or the people involved

The closet report
If you've been around any length of time, you've most probably encountered inefficiencies that have left you scratching your head and wondering what the heck is going on. Steve Epner of BSW Consulting Inc. tells a story about a report that clearly illustrates wasted time and effort. It seems that this woman spent the last two hours of each day compiling some data into a report. She'd leave it on the corner of her desk and the next morning it would be gone.

When asked what the report was for and who it went to, she didn't know. The woman had been trained by her predecessor to do the report but was never told why or to whom it went.

It turned out that about three years before the CEO had asked that the report be generated and left for him to pick up at the end of each day. After a while he decided he didn't need it and he quit picking it up, but forgot to tell the preparer.

As the reports piled up the janitor took note that they were unsightly and got in the way of his cleaning. He started moving the report to a nice safe out of the way closet. He referred to it as the "closet report." When the stack in the closet got too high, he'd toss them out and start a new stack.

Clean floor, dead customers
Russ Case, president of www.bestbizways.com, tells a real story about a hospital room in England where the patients unexpectedly kept dying. All the equipment was checked and double checked, the air was tested, the water and food were checked out and found to be safe. The deaths continued and the toll hit 10 before the cause was found. Again, it was the janitor.

It seems that this room has a shortage of electrical outlets and when the clean up crew came in they'd unplug the life support equipment so that they could plug in their cleaning equipment. To protect their hearing the cleaning guys wore ear muffs and couldn't hear the patients' death struggles.

Information and knowledge
Humans are creatures of information. We store it, use it and pass it on, yet information on its own is just data and means little. When organized so that it becomes useful, information becomes knowledge, and that has value to a business.

Every business runs on knowledge, how efficient a business operates is tied to how well it manages the knowledge it takes to get things done. It's critical that different business functions not work at cross purposes.

The best run and more efficient organizations are those with written policies and procedures that document their best biz ways.

Why the costs?
Every business function must have a clearly stated purpose that supports the overall company strategy and answers the question, "Why incur the costs that go with the function?"

Many department and business function managers can't give a clear and concise answer when asked the purpose of their department/function; and if they don't know, what are the chances the people working with them know? Or care?

From the mind to the paper
There's a lot of valuable knowledge in the minds of the people that make up every business, and most often that's where it stays.

To be efficient (powerful in effect with little waste of effort) businesses must document their hard earned best biz ways; they must have written and useable policies and procedures.

How to: For each business function, make up a list of the costs that go with the function. There will be direct and indirect costs (people cost is often the greatest). Based on the costs, establish a purpose for each function that supports the overall business strategy.

Once there's a clearly stated purpose for the business function, break the function down to its major components and come up with a goal(s) for each component. State the goal(s) for each major component, within the function, as a policy; i.e. a goal driven guideline.

Determine the steps needed to be taken in order to achieve the stated goal(s). Procedures are steps.

Based on the procedures needed to achieve the goal(s) (policies), establish the people requirements (skills and personality traits) needed to carry out the steps.

How the people involved think about a business function and the actions they take is determined by the key steps that are monitored (quality control) and by the goals measured. "People respect what is inspected, not what's expected."

If thought and care are given to the purpose and the policies (goals) and the goals are not achieved, look to the steps or to the people involved.

Abe WalkingBear Sanchez is an international speaker/trainer on the subject of cash flow/sales enhancement and business knowledge organization and use. Founder and president of www.armg-usa.com, Abe also sits on the board of www.BestBizways.com Inc.

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