Tuesday, February 17, 2009

Get the Wrong Who and It will Cost You --- ALOT!

In a down and unpredictable economy, we cannot afford,“Ooooppps…  we hired the wrong guy…”  Sound hiring practices are paramount. The cost of unsuccessful hire can be extremely costly not only in terms of wages, benefits, and training, but also opportunity costs.  According to the Department of Labor, a wrong hire can cost 3 to 10x the annual salary of an employee.  If we base our numbers using the median income in America in 2007, that would be around $38K.  Therefore, a “costly mistake” of 3 to 10 times an employee’s annual salary would mean an average net loss of  approximately $115K-$380K to a company.  This may not appear as much for a big company as we’re only talking about a median income of a single contributor [but what if there's more than one "costly mistake"???].  Now, let’s consider the loss at higher-level positions such as hiring unqualified, B or C Player Managers, Directors, or worse, Executives.  These titles have a considerably higher salaries which also means higher risks of a bad hire.  In simpler terms, this can mean a painful price tag of up to $1.5M or more per year plus, wasted time and effort to the hiring company.  This statistic becomes even more shocking when we factor in the fact that the typical hiring success rate of managers is only 50%.  Wow!  

Jim Collins, author of Good to Great said, “The most important decisions that businesspeople make are not the what decisions but the who decisions.”  Having certain people in place can either make or break a business as this is where either good and right things happen or where the ugly and disaster starts. When filling a position, you’ll need the right person for the job.  One may have the knowledge on how to do the job but knowledge and the ability to execute on the job are not the same thing.  He or she must walk the talk but more so, it’s the walk that counts not the talk.

With the economy heading down steeply, times are tough.  Unfortunately, there are some people who would make engaging in political activities priority to create outcomes consistent with their own political agendas as they really have nothing else to offer.  But when you’re dealing with money and mean serious business, now is NOT the time for dirty politics nor political gains.   Now more than ever, we need to cut costs, be efficient, and ensure we have the right resources to not just stay afloat but to stay in business.  

In order to prevent this type of costly mistake, businesspeople need to be clear about what is required in a job, what the expected results are, and putting the right people in the right places.  Be selective.  Otherwise, you’ll be stuck with pricey hard costs and productivity loss paying people who deliver no value [that's IF they deliver at all] to the company.  Having the right people performing the WHAT will determine if you’ll succeed.   Do not hire a resume then later on discover that you hired the wrong guy.  Put in the time and effort and the due diligence in finding A Players which would require setting the bar higher.  

So, what is an A Player???  An A Player is defined as someone who has at least 90% chance of achieving a set of outcomes that only the top 10% of possible candidates could achieve.  However, this is just a piece of what’s required in ensuring you have the “right guy”.  Putting the “right people in the right places” doesn’t only mean qualified people who can execute and deliver but also someone who would make a good fit for the mission.  Depending on what the mission is, sometimes the individual has to also be a good match to work with the team and the environment of the team including a company’s culture.   

Below is an excerpt from a book that I read last year.  It is sooooo true that it stuck like glue.  :)

You are who you hire.  Hire C players and you will always lose to the competition.  Hire B players and you might do ok but you will never break out.  Hire A Players and life gets very interesting no matter what you’re pursuing.  Hiring “A PLayers” is not everything.  It is one of the most important skills to growing the value of a company.

In summary, most executives know what needs to be done but the greater challenge is finding the right people that will and can successfully execute on the job.  Astute companies arm themselves by learning and diligently implementing hiring best practices to ensure they have the right people in the right places.  Invest in the WHO behind the what and eliminate the costly oops.

Monday, February 9, 2009

Understanding the Voice of the Customer

I’ve always been a proponent of customer advocacy, promoting best practices, and applying proven methodologies and frameworks to meet business needs, deliver on customer requirements and manage their expectations.  However, before all of these can come into play, it is a MUST to understand the voice of the customer.

Understanding the voice of the customer requires fact-based foundation and knowing what to closely pay attention to as they express their needs and expectations based on their experiences on a product and/or service delivered to them.  As managers, we need to be able to translate these “customer voices” into actionable terms.  Once the translation is complete, it may also be necessary to review our company’s focus.  What do I mean by this?  Some companies focus on releasing products and are more concern about time to market but with the current state of our economy, we may need to change our “product-out” mentality to “market in” mentality and at the very least, keeping existing customers happy.

Fact-based foundation requires data gathering.  The collected factual data can be turned into useful information that can be used as a decision-making tool.  Sometimes, to beat the competition, we need to have that “edge” by understanding the voice of the customer and focusing on great service instead of just selling products and/or services.  In my opinion, it’s equally important to make service central to a business strategy especially for product companies.  This not only builds and strengthens customer relationship but can be extended to go beyond the initial sale.  Earn an excellent reputation not only for producing great products but also providing excellent service.

To boost revenue especially in our current economic climate,  targeting customer goals and understanding what they value is key. Get customers involved and allow them to influence every aspect of the business as this can serve as the core foundation of your organization’s success.  Think about it.  What is the point of having all the bells and whistles if it’s not what your customers want?  Right?  :)

We live in a very competitive market place and this alone should be more than enough for us to think about creative ways on how we can be flexible in accommodating or fulfilling customer requirements to the quality they expect and the time frame they need it by.  How do you do this?  Listen to your customers and build long-term relationship with them through partnership and commit to delivering excellence in every transaction or every opportunity to serve them.

Understanding the voice of the customer will help your business maintain the “edge” and focus required to make effective and sound business decisions and harness the power and commitment your company needs to weather turbulent times. Partnering with customers represents a company’s ability to anticipate what customer needs even prior to them requesting for it.

Wednesday, February 4, 2009

Quality Management - One Size Doesn't Fit All

Quality Management is a system of organizational structures, processes, responsibilities, policies, procedures and evaluation mechanisms to ensure that an organization is delivering products and/or services to specified standards in an efficient and effective manner.

There are several quality improvement frameworks and strategies.  I do not believe in “one size fits all” methodology.  In my opinion, the best approach is choosing industry best practices and applying them to the framework of a business.  Sometimes, it’s also necessary to borrow from other quality control techniques and integrate these best practices to provide solution for an organization that makes the most business sense.  In addition, it’s also important to know what the goals and motivations are in selecting a certain strategy.

Frameworks I’ve used includes (but not limited to):

Six Sigma – Started by Motorola is a way of reducing defects in the manufacturing process.  It is a quality management methodology using DMAIC problem-solving framework to measure quality, improve processes by increasing performance and decreasing process variation leading to defect reduction and improved product quality.  DMAIC is an acronym for Define opportunity, Measure performance, Analyze opportunity, Improve performance and Control performance.  [Tons of information available online on Six Sigma, feel free to search.]  :)

Six Sigma represents a statistical measurement of variation from a specific attribute or characteristic desired by the end-user and expressed over six exponential layers:

One Sigma = 690,000 defects per million
Two Sigma = 308,000 defects per million
Three Sigma = 66,800 defects per million
Four Sigma = 6,210 defects per million (relatively efficient)
Five Sigma = 230 defects per million (world class efficiency)
Six Sigma = 3.4 defects per million (perfection)

Most books on Six Sigma cite examples on how it’s applied in manufacturing.  However, Six Sigma is NOTonly used in manufacturing.  It’s actually a great tool for driving difficult process problems back to their root causes by applying process analysis and statistical analysis techniques.  I highly recommend it if you want to measure quality in numbers.  The statistical analysis can help detect anomalous variation.  Six Sigma may be very popular but it is not always the best framework to use.

Total Quality Management – Deming is one of my favorite quality leaders who contributed to the work of Juran and Cosby to what’s known as TQM.  TQM is more flexible and suitable to various types of organization.  Its primary focus is on continuous improvement and promoting “quality culture”.  It is applicable to any company that strives to provide customers with products and services that meet their needs and/or expectations.  “Quality Culture” means doing things right the first time and eliminating defects from all aspects of the company’s operations.  I personally like Deming’s 14 Points and also his PDCA cycle.

These are just a couple of many available strategies that can help assess and define a problem, identify goals and how to reach desired end-results to improve quality, processes, and productivity and add value to company performance.  In addition to these frameworks, tools, and techniques, it’s also very important to know and understand high-level planning, organizing, leading and controlling processes which every manager should know how to do by default.  :)

There is no perfect or “one size fits all” approach.  Every company should be well-rounded and be open to other available methodologies and best practices and not be focused on one single approach.  Assess various models and determine optimal solution to problems.  In many cases, it’s not a “one size fits all”.