When you must close an operation...

We often hear that the best way to reduce the workforce or to close an operation is to: "Go Fast!"
Get it over with, and move on. In the May Issue of Harvard Business Review, Kenneth W. Freeman, based on his experience, and writing in "First Person" suggests a different approach. Check it out!

He says "it pays to go the extra mile for employees, customers, and suppliers. He has the experience, what he calls: "soft hands."

These are his suggestions (read the article to get the full impact, of course!):

1. Treat employees with dignity, fairness, and respect - the way you want to be treated.
2. Treat you customers and suppliers like valued partners during the shutdown process, and they will stick with you.
3. Manage the closure or layoff like a project... (carefully and thoughtfully- my words!)
4. Use judgment and, if necessary, fight back.

What do you think? What has your experience been? I'd love to hear from you!

Dr. Bill - I love to share, I hope you do to! ;-)

Do Teams Work for You?

I have always considered Dr. J. Richard Hackman the academic expert on Teams. He is now at Harvard and was recently interviewed by Diane Coutu. Key elements of the interview are published in the May 2009 issue of Harvard Business Review. Some excerpts are available at the link.

While still extolling the possibilities of working in teams, he also expresses concerns, based on real-life experiences, that unless teams are used correctly with respect to any program or project, they are as likely to be ineffective as to be successful. This has been my experience, over the years, as well. To build a team that works, five elements are required:

1. Teams must be real.
2. Teams need a compelling direction.
3. Teams need enabling structures.
4. Teams need a supportive organization.
5. Teams need expert coaching.

I will deal with each of these issues in future notes, building on his research and adding my own research and comments based on observation.

In the meantime, I'd love to hear from you. Have teams worked, in your experience?

Dr. Bill - I love to share, I hope you do to! ;-)

Cash Management in Hard Times

Although written with the larger company in mind, the May 2009 issue of Harvard Business Review has an article that can be useful to small businesses as well: "Need Cash? Look Inside Your Company," by Kevin Kaiser and S. David Young. It also is available on-line.

They list six "don'ts" of working-capital management, that, though counter-intuitive, may be very useful in times such as these:

1. Don't manage to the income statement.
2. Don't reward the sales force for growth alone.
3. Don't overemphasize production quality.
4. Don't tie receivables to payables.
5. Don't manage by current and quick ratios.
6. Don't benchmark competitors.

We have been teaching some of these as "standard practice" in business school! What do you think of this different approach. I'd love to hear your thoughts and stories.

Dr. Bill - I love to share, I hope you do to! ;-)

SBANC Newsletter

If you are not already getting it, I heartily recommend the SBANC Newsletter, edited by Don Bradley at the University of Central Arkansas, the Small Business Advancement National Center. It is an electronic newsletter that comes to your email box each week or two, and is filled with dates of events, a feature research article, and useful tips. Check it out!

Dr. Bill - I love to share, I hope you do to! ;-)

Recruiting in Good Times and Bad

One of my purposes in writing this blog is to put in one place the various topics on which I have written in the past and hope to write more about in the future. As you may have noted, sometimes I use an existing magazine or trade journal article to remind me of some of these things.

For this note, my inspiration is the May 2009 issue of Harvard Business Review. For today's article, I am looking at: "The definitive guide to recruiting in good times and bad," by Claudio Fernandez-Araoz, Boris Groysberg, and Nitin Nohria. It is full of good ideas, of course, many common knowledge, but with new ideas based on new research. I'll note the seven steps, today, and come back to them later, with more detail and my own observations:

1. Anticipate the Need
2. Specify the Job
3. Develop the Pool
4. Assess the Candidates
5. Close the Deal
6. Integrate the Newcomer
7. Audit and Review

In the article, page 79 (p. 2, on-line) has a most useful chart, based on the seven steps, listing for each: Poor Practices, Best Practices, and Implementation Challenges. Check them out - the full article is available, on-line.


Dr. Bill - I love to share, I hope you do to! ;-)

Tax day has passed - how long must I keep all these papers?

While more and more records are being kept electronically (a subject for another day!), most of us are still challenged by the boxes and boxes (or paper sacks?!?) of receipts, bank statements and other papers we keep to do our tax returns each year. Records retention is an especially never-ending problem for small business (all business!?!).

Five categories, based on passage of time, can be a very useful approach to both the storage and retention issues to be faced in dealing with the piles and piles of paper (as I noted, we will discuss electronic storage devices and issues at a later date). Care must be taken in assigning individual items to the categories, but these five categories seem to work well, for most people and organizations:

Category 1: Items to tossed in approximately a month or two.
Category 2: Items to retain through the year until tax returns for the period have been prepared.
Category 3: Items to retain for three or four years after tax returns are filed (including extensions).
Category 4: Items to retain for six or seven years after tax returns are filed.
Category 5: Items to retain "forever" - that is, as long as the business exists or owns certain property.

Each of these categories have criteria that should be used in applying a particular item to that category. To a limited extent, some items may shift from category to category, depending on changes in tax laws, for example. We will look at each of these issues in a future post.

Dr. Bill - I love to share, I hope you do to! ;-)

Creditworthiness - is a loan right for you?

Creditworthiness has never been more important than it is today. In December of 1997, I wrote an article in "Dance Teacher Now" magazine, that highlighted the 5 C's - the five areas of concern regarding Creditworthiness - here are the highlights:

Capacity to repay is the most critical of these five factors. Lenders are in business to see that loans are repaid with interest in a timely manner.

Character is actually your payment history on existing credit relationships - both personal and commercial.

Capital is the money you personally have invested in your business, and it is an indication of how much you have a risk should the business fail.

Collateral or guarantees are additional forms of security you can provide the lender. Prospective lenders want to know about your contingent sources of revenue should normal revenues decline, for whatever reason.

Conditions to a loan focus on the intended purpose of the money advanced. Is it for current operations, for expansion, or for a new building or equipment? The lender will need to understand these conditions in order to be able to allocate loan funds to you.

We can look at a lot of other relevant factors, and at these factors in more detail, but an initial focus on these five will give you a quick idea of whether applying for a loan from a financial institution is likely to be successful for you.

Dr. Bill - I love to share. I hope you do to! ;-)