National Clothesline

n mid-October, the Dow Jones hit a new 16-month high; retailers reported better than expected sales for September; and new unemployment claims dropped to an eight-month low.

These small factoids are proof positive that the economy is beginning to recover. The big question you must ask yourself today is “Am I ready to capture the future or will I be content

to just go along for the ride?” Those who start planning for 2004 now will be the ones who will reap the rewards.

For the last month I have been in the trenches with clients. I learned during these consulting projects that many business owners have allowed themselves and their employees to sink into a state of emotional depression.

I also learned that the only way to climb out of this deep abyss is with a large dose of reality.

The most difficult part of discovering the “realities” that are driving your business is that these realities are hiding under a mountain of lame excuses. Why this happens reminds me of a quote from Winston Churchill, “A riddle wrapped in a mystery inside an enigma.”

Case study

Background. A drycleaner located in a Midatlantic state with 37 employees. This business has been losing piece volume for the past two years. From 2001 to 2003 the piece volume has gone down 18 percent. The company has one plant and three drop stores.

To date, ownership has done an excellent job of cutting costs during this period of decline but realizes his first priority is to stabilize the piece volume and then grow it again.

There are three steps in every management consulting project.

1. Review and analyze the financials of the company to determine where costs are in line with the industry standards and where costs are out of line. This analysis requires an in-depth understanding of the company’s fixed, variable and semi-variable costs.

Furthermore, the experienced consultant must have the ability to predict how his recommendations for change will affect the future performance of the company. This financial evaluation includes an analysis of product mix, piece counts and productivity standards.

2. The second step in the consulting project is an evaluation of the management structure of the company.

This is where I ask “Who’s on first?” More often than not I find that “Who’s on second” and “I don’t know” is on first.

During this step an organizational structure needs to be developed for the company that is based on the needs of the company — not the needs of the people working for the company.

At first, it is difficult to wrap your brain around the concept that the company has “needs” and that the company’s needs are the most important.

Once this reality becomes clear, you can stop making excuses for people and begin to make proactive decisions.

Pictures and graphics are always helpful aids and it is at this juncture that we develop the Organization Chart. Alone, an Organization Chart is meaningless — just a pretty diagram.

Unfortunately, there are many of these useless documents floating around courtesy of all the software available for making one. Problem is that the software does not teach how the lines of authority and responsibility flow in an organization.

3. Every employee is asked to complete a Confidential Employee Questionnaire. Most of the employees welcome this opportunity to be heard. Their answers provide a great deal of information about how the management of the company really works. Also, their responses reveal how they feel about the customers and fellow employees.

After the results of the questionnaires are tabulated, all key personnel are interviewed. Over the years, a good interviewer learns how to ask pertinent, yet non-threatening, questions. Most importantly, the interviewer must shut up, listen and read the individuals body language.

The problem. The biggest problem confronting this company was the negative employee attitude at the front counter. The mood amongst the CSRs and their Team Leaders was “No matter how hard we try, we can’t bring in more volume, so why bother?”

The solution. Drastic measures were needed to stop this company’s downward spiral. This required identifying any and all CSRs and Team Leaders who were not willing and/or able to change for the better.

As the owner and I reviewed the contributions and skills of each CSR, it became apparent that he had his favorites.

This is not uncommon — we all do it. Who doesn’t like the employee who never complains? Your responsibility is to get out of your comfort zone and evaluate all of your employees every six months.

My job is to make ownership understand why the company is in trouble and to make the appropriate recommendations to fix the problem.

Owners must demonstrate to their employees their willingness to make hard decisions such as firing under-performers.

When you, as an owner, allow under-performing individuals to stay on the job, you are demoralizing your entire staff. Nothing will get the attention of your good employees and build your credibility as quickly as taking action.

The lesson. Ownership is courting disaster when it refuses to honestly evaluate the performance of employees.

Take a good look around your company and evaluate your key employees. The economy will continue to improve in 2004 and only those who have the right people in the right job will share in the rewards.

Most important, meet with your key employees every day to make sure that your are all on the same page and striving to achieve the same goals. Base your decisions on what is best for your company.

In the game of business the more you know the better you can play the game.

Alan Robson is a private consultant dealing with the specialized needs of the drycleaning industry. Contact him by telephone at (941) 408-8819 or send e-mail to him at: alan@bizbuilderonline.com or visit the Biz Builder web site: www.bizbuilderonline.com.