Grandy

*Published with permission in the March, 2015 newsletter*

“What we’ve got here is a failure to communicate.”

You might remember this quote from the movie Cool Hand Luke. While it’s one of the most popular and often-quoted lines in movie history — and it might even make you smile — there’s nothing funny about a lack of communication within your organization. As a leader, it is your responsibility to intentionally and deliberately create a team culture where there is consistent communication at all times.

Communication is the grease that keeps the gears of your company moving, and without it team members feel detached and insecure. When they feel like they’re being left out, they can start to feel like they aren’t involved in a worthwhile venture. Just as bad, they begin to question their value to the company.

With that in mind, here are five practical steps you can take to create a culture of good communication within your business:

• Avoid “mushroom communication” – People want to know what is going on and why things are happening, even when situations are going badly. Still, many leaders use what I call mushroom communication. This means they leave their team in the dark, and feed them manure. Bad idea!

• Overcommunicate – When it doubt, share more!

• Establish predetermined goals – Make sure your team understands goals and expectations laid out by leadership. Accountability is a great motivator, so put things in writing and require regular reports of their progress. Remember, a culture of uncertainty creates fear. And fear develops quickly when good communication is missing.

• Foster unity – A team isn’t a team unless it has shared goals and visions. Create a mission statement, and have everyone memorize it. Personal mission statements help ensure what you’re doing is consistent with your life and career goals.

• Practice thoughtfulness – Avoid knee-jerk reactions, and never try to communicate with your team when you’re angry or upset. Also, communicate in ways that will ensure people are educated and enlightened, not harmed or embarrassed. Remember the Golden Rule? Handle issues the way you’d want your own issues addressed. Otherwise, people will lose respect for you and question your integrity.

The greatest problem in communication is the illusion that it has been accomplished. Communication should be attempted early, often and should be an everyday requirement on all levels in the workplace!

Changing habits, behaviors and patterns is not quick or easy. Nine out of 10 men shave their faces in the same patterns every day, and most of them are not even aware of it. Even small habits shape patterns that create certain outcomes. Change is often a challenging process. Gentle change also is challenging; however, gentle change is also different.

Gentle change provides people with clarity to understand the process, and trust in the people with whom you are working. Gentle change is a clearly defined guided process that begins with awareness of existing patterns with the individual and the organization. To change a pattern is difficult for most people. That is why people must feel included in the process of change. This helps people contribute to the greater purpose of the group to work together. People must be included in the process of growth through enrichment because people make the system perform.

Gentle change is designed to enrich the organizational life of a corporate culture. We accomplish this through leadership enrichment and team learning. We evaluate and clarify core values. This forward movement provides positive energy to remove obstacles that help to create organizational alignment.

The focus needs to be on healthy, organic growth, and be based on a full understanding of people and systems. Both are interconnected, dynamic environments. Safe pathways need to be created where people can connect deeply with others to cultivate synergy that stimulates forward movement. People and processes must have synergy to create organizational alignment. We focus on the intangibles of team building by developing the people before we focus on the tangibles of best practices.

Organic relational growth processes result in incremental organizational growth that result in macro changes. Change most simply defined is the progressive realization of a new state of being. Change will manifest itself in different behaviors, habits and patterns. New patterns of behavior focused on desired outcomes produce synergy of effort. This synergy is associated with performance metrics and output.

People also can restrict forward movement and growth that can limit the potential of a group. Individual enrichment and leadership development removes invisible barriers that have blocked people from the next level of growth. People need to understand their core values and motivations which are critical in understanding the process of change. Core values are solidified by habits and patterns that are repeated over a long period of time; when they are practiced repeatedly, it creates a corporate culture. Therefore, cultural diagnosis must be implemented before a change in process can be effectively initiated. We examine individual’s core values as well as corporate culture, and evaluate the disparity or congruency of habits and patterns and compare them to core values. The disparity often reveals obstacles. Gentle change is a process that clarifies core values and then removes obstacles that lead to healthy team performance and organizational alignment.

Gentle change is the recognition that change is occurring invisibly all the time. The weather changes every day. The atmospheric pressure, humidity and temperature change many times per day. Our bodies change every minute. The evening news is different than the morning news. Change is a process that is occurring all the time. Change is natural, normal and is most often beneficial. All growth requires change. Most people are in favor of growth and progress but resist change. This is normal and predictable and most often is caused by lack of understanding, lack of trust or hidden fears of not feeling safe in the process of change.

So why is change misunderstood, resisted or avoided? Change within people requires recalibration of thoughts, habits, and patterns of life and work. Most people are in favor of progress but not always in favor of change. Why is this true? Change is difficult because there often is not clarity of what benefits change will provide. Change is challenging because change is resisted on multiple levels that create obstacles that prevent change. Change within groups of people requires new connections, a common language and a sense of belonging and meaning. Gentle change occurs in environments that have clear processes, deep trust, functional relationships and open communication. Most change does not occur instantly. Change is a process that occurs over time. Change is not an event because change requires the change of mindsets, habits and attitudes. Change is most difficult among groups of people. The larger the size of the group the slower the rate that changes will occur.

If change is an essential component of growth why is change resisted? All growth requires change yet people resist it. At times, people fear change, avoid it and sometimes fight it. Change redefines people’s habits and routines and often causes a different expectation for a new pattern of behavior. Changing patterns are often seen as an inconvenience. People do not want to be inconvenienced because time and energy are such precious commodities.

On a much deeper level, people interpret change as rejection and interpret change personally. People have difficulty in separating themselves from change that is needed. The emotional reaction can interpret change as personal condemnation. Human behavior is predictable and often takes the path of least resistance to maintain homeostasis. This is why sudden change is often met with a shock reaction at a more primal level. This reaction is much more visceral than intellectual and is much deeper on an emotional level than has been previously understood. Radical change or sudden change can cause fear. Gentle change allows people to have agency within the process of growth that is needed for progress to occur. Gentle change is a process that deals with the primal forces as well as the best practices of the change process.

Change is a fact of life, to live be changed. The question must be asked: How will you react? The question is not whether change will occur: it already has and even now is occurring as you are reading this sentence. The deeper issue is how you will respond to change?

A number of years ago, a fellow trainer and close friend asked me a thought-provoking question. He asked me how one of our many products was selling. My immediate reaction was to say sales were pretty good, but before the words came out of my mouth, I spent a few seconds in thought. When I finally did answer, my response was “Actually, sales aren’t very good on that product.”

Then he made a comment that threw me. He said, “Tom, you’re not focusing on selling that product, are you?” I was a bit taken back with his comment until I realized he was right. I wasn’t focusing on selling that product. His next comment was the eye-opener. He said “Tom, you sell what you focus on!”

That comment, “You sell what you focus on,” has rung in my ears ever since. The first 25 years I was in business I “focused” on presenting one-day seminars and our three-day Basic Business Boot Camps (now called Planning for Profit). The results? I was presenting several times a month, which was necessary to cover overhead and generate a reasonable profit.

As most of you know, two years ago Bill Kinnard purchased the business and the offices were moved to Green Bay, WI. When that happened, a huge percentage of my monthly fixed overhead disappeared. Now I am still working within the business, and plan to as long as I am able. However, with my overhead greatly reduced, the question I then found myself asking: “Ok Tom, your overhead is greatly reduced so what do you want to do for your remaining years in the business?”

I love teaching, and will continue to present seminars and the two-day Planning for Profit programs, but my true passion has been working with contractors one-on-one through our two-day, on-site Company Overview program. With the business sold, and my fixed overhead greatly reduced, my mindset changed and I began to focus on doing two-day Company Overviews. I started thinking of new ways to market the service. Ideas began to literally pop into my mind. When I wrote articles, the new twist was Company Overviews. As I presented at national conferences, I found myself thinking, “What needs to change about my presentation, and feedback sheets, to incorporate the overviews?” I started talking to distributors about companies that might need a bit of one-on-one help, and I am now regularly presenting free webinars for a number of national manufacturers and trade associations with the focus of creating some one-on-one work .

Bottom line, my focus changed and, as a result, 70-75% of my time is now spent doing one-on-one Company Overviews!

The question I want to pose to you is the same one that was asked of me. “What are you focused on?” That focus can take several forms. You might want to focus on one or two specific offerings like service and/or selling maintenance agreements. The focus might be internal. “How can we improve efficiency, reduce non-billable time, or do a better job of marketing?”

One of the things I have learned over the past 27 years is that there is a limit in terms of how many areas you can focus on. Trying to focus on too many areas has predictable results – you end up not doing a really great job on any area! The most profitable companies I have worked with over the years nearly always had one thing in common. They focused on doing one thing, and doing it better than anyone else. Some companies were totally service-oriented while others were nearly 100% commercial. I even worked with one company that was 100% new construction and, as many of you know, there is typically very little money to be made in the area of residential new construction. But, guess what? That company focused all their efforts on becoming very efficient at what they did from crew training to their bulk purchasing of materials. The end result was again predictable – they generated a substantial profit.

Our Labor Pricing software has a “what if” section. Take a look at the below report. Notice the results of the “what if” if the company focused on increasing their sales by 3% while decreasing fixed overhead costs by 2%. Those are NOT huge changes but notice the difference in bottom line profitability if those two goals were met. Wow……bottom line profit went from $69,260 (15%) to $84,482 (17.8%).

One last example of what changing your focus can do for your company. A little over a year ago I performed a two-day Company Overview for Assured Energy. The results of the computer modeling of the company, department-by-department, clearly showed that if they would shift their focus from doing several things to focusing on a couple really profitable opportunities, their profitability would substantially increase. I received the following email last week.

Tom,
I just wanted to drop a quick email and give you an update on our progress since you were out with us in the fall of 2013. When you came out and helped us filter through the information we saw where our highest profit margins really were. I decided to pursue those programs full force and examine all programs and opportunities with the same metrics.

2013- We grossed about $650,000 and lost about $70,000 when it was all done.
2014 – We grossed $1,350,000, expanded to a second location, expanded from 2 trucks to 6 trucks, and they are all paid for, and we made $235,000 at year’s end. Still don’t have buckets of money but I am not drowning in debt either!

Thanks again for the services you provide; it certainly helped us out in a big way.
Cal Pickup
Assured Energy Solutions

Notice his comment, they “decided to pursue…” which is another way of saying they began to focus on a couple of potentially really profitable areas. Wow, you can see the net result.

I want to challenge you to spend a bit of quality time alone, or with your management team, and evaluate what’s making money and what is not. Once you and/or your team fully understand which areas are the most profitable then “focus” on those areas. If you need some help evaluating your company, give us a call at 800-432-7963.

(Published with permission from Coolfront.)

As a service contractor, you have a general idea of your expenses, which includes items such as rent, wages, insurance, equipment, utilities, as well as many others. But have you considered what unapplied time does to your overhead?

Unapplied time is the number of hours your field staff is on the clock, but you can’t bill for their time. According to research by the Carrier Corporation, during a regular work day a field person is able to bill for about four hours of repairs, yet their company still has to pay them for a full eight hours. The rest of the time is commonly spent driving, picking up parts, and callbacks. Naturally, most companies offer paid time off and this must be added to unapplied time as well.

But you can’t bill customers for every hour of the day your tradespeople are on the job. After all, in order to keep a business running and professional there are tasks that must be done internally, such as meetings, cleaning the shop and washing the vans. So what should you do?

The key is that your unapplied time absolutely must be included in your hourly rate. For example, if you estimate that you must charge $70 per hour to make a 10% profit when you’re staff is on the job, you likely need to double that in order to turn that same profit for the entire day. Again, you pay your staff for eight hours but can only bill for roughly four.

But how can you push your labor rates up without getting blow back from your customers? The answer may be flat rate pricing. Since flat rate systems focus on total repair price instead of hourly rates, customers are less likely to push back on the prices.

I’m sure you’ve heard the statistics; about 90-95% of all trades companies are owned by individuals who used to be a technician working for someone else. What that does not mean is this: that every technician who starts their own company succeeds. Listen to these two scary facts. According to the government, 90% of all companies that start up this year will fail the very first year. Secondly, only one company out of 1,000 that starts this year will ever see its 20th birthday. Sobering numbers aren’t they?

Now, I am not trying to discourage anyone from starting their own company! But before you dive into entrepreneurship, you might want to consider the following.

Not Much Profit
The difference between what you are being paid, and what the company is charging, is NOT all profit. It costs a lot to run a company in terms of basic overhead, non-billable time and the costs of equipment. The average trades company owner actually only nets about 3-5% of gross sales. That is a lot of work for not a lot of money!

Consider the Business Side of the Business
The most profitable companies within the industry are run by owners who understand the “business side” of their business. If you don’t have a basic understanding of the business side of the business, you are likely to fail within 3 years. If you are serious about starting your own company I would strongly suggest you invest in some business training classes……before you start the company.

Cash on Hand
It takes a lot of cash to run a company, much less start one. Think about this. You decided to start a company, and you already have some contacts who will provide work for the first month or two. What money is going out, immediately? You will have to pay for gas to run your vehicle, and you will need insurance both of which will be up-front dollars. If you have a second tech, they will need to be paid (and don’t forget about payroll taxes, which MUST be paid within a specified time period!). You will probably have to purchase some parts up front and, unless a family member owns the distributorship, you will be on COD for at least a while. That requires cash! These are just a few basic things to think about. Now unless you are a shrewd business person, and have your collections policies in place when you perform your first job, you will probably not be paid immediately. Normally it will be 1-4 weeks before your first money rolls in … that is if you have carved time out of your busy schedule to invoice the customer! Start-up cash is critical and most start with none, so you are behind the eight ball right out the gate!

The Cost of Personal Relationships
Starting your own company will require long days, and lots of them. Typically you will work 40-60 hours in the field and another 20 a week doing paperwork. Count the cost. Do you love your wife? Do you want to spend time with your children? The cost, in terms of relationships, is high when it comes to starting your own company and the extra hours tend to NEVER go away. As a tech, your job is finished at the end of the day; your nights and weekends are your own. Also, you get paid each week, which is unlikely to happen as a new owner.

Now I could list at least a dozen more things to consider before starting your company, but this is just some food for thought. The bottom line is this: count the cost BEFORE you make the break. It’s kind of like buying a boat. Typically a boat owners two happiest days are they day they bought the boat and the day they sold it. That’s clean. Getting out of business, once you are in, is a lot more difficult.

By John Mathis

Benchmarking Outlines the Personal Talents Jobs Call For

How do we truly know if an employee is a “fit” for the position?

Typically, employers deem competent and suitable candidates fit for a position if their resume represents experience matching the technical skills the job calls for.

But there’s more to it. Let me explain a bit further.

Recently, I observed the manager of a chain restaurant assisting his staff clearing tables and checking on customers who had already received their meals. I could tell he had lots of enthusiasm while doing his work.

When he stopped by my table, I made a point to mention that I thought he did an excellent job keeping the place running smoothly. He thanked me and said with great gusto, “I love my job!”

Over the years, I have asked successful sales people, customer service representatives and managers, who go the extra mile, how they go about achieving the results they do.

To a person, their first response is always, “I don’t know.” But when I profiled them, I discovered they had the personal talents the job called for — and they received an emotional reward for doing it.

Most of them had not completed a behavioral profile before and were surprised with how accurate the report characterized them.

People who are a clear fit for a position carry out the duties and responsibilities of the job because they have that inherent desire and drive. They receive emotional rewards that build their self-esteem.

As their self-esteem increases, it becomes easier and natural for them to routinely discover more and more good things about their job and the company. They become the people who help fellow colleagues become better team players, if not directly then indirectly.

Job descriptions are key in determining what personal talents are needed for prospective employees to be successful. 

Sales people need personal talents for presenting, asking questions, listening and overcoming objections, all the while focusing on the end outcome. Managers need the personal talent for providing direction, follow up, holding people accountable and seeing the big picture.

However, the job benchmarking process is the ONE tool to truly determine if the candidate or incumbent has the personal talents to perform the job comfortably and with ease.

Most people can adapt if needed, but there is a price to pay for adapting.

In the end, the person who will be most comfortable performing the job goes about it with little fanfare and a desire to not only benefit their customers, but also drive performance and profits for the company.

If you would like more information on using these tools to increase your odds of finding the right person, visit our Team Solutions Page or email GeneHeacock@GrandyAssociates.com.