As with nearly any new process, managing vendors well starts with being very clear about WHY you have hired a vendor, WHAT you expect them to deliver, and HOW you expect them to work on your behalf. Let’s look at each factor.

WHY

You must start with the why—why have you hired a vendor? Very often, cost savings are a primary driver of the deal, but there can be other reasons:

• Capability—the vendor has expertise your company does not have and does not want to acquire
• Quality—the vendor may be able to deliver a service more effectively or to a higher standard than your company could do in-house
• Scope—your company may need services or materials in multiple locations or on a timeline that you cannot achieve in-house
• Strategic reasons—your company may be using a vendor to gain an advantage in some way beyond a direct, tactical benefit

The why of the relationship should be very clear to both parties, and where necessary, codified in the contract

What

Next, you need to consider the what—what services or materials will they deliver, when (including timeliness of delivery), how often, and to what quality level? The answers to these questions must be in the contract and form the basis of Key Performance Indicators (KPIs) and/or Critical Performance Indicators (CPIs). 

• The difference between the two is that a miss on a CPI might be grounds for ending the contract, while a miss on a KPI might only attract financial penalties or a need to make the recipient whole.

How

The next consideration is how you expect the contractor to work. This is particularly important if their role is customer-facing in any way, but it can also be important if the vendor interacts with your company employees. The How could include things like

• Materials or supplies that must be used
• Techniques for delivery that must be used, or techniques that may NOT be used.
• Adherence to company cultures, standards, codes of conduct, regulatory requirements, or other expectations

These Hows must also be captured in the contract, along with agreed metrics for measuring them and designation as KPIs or CPIs if applicable.

Other items that must be captured in the contract include a framework for managing the relationship:

• Who will meet to discuss and resolve conflicts or disagreements?
• How often should they meet?
• How will changes to the contract be managed (when the contract is for more than a one-off engagement)?
• How will failures to meet contractual terms be resolved?
• When the contract ends, who will do what by when?
• For what reasons can the contract be terminated early?
• If that happens, what are the responsibilities of each party?

Risk

A last consideration for managing vendors is the element of risk—how will your company manage the risk that using vendors brings?

• How will you know if they are doing or not doing something that will create risk for your company?
• If the vendor does something wrong or fails to do something right, who is responsible to do what? What penalties will the vendor bear? What restitution are they required to make?
• What level of control does your company have over the vendor company, and what legal or regulatory obligations must the vendor bear on your behalf?

As you can see, managing vendors well is not optional, nor should is it something that can be “dealt with later”. If you need help managing your vendors, contact me at 646-736-9006 or at jeff-dot-hosken-at-jirehenterprises-dot-solutions.

The post Managing People Well–Vendors and vendor risk management first appeared on Jireh Enterprises.

I’d like to cover these first, as they are more straightforward. A raise is an increase in an employee’s pay without a corresponding increase in their responsibilities or level in the organization. Good looks like this:

• The employee and manager mutually understand the purpose of a raise, e.g.,
  • Is a raise meant to keep the employee whole in the face of inflation?
  • Is a raise meant to retain the employee in a competitive job market?
  • Is the raise meant to reflect an employee’s increased productivity due to training, accumulated experience, or some other factor?
• The employee and manager mutually understand when raises will happen
  • This should be written in the employee handbook, is driven primarily by the needs of the company, and is not usually open for negotiation
• The employee and manager mutually understand how the amount of a raise will be determined. Examples:
  • Cost of living raises will be based on the US CPI index
  • Competitive job market raises will be based on independent survey data re: pay (shared with the employee for transparency) and on performance evaluations
  • Increased productivity pay will be based partly on the employee’s performance, measured by performance evaluations, and partly on company performance. The split should be company policy and will likely vary as an employee’s level in the org chart changes.

Promotions

A promotion is an increase in job responsibilities that may be accompanied by a change in title and should include an increase in pay. In contrast to general employee management, promotions should be done systematically. Exceptions should happen rarely and with abundant, transparent justification—this reduces perceptions of favoritism or any other -ism affecting the decision(s). A good system includes these elements:

• Clear criteria for eligibility 
• Clear, agreed expectations about when promotions will happen
• Clear, objective selection criteria, focused on job performance
  • Do not include “potential” as a criterion, because
    •  Potential is a subjective assessment and humans are notoriously bad at judging it 
    • If you doubt this, consider that NFL scouts are explicitly paid to assess “potential” and usually have decades of experience to back up their judgments. Then consider that Tom Brady was picked dead last in his draft. Are you better at assessing “potential” than the professionals who passed on the greatest quarterback of all time?
• Transparency about who will be involved in the decision and who the final decision-maker is
• Transparency to every candidate on how they scored on the stated criteria

The post Managing People Well–Raises and Promotions first appeared on Jireh Enterprises.

As the above illustration shows, however, there ARE things we can control IF we choose to. As Steven Covey said, the number one thing we can control is ourselves. He pointed out that “responsibility” can be broken down into “response-ability”, i.e., the ability to choose our response to a stimulus. As business owners, we are “response-able” for how our business runs and how we respond to events impacting our business.  Let’s look again at the five categories of “stuckness” and how we can respond when we find ourselves in one or more.

Chaos

At Dictionary.com, the antonyms to chaos include calm, harmony, order, and most importantly, system. Because these describe how to overcome chaos, let’s briefly look at each.

• Calm starts within you—your team and even your customers will rarely be calmer than you. Calm comes from a belief that you and your team are able to meet any challenge. As a fighter pilot, I learned very quickly that my response to a problem was never improved by panic! Instead, take a deep breath, figuratively and literally, and realize that a solution to every problem exists.
• Harmony and order go together, though they are not synonymous. Creating order is a necessary but not sufficient step to overcoming chaos; creating order such that parts integrate seamlessly with each other and work flows smoothly between them leads to harmony.
• The bottom line for overcoming chaos is that you need to have systems in place—orderly, repeatable methods that enable you and your team to process work smoothly and efficiently yet also recover quickly from unforeseen events. 
• Libraries are full of books telling entrepreneurs how to them run their businesses well; one I like is the Entrepreneurial Operating System, EOS™, as described in the book Traction by Gino Wickman.

People problems

Finding great employees is a challenge for all companies. Managing them well is also a challenge. My recommendations align with the EOS system:

• Hire the right people—this means hiring people who 1) share your company’s core values, 2) have the experience and knowledge to do the job, and 3) will naturally work in the way you need them to work
• Put them in the right seats—this means you need to know 1) what roles you need in the organization, 2) what types of training, experience, or knowledge are needed to do each job, and 3) how you need the person in that role to function.
• Managing people well comes from being clear on what you expect them to deliver and then providing regular, honest feedback to them on how they are doing against expectations.
  • Regular means formal performance assessments should be done at least semi-annually; quarterly or even monthly is better, with weekly touchpoints with each employee

Revenue and profit

For some businesses, the path to increased revenue and profits is clear, but for most it requires an ongoing stream of decisions. Thus, increasing revenue and profits comes down to making good decisions, and making good decisions comes down to three things:

• Using data, instead of anecdotes, emotions, and assumptions
  • This means you need a system to identify, collect, analyze, and distribute the data
  • It also means you need to ensure your decision-makers are using it to make decisions—this ties into the performance feedback framework described above
• Focusing on the most important decisions, the ones that will really move the needle
  • It’s seductively easy to put too much time and energy into making small decisions that don’t really matter, leaving you without enough time and energy to make the big calls
  • Avoid this pitfall by regularly asking yourself, “What is the top thing that is keeping me from making more money?
  • Focusing on the top problem each day will ensure you focus on making the important decisions that day
• Ensuring decisions are made at the lowest possible level, with the right level of oversight
  • Set the expectation first with yourself and then with your employees that decisions should be made by the person (never a committee) that is closest to the problem and has the resources to solve it—this person is called the RP (responsible person)
  • The management level directly above should be responsible for reviewing decisions over time and where necessary, improving the decision-making ability of the RP

Growth

Reversing a decline in revenue & profits and/or growing them requires first that the above problems are solved. If you still cannot grow as quickly as you want, you likely need to address one of two things:

• A failure to solve problems effectively. Unsolved problems, aka issues, drain time, focus, and energy. To solve problems effectively, you need two things:
  • An issues list that is shared within the leadership team and as appropriate, with the entire company. 
    • Issues should be listed at the company level (strategic and quarterly time frames) and at appropriate sub-levels (monthly and weekly time frames)
    • Issues must be prioritized and addressed in order
  • A way to identify the real/specific problem(s), find the root cause of each, and create an effective solution
• Can you acquire all or part of another company to fill your biggest need?
  • Examples: if you need market share, buy a competitor; if you need increased profit margins, buy a supplier or someone to whom you are a supplier

Frustration

If you have done all of the above yet are still frustrated, it is likely because you lack day-to-day traction, in the words of Gino Wickman. Traction boils down to two things: accountability and execution

• Accountability requires each employee to have a short list of specific, measurable, and attainable things they will do over the next 90 days, called Rocks.
  • A list of everyone’s Rocks should be shared with the entire organization.
  • A short list is a focused list.
    • The company as a whole should have 3-7 Rocks
    • Senior leaders should have 3-7 Rocks
    • A line employee should have 1-3 Rocks
    • Sharing the Rock list will inherently create accountability, as everyone knows who is responsible to accomplish what.
• Execution requires that the company holds quarterly and weekly meetings to create accountability. Both meetings have a common structure:
  • Segue
  • Review key data on “Scorecard”
  • Review Rocks—done or not done
  • Review To-Do list—done or not done
  • Address issues
  • Conclusion

If you are stuck, I hope that these ideas help you to become un-stuck. If you want to learn more or think you need help to put them into action, I am here to help you! You can contact me by phone or text at +1-646-736-9006 or by email at jeff828hosken@pm.me. If you do not need my help right now, please read my next few posts where I will dig into what it means to manage people well!

The post How to regain control of your business first appeared on Jireh Enterprises.

Being “stuck” as a business owner can mean a variety of things since the specifics of each owner’s situation are different. While acknowledging that truth, I suggest that we can divide “stuck-ness” into five categories:

Chaos

Dictionary.com defines chaos as a state of confusion or disorder or as a lack of organization or order. As an owner, you may feel that your life is out of control. It could be a lack of control over your time, or feeling buffeted by the market, or not having enough control over what is happening inside your company. If your time is consumed resolving crisis after crisis, you might be stuck in chaos.

People problems

While often by “people” we mean “employees”, people problems also encompass customers, vendors, and/or partners. It may be that employees don’t share your vision for the company, or they all seem to be going in different directions with different priorities. Customers can seem too demanding, or worse yet, apathetic; vendors fail to follow through on their commitments to you. If you are frustrated by the people you work with or for, you likely suffer from people problems.

Revenue and profit

For many owners, there is not enough of one or the other, or perhaps both. If this is what stuck means to you, you are probably unsure what the problem is and therefore what to do about it.

Growth

You seem to have hit some sort of ceiling on growth—new customers are hard to find, or your company seems to be unable to scale in order to deliver at a higher level. You may know that you need to grow, but are unsure how to do it or what strategy to implement—is geographic expansion your next step, or broadening the kinds of products/service you offer, or something else? This category also includes negative growth—your sales and profitability are not only stagnant, they are headed in the wrong direction.

Frustration

You are not at a loss for new ideas, but none of them seem to work. You have tried new strategies or the latest business initiative, but all you have to show for your efforts is a worn-out, jaded, even cynical staff. You are working as hard as you can, but you are metaphorically spinning your wheels and going nowhere.

If you suffer from one or more of the above categories, you are stuck. Recognizing  and admitting this is the first step to becoming un-stuck. If you are stuck, let me help you! You can contact me by phone or text at +1-646-736-9006 or by email at jeff828hosken@pm.me. If getting help is not a good fit for you right now, please read my next post to learn how to regain control of your business!

The post Are you stuck? first appeared on Jireh Enterprises.