Posts Tagged ‘employee’

Help New Young Employees When They Make a Mistake

May 6, 2011

by Doug Smith, President, The Woodhaven Group, LLC

As a 30 year CEO, I truly believe that employees always want to do the right thing and not make a mistake.

I also remember as a young new employee many years ago that I believed I would be fired if I made a mistake of any kind.

Well, mistakes happen.

And they are probably going to happen more often with new young untested employees.  And, yes, these mistakes may have a short-term negative impact on your business cash flow.

If there are not some mistakes being made then the new employee is probably not learning and growing.  I don’t want an employee who is so afraid of making a mistake that they are unwilling to attempt anything new.  That is not how superstars in your company are developed.

Here are tips on working with new young employees that will benefit both them and your company:

  1. Make sure they clearly understand the job description of what they are to do.
  2. Give them solid initial and ongoing training in their scope of work.  Make sure there is plenty of time  for them to ask questions and follow-up questions.  Don’t just have them look at an online video and call that training.
  3. Make it clear they will be accountable for the results of their actions. Most top performers want to be held accountable.
  4. Assign someone to work closely with them.  Call this a mentor if you want.
  5. Proact by setting a time each week to let them ask questions regarding areas they do not understand or are having a problem with.  Don’t wait for the employee to come to you.
  6. When a mistake occurs ask them to go thru the steps or process and if they would do anything differently.
  7. Make sure they have victories to celebrate.  When there is a success let them get the credit.  That is part of being accountable.
  8. Add more responsibility as they earn it. Otherwise, what are victories for?
  9. Through all the steps make sure you listen to what the new young employee is actually saying and not what you may think they are saying. Read between the lines if  you have to.  
  10. When the new young employee becomes a success let them mentor their own new employee.

Retaining employees, reducing mistakes, and building teamwork will be obvious by happy customers, increased sales, and more cash flow to grow your business.

Now, go hire your next superstar.

Calculate Revenue Per Employee To Increase Productivity And Cash Flow

July 22, 2010

by Doug Smith, President, The Woodhaven Group

If your company is increasing productivity then chances are the cash flow  of your business is also improving.

That is a good thing.

But how do you know if the productivity of your business is showing improvement?

Is there a quick easy way for an owner or CEO to know if the efforts to improve productivity compared to other businesses is working?

Yes there is.  One quick metric that will give the owner a snapshot is Revenue per Employee.  It is simply total revenue or sales divided by the number of employees.  If your company can increase sales while staying at the same employee level then it tells you that  the combined efforts of all employees is having a positive impact on sales growth and probably on cash flow.

Industries differ in the Revenue per Employee calculation that is reported.  Software companies and oil companies can have a high Revenue per Employee while retailers may show a smaller Revenue per Employee.  J. Bryan Scott showed an interesting table right here of 100 companies and their Revenue per Employee totals.

For the owner, it is critical that you define what an employee is.  I have always liked to use full-time equivalents (FTE).  For example, 2 part-time 20 hour employees equal 1 full-time 40 hour employee.  I would define how many hours is a FTE and divide that into total hours  worked.  That is my number of employees.  I take the sales total and divide by the number of employees to get my Revenue per Employee.  Retailers are often a good example of why FTE needs to be used.  Some retailers choose to employ primarily part-time employees while others choose to employ primarily full-time.  Wal Mart probably has a low Revenue per Employee number if they don’t calculate using FTE.

The other caveat is to recognize when comparing to other companies that they may have a high percentage of their work done by outside contractors who are not employees.  As a result, the company will appear very productive because there would be a high Revenue per Employee reported.  I would imagine Microsoft and oil companies like BP or Shell that use a lot of outside contractors will have high Revenue per Employee calculations.  

When it is all said and done, the truest measurement of productivity using Revenue per Employee is to track the trend in your own company.  Is Revenue per Employee going up or down?  Take the best year of sales and profitability in the history of your company and use that year’s Revenue per Employee calculation as a baseline to compare to.  If I had a bad 2nd quarter, I would want to compare the Revenue per Employee back against that baseline year.  Then I would take action to get to my baseline for the next quarter.

If you have an industry association where everyone computes Revenue per Employee the same way, then that becomes a great way to measure how productive your company is.

As an annual goal for my company, I would always challenge my management team with an aggressive improvement in Revenue per Employee.  I know that if I hit the goal then I probably had a great year from a sales, profit and cash flow standpoint.

I would be interested to know if your company has had success using Revenue per Employee as a productivity calculation.

Will Telecommuting Increase Business Cash Flow ?

June 24, 2010

by Doug Smith, President, The Woodhaven Group

It seems like business owners and CEOs wake up everyday trying to find a new way to increase business cash flow, productivity and sales.

A tool being used more frequently these days to achieve those goals is telecommuting. 

Telecommuting is the process of an employee working somewhere other than at the office.  Usually this means the employee is working from home.  The increased utilization of the Internet has allowed this alternative workplace to become much more popular.  For many businesses it has turned out to be a win-win situation for both the employer and employee.  The telecommuting employee is typically referred to as a teleworker.

Is it something your company should be doing?

Most researchers and business consultants will advise you that it is the right thing for your company to do.

My answer to that question is that yes, teleworkers are going to become a larger percent of the workforce in the future and your company needs to include them as a part of your employee mix.  However, for the program to be successful, your management team must do their homework first or the concept could fail.  There are benefits and concerns that must be addressed.  Here are just a few of them:

Benefits:

  1. Improved Productivity:  There are university, corporate and government studies that show the teleworker operating out of their home is a more productive employee than the employee in the office.  Reasons often given are fewer interruptions, less stress, and a fresher employee ready to work due to not needing to deal with the issues of commuting  to the office. This may be true but, frankly, I am not sure how much more productive the employee working from home really is. There are distractions at home also.  Laureen Miles Brunelli had interesting comments on this subject in a 2009 blog post on About.com  You can read Laureen’s blog post here.
  2. Less Office  Space Needed:  This can be a real cash flow savings for the company.  Less space needs to be leased, no utility or phone cost, and office and workstations can be eliminated.  Those are all real measurable savings.
  3. Flex Time For the Employee:  A real benefit for the teleworker is the opportunity to utilize flextime in their day.  The day can be broken up allowing the teleworker to take time to address home and family issues and still get the job done.
  4. Can Reach High Quality Candidates:  I have seen individuals with advanced degrees who, due to family commitments, have to stay at home.  Yet they still want to realize their professional ambitions.  If they were required to come to an office this high quality candidate would be lost to the company.
  5. Can Utilize More Part Time Employees:  Depending upon the scope of work, the teleworker may not need to be a full-time employee.  For instance, two 20 hour part-time data entry workers might be the best solution for both the company and the stay at home employee.
  6. Opportunity To Employ Handicapped and Retired Workers:  There are some excellent handicapped workers and retirees who choose not to work in an office environment.  They become a real asset to the company working out of their home office.
  7. Improved Morale:  Studies have shown that teleworkers have  higher morale  than those in the office environment resulting in less turnover.  Not having to commute to and from work would be a morale booster by itself to many workers.
  8. Bad Weather Is a Nonissue:  No problem with snowstorms.  While the regular office may be closed for the day, the telecommuting employee carries on as if nothing happened.
  9. Geographic Location Is Not a Problem:  Working remotely allows the company to hire the best candidate regardless of where they reside.  I once hired a telecommuting employee from 600 miles away because she was the best candidate available.  Also, if the spouse is relocated to another city, your company’s teleworker can follow the spouse and continue on as if no move occurred.  

Concerns:

  1. Lack of Social Interaction:  This might be the biggest concern.  The teleworker operating from home does not participate in the “water cooler” conversations or have the opportunity to have a lively discussion at break time with others about the ball game on TV last night.  There must be a process in place to engage the work at home employee if they are the type that requires a lot of social interaction.  A behavioral analyses of the telecommuting candidate might be a good idea to use during the hiring process.
  2. Can the Worker Stay Focused:  Is the  teleworker self disciplined, organized and have the ability to manage their day?  If not, the productivity issue becomes a concern not a benefit.
  3. Is There Buyin From the Manager:  A work at home employee has to be managed differently than the one down the hall from the manager.  Goal setting with specific measurable results and deadlines is critical.  Managing to results is the way to make the teleworker accountable.
  4. Could There Be a Culture Problem:  Not all jobs are a good fit for the telecommuting program.  If there are employees in the office that perceive the teleworker as a slacker that does not pull their weight, then the productivity concern might shift to those employed in the office.
  5. Promotion May Not Be An Option:  If the employee wants to move quickly up in the organization, then working from home may not give them the opportunity to develop and show off their people management skills.  A manager career path training program might necessitate the employee only being in an office environment.
  6. Security Can Be a Problem:  If the teleworker has access to the company database and confidential documents, it is imperative that steps are in place to protect these valuable assets of the company.  A disgruntled employee working remotely can do serious damage.
  7. Are There Savings In Office Equipment:  If the company reimburses the teleworker for a computer, fax, printer and other office needs then how much savings were actually realized?  In some companies the teleworker uses their own home computer with no reimbursement.
  8. Overtime Can Be An Issue:  A happy productive at home employee can easily surpass 40 hours per week.  While managing to results is good, the company still must be in compliance with all labor laws.  This includes not only overtime but also making sure workmens compensation is paid. 

Incorporating telecommuting into your employee strategy can be a real source of additional business cash flow.

It is just important to do your due diligence to assure yourself that the program will be the success that you expect it to be.

Save Business Cash Flow With Smart Use Of Employee Overtime Hours

June 14, 2010

by Doug Smith, President, The Woodhaven Group

Consider this scenario.  Your company has had to operate through an extremely bad economy.  As owner or CEO, you were proactive  by reducing expenses to bring the breakeven of the company in line with reduced sales.  This reduction in expenses included eliminating employees.  Tough decisions to make but, looking back, it was obviously the right thing to do to maintain positive cash flow.

Does this sound familiar?  You are not alone.  A lot of good managers had to make the same type of decisions over the past 2 years.

Sales are now beginning to rebound and while progress is slow, it appears the worst days are behind the company.  Now the question becomes…… do you hire new employees to replace the ones you eliminated?

Here is what I have done after other economic downturns that required staff reductions.  Before hiring additional hourly workers or non-exempt employees do this instead.  Take the current employee group and give them overtime hours.  There are 6 benefits to doing this:

  1. It puts additional dollars in the paycheck of your key hourly or non-exempt employees.  They will appreciate the extra dollars coming their way.
  2. You will not have to spend valuable cash to recruit and interview replacements.
  3. There will be no new training cost since there will be no new hires at this time.
  4. There will be no added workmens compensation insurance nor employee benefit cost incurred without new employees.
  5. Most new hires make mistakes that costs the company cash during their ramp up period.  This potential expense is eliminated. 
  6. If the increased sales is not for real then you do not have to cut back employees again. 

Once you see the new sales increase is going to continue and overtime dollars grow, then it will be time to hire added staff. 

Until then you have saved cash, your company has survived, and there is a happy group of employees ready to grow the company into the future.

The Best Employee Reward?

May 8, 2010

by Doug Smith, President, The Woodhaven Group

Have you noticed how often the same individuals get all of the awards, bonuses and free trips in a company for a job well done.  I certainly do not fault them their recognition and rewards.  As a CEO I structured many of those incentives in order to get results I wanted to see.  It usually worked.  We got more profit, marketshare, and cash flow.  It was nice.

But over the years I also noticed and appreciated the efforts and indirect results that others in the company working behind the scenes accomplished.  It was hard to directly measure their individual contribution but I knew they were critical to our success.

We would recognize these individuals at some year-end dinner or event but it never seemed to be enough.

So I started doing this.

From time to time and totally unannounced I would bring a behind the scenes contributor into my office and say something like this, “I just wanted to personally thank you and tell you how much I appreciate what you do everyday.”  I would give an example of something they recently did and why it was important to the success of the company.  Then I would tell them as an added thank you the company would like them to take a day off with pay.  Sometimes I made it 2 days off with pay.  Often the day off (their choice) was taken on a Friday or Monday so the employee got a long weekend.

I found this accomplished a few important goals.  First, it recognized a key loyal employee and showed them they were appreciated.  Second, it showed that as a business we recognized there is a life outside of work.  Finally, I found that this key contributor came back even more energized and committed than before.

Does this contribute to increasing cash flow?  You bet it does!

Will you find this spelled out in some MBA course on employee development?  Probably not.

Oh, and one other thing.  I gave the employee a $100 to spend anyway they wanted on that day off.