Fundamental Management

Fundamental Management (5)

Tuesday, 11 October 2016 15:55

The 'Risk' of the Risk Register in the Boardroom

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The risk register is a great tool to help organisations identify, assess and mitigate risks. However for it to be an effective tool, it must be used and not just reviewed. It surprises us in our board support work how much good effort is put into creating risk registers and how little is delivered from them.

The most common mistakes we find in working with risk registers are:
  • reviewing the risks together as a topic, rather than reviewing risks as a part of critical agenda items
  • reviewing a huge number of risks, many of which are really remote and may never occur
  • not removing or lowering the priority of risks when mitigation plans have been implemented
  • adding a new project and then immediately placing a risk that the project may not be achieved
  • allowing risks to remain highly rated with no realistic mitigation
The role of board members is to seek assurance that the organisation has identified substantial risks, rated them effectively and has placed mitigation controls on the most likely with mitigation plan outlines for the less likely. A quick review of the risk register highlights and trends should provide this, together with an occasional deep dive into a specific risk.

The monthly review should focus on what risks were added, those that have escalated in priority, those that remain high risk without mitigation and those that are recommended for dropping from the register. Supporting documentation for these conditions should be provided to the board members to be read before the meeting. Board members should then ratify the register at the board meeting.

Let's look at these issues in a little more detail:
  • Reviewing the risks together as a topic. This occurs when the risk register becomes an agenda item on its own, disconnected from the critical issues on the board agenda. For example, if revenue is a problem, then risks associated with it should be reviewed at the same time as the income streams and forecasts are reviewed. If new projects are added, project risk should be reviewed with the project. The result of not doing this is that the board member loses the context within which the risk has been raised. It is not an effective use of the board members time.
  • Reviewing a huge number of risks. Overload is an obvious flaw in any management process. In a complex organisation there may be a large number of risks at any one time, however those that require board focus are limited to the most critical. We find that strong boards review many risks when there is no assurance that the management team has control of them. Otherwise the review of many risks takes focus away from the most critical. Again, this is not an effective use of board member time and indicates strengthening of management skill is necessary.
  • Not removing or lowering the priority of risks. Once a risk has been identified and rated as critical, then mitigation plans must be implemented by management. However once these plans are in place, the risk rating must have reduced by definition. The board can choose to maintain a list of critical risks that have mitigating plans in place, but this should be separate from the active register. Board members need to focus on risks that are changing.
  • Adding projects with risk of non achievement. This is a sign of management allowing imcomplete or poorly developed project plans being put in place. When a project is started, it should be assumed that risks have been identified and that mitigation activities are already built into the plan. There is always a risk that the market may move during a project plans duration and that a change becomes necessary, but this should be being managed by the project manager. The risk register should never be used to excuse poor performance or missed targets.
  • Allowing risks to remain highly rated. This is usually a sign of superficial problem solving. A common risk we see is that an IT system or a piece of equipment is becoming obsolete and there is no funding to replace it. Mitigating actions should include work arounds in the event the system or equipment fails, or other financial tradeoffs that could be made to fund replacement. Leaving the risk categorised high, with the assumption that nothing can be done but replace, does not give the board assurance that the organisational continuity is real.
The board members also have a role in contributing to the register. They represent the eyes and ears of the organisation outside and are often better placed to identify external risks than anyone else. Beyond that, there is always the risk that nobody sees coming until it hits. No matter how good the risk register, it will not help in that situation and management must be ready to adapt quickly to the new situation.

For a good discussion on four good practices to document risk, using an IT project example, see this article by Lokesh Aggarwal. The concepts remain applicable outside IT.

Also useful is this download from discussing the level of trust we can have with risk registers.

Risk registers are powerful tools and really assist board members get assurance that risk is being monitored and actively mitigated in an organisation, but like most tools, it must be used effectively.

We would like to hear your ideas on how to make risk registers more effective too. Please comment.
Sunday, 25 September 2016 19:19

Sales IS a Boardroom Issue

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Is Sales a Boardroom Issue? We always thought so and felt the question was self-evident. But this is apparently not the case as more and more small to medium enterprises (SMEs) we work with demonstrate a superficial understanding of the board members role in sales. There is also a surprising lack of published research on the topic, although we do list some references below. One excellent case study can be found here. Let me share our findings and then invite you to comment on this important issue.

When we ask businesses why they do not see sales as a boardroom issue, we get answers that broadly follow these three lines of reasoning:
  • sales is included in the financials and therefore needs no further emphasis
  • sales process is the role of the Head of Sales, not the board
  • we review product performance and it is an integral part of that review
Are these plausible reasons? There is validity in what is being said, but the question to look at from a governance perspective is: “Is this sufficient?”

We find that when the above reasoning is followed by a board, the coverage of sales becomes superficial and essentially a hands-off exercise. When we compare the amount of time and focus spent on sales against that spent on cost control, we see a ratio of 1:4 to 1:5. In other words, although sales is one of only two levers management can control directly for financial success, they spend much more time on the other lever – expenses - plus risk and administrative issues where a 1:3 ratio of sales : expenses and administration would be far more powerful.

SMEs that are performing well and growing exhibit certain boardroom traits that are quite straightforward and easily copied but too often it takes a change in management thinking, or a crisis, to get these traits adopted. Sales should not be a passive issue in the boardroom.

In SMEs that are performing well, members of both the executive and the non-executive directors ask for evidence and drill down into detail on the following ten questions:
  • what is the revenue plan (by product, region etc..)?
  • what assumptions were made to create the forecast?
  • how will the forecast be achieved?
  • what risks are inherent in the forecast and what mitigating action is being taken against the risks identified?
  • what is the average, high and low in time to sale?
  • what is the average, high and low in time to cash?
  • what is the sales efficiency – sale size, effort to sell, etc?
  • what is the rate of customer losses, complaints and refunds?
  • do we have the right skills and approach in our sales team?
  • are we projecting the right image in our sales and in our sales team?
In addition to asking for detailed answers to these questions, board members should be actively involved with key customers and key accounts. By doing this, they provide themselves assurance that the sales forecast is real, that therefore decisions on growth and investment are being taken on realistic business cases. Additionally they can be assured that they will be first to find growth among their competitors. This focus is supported by coaching and mentoring their key sales people and learning how the customer wants to buy. These help assure the sales process is designed to match and can be fine tuned when a change in customer needs is detected. See this excellent McKinsey piece on understanding the customer experience here.

Even the board structure is an indicator of the level of importance placed on sales. When the board contains at least one member who has been a salesperson on the road, not a former marketing director, then it is likely to have a much more nuanced understanding of the sales forecast and how the company can take advantage of small indicators when the buying patterns have changed.

In short, directors should engage with the people and the process of sales to assure themselves of the confidence level in the forecast, that the risks are truly being managed and not just relegated to another line on the risk register and that customers needs are truly being met.

Perhaps the fact that there is little published research on this topic means it should be self-evident but actual performance in the market indicates it is not common practice. Corporate governance standards have become more stringent in recent years so it is even more important than ever the board members assure themselves of the quality of the sales process.

In future posts we will look at behaviours that are essential for boards that have key account customers and consider some powerful questions for board members to ponder, and ask. Also, we will be looking at the impact of emerging big data and artificial intelligence capabilities and how the board can benefit from them.

Having dedicated a large part of our own careers to customer experience and top line sales, we believe emphatically that sales is a boardroom issue. We welcome your thoughts as to why so many SMEs don’t pay sales the in-depth, focused attention it deserves – the attention that can accelerate their growth and protect their business success long term.
If you've seen all the social media posts for executive or business coaching, you may have been interested but have hesitated - how do you know if you will find the right coach? If you are hesitant about getting started don't be. There are ways to be sure that you are doing the right thing.

First Consultation
Very few genuine coaches will not offer a free initial consultation to get started. Even if it's not offered, you should ask for one. You should use the initial consultation to find out three things:
  • can I work with this coach and will he/she respect me?
  • does this coach offer me the support that I need?
  • do I have enough of a burning ambition to benefit from coaching?
You can see from these questions that the initial consultation is as much for the coach as it is for you. Coaching requires a productive relationship to form and this does not happen over a single telephone call or meeting. During the first consulation, you can establish the type of coaching you need - executive, SME business, strategy, projects, work-life balance, burnout, personal development, career, etc. If you find the coach does offer what you need, then determine if you feel you can get on with them on a personal level. Rememebr the coach will challenge you to make change and do better. Those discussions are not always easy. Will this coach challenge you but with empathy, an intent to build, an intent to inspire or will they not treat you with respect?

Once you believe you have a match with this coach, now work out the logistics to facilitate a prodcutive working relationship. This is where you need to ask:
  • do you need in-person or telephone/virtual coaching?
  • does the coach have the time required to deliver to your needs?
  • can the coach accomodate your schedule?
  • does the coach have backup to cover absences?
  • are there any supporting materials or web based facilities you can use?
  • can the coach provide references?
  • does the coach guarantee privacy and confidentiality?
When getting the answers to these questions, here are some things to consider.
  • You may feel that in-person coaching is essential for you. Many coaches will offer both in-person and virtual coaching but it depends upon what you need to get out of the sessions. In-person coaching is more expensive, but you may feel it is worthwhile for you.
  • If you have a 60 minute coaching session, you can assume your coach will need 30 minutes to prepare. If it sounds like they would find it tough to fit you in, that might be a marker of trouble. Superficial coaching is the last thing you need.
  • Some of the people most in need and most committed to coaching are people who are unable to meet (in-person or phone) during the day, or they work at night and need to rest during the day. A coach who is genuinely interested in helping people from all walks of life will offer hours outside the normal Mo-Fr 9-5.
  • A personal relationship develops between you and your coach, but what happens if your coach is away for holiday or due to sickness? You may be able to wait, or the coach may be able to give you some self-reflection exercises. However if they are backed by a team that can stand in quite admirably, then that should give you some comfort.
  • The coach is there to challenge you, to listen to your ideas and to inspire, motivate and guide you. However the coach does not give you answers. They may teach you a few techniques or tools to use, but only you can make the decisions necessary for your own future. Does the coach provide any tools, assessments or other materials that you can use in your own time to continue your development journey? If they do, this may be the coach for you.
  • Coaching is confidential, so it can be difficult for coaches to provide references. Usually, prior clients have left endorsements or have written comments that the coach can use. Coaching lasts from two to twelve months so with frequent new clients, past clients might get annoyed if bombarded with reference requests. See if the coach has published enorsements and ask for others if you are not sure.
  • Coaches are not required to guarantee confidentiality, as might a psychologist or doctor for example. However, professional coaches will never divulge any of your conversations with others. Make sure they have this written in the coaching agreement. There is one caveat to this - if the coach believes you might be at risk of self-harm or of harming others, they will report that to the appropriate authorities.
First Full Consultation
Now you are where the business starts. In this consultation, you need to be absolutely sure you can work with this coach. The basics were covered in the initial consultation, but you were not really challenged at this point. Be ready to ask at least one tough question of your coach and see how they respond. Are they encouraging, inspiring, glad you asked or do they treat you with disdain, indifference or gloss over the issue superficially. If you are not sure by the end of the first full session, you would be perfectly justified to stop and find another coach. You might not want to go through another initial consultation, but it would be worth it to get the right coach.

Subsequent Consultations
The consultations will continue as long as you feel there is a need. Coaching relationships, when effective, come to natural conclusions. You're back on your own to accomplish more. In the future, a new challenge may bring you back for more, or different coaching. It's an iterative process.

Don't be shy to end the coaching. It needs to last as long as you feel it is necessary and no longer. Of course a coach can always develop you more, but if your original objectives are satisfied, then stop. A good coach will accept and suport your decision.

We are offering a limited time reduction in our first full consulatations to encourage those who are hesitant to give coaching a real try. To obtain this offer, follow this link.

Sunday, 10 April 2016 12:17

Underappreciated at Work

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Feeling under or unappreciated is a major epidemic in work places today, regardless if it's in a corporate setting, government office, healthcare or community group, yet staff who feel appreciated consistently deliver better results. What may seem surprising is that even in organisations with high staff satisfaction, the feeling on not being appreciated can still be high. Why? It relates to the level at which individual staff members feel they are connected to the overall objectives.

Appreciation works best when it's local, one-on-one or handled in small groups and it's the little things that matter most. But does this mean appreciation is limited then only to small companies or groups? Certainly not. Taking five minutes to explain to someone how a change they make could contribute to the overall objectives is sometimes all it takes.

Staff report feeling underappreciated far too frequently. In recent polls, 40% of British staff said so, 38% of US staff blamed their lack of engagement on being underappreciated and globally, that figure soars to a frightening 80% in some countries.

No matter how routine a job is, there are opportunities to show the person performing it that they are appreciated. The ideal appreciation is received from happy customers, but there is a personal, internal driven need in us to belong to something bigger than ourselves, and when we work towards that it creates an expectation of having our efforts appreciated within the group too. This is why knowing their part in the big scheme of things is essential.

Managers View
Here are some things that great bosses do to show appreciation to their staff:
  • remember their names (you'd be horrified by how many times we come across managers who don't know their staff's names)
  • make sure that every staff member understands, in detail, their part in making the overall objectives happen
  • find a reason to thank each person for the job they do, not programmatically but as a habit so that everyone gets recognised from time to time
  • write 'thank you' notes and leave them on people's desks or wherever they will see them; simple, quick and heartfelt works wonders
  • ask your staff members opinions and let them follow up on their ideas
  • make sure your staff are in the right roles so they can succeed; otherwise praise can be taken cynically
  • point out something special they did and let them know it was appreciated
  • work collaboratively with your staff and allow them to contribute
  • share your goals and passions with them and ask them to share theirs
  • find out what each indivudal likes in terms of recognition to show you are genuine and that you care about them feeling appreciated
Appreciating staff can be the simplest and most effective method of keeping morale high and staff engaged. If you join a team that has been under appreciated for some time you will have your work cut out to bring them round, but they will break through. Start as you mean to continue and never stop.

Sharing ideas, goals and passions with staff helps you connect personally. The topic should be business related, but the sharing should be personal. Staff will respond and even the most jaded teams can come around. Make sure you don't stop appreciating them when they do come around too.

Make recognising your staff an honest, open, daily event as natural as brushing your teeth in the morning. It will pay great dividends in engagement and performance.

Staff View
If staff members feel they are unappreciated or underappreciated they need to ask some hard questions of themselves because their performance will deteriorate and their reputations may go down shortly afterwards. Key questions and issues for staff are:
  • being open with the boss and saying you don't feel appreciated can open your eyes to your boss' attitude; you may get nonchalance, surprise, regret or even defensiveness
  • ask yourself if the boss really cares; are you seeing lip service, compliance, begrudging recognition or do you see vibrant, caring, relevant and uplifting recognition
  • don't equate recognition with pay, you should be treated with respect at whatever pay grade you're on and recognition can never always be about money or pay increases
  • if you find yourself with a boss who does not want to, or cannot bring themsleves to recognise - move to another group or even another organisation - you're worth more
  • make sure your boss knows the way you like to be recognised and don't be shy asking for it
Staff respond to recognition when it's spontaneous, relevant to what is happening at the time, genuine and freely given. If recognition is always followed by a special request it soon loses its' meaning. It is always a stand-alone activity. Staff members cannot make a boss appreciate them, but they can share their thoughts and ask the boss to consider alternative approaches.

For a FREE and confidential coaching session if you are a manager or a staff member who is concerned about appreciating staff more effectively:

I had the good fortune to attend one of the best training courses in service I’ve ever had. It was called real life experience and my attempts to document items of note over the summer have led to some fascinating discoveries.

Using the techniques I have seen so beautifully executed, some of the service encounters I’ve had were legendary. They were a real lesson for anybody interested in delivering that exceptional level of service we all hope to receive.

I will give you my top ten list, and then elaborate on some of the finer points of service quality. The list is in no particular order of importance, after all every service encounter is important, isn’t it?
  • Never look the customer in the eye
  • Avoid customers who look like they may need help
  • Make the customer thank you before ending the transaction
  • Find more important things to do when the customer comes near
  • Express exasperation at customers stupidity and ignorance
  • Never tell the customer more than they need at that moment
  • Avoid answering the phone so you can do more important things
  • Never let a customer interaction interrupt your personal calls and texts
  • Quote policy and stand your ground
  • Make it clear the customer has no choice but to deal with you
Not the list you thought it would be? That’s a shame, but although the staff involved in these exemplary situations clearly had no worries about delivering them, somewhere there were a lot of managers and business owners who allowed this to happen. That’s the real shame of it, especially if they don’t even know.

However, all these examples have given me ample fodder for service training. While most service training tends to be positive, and rightly too, sometimes making an example of what is not acceptable is specific and more effective for some staff. At least they’ll know its poor service. After all, how do we get youngsters interested in the dangers of drink driving? We show them a vehicle that was destroyed in an accident.

In some respects I’m glad summer is over now. I feel sure winter will yield a much warmer and caring service. Otherwise I’m thinking of never buying anything ever again, except the essentials.

It’s really not that hard, for staff or most importantly for managers. We teach that customers only want to have their need met and to feel good about the transaction. That’s it! Simple, stunningly simple.

So let’s look in a little deeper as to what nuggets we can use to design better service experiences.
  • Never look the customer in the eye.
    Looking someone in the eye means you care, regardless of how simple or quick the interaction. It is best to look at customers’ feet, bag, clothing or even their hair, but just avoid those eyes. Try to look like you are thinking great thoughts and really don’t have time for the mundane needs of the customer before you. A particularly excellent example occurred in supermarket where, on checking out with over 100 items, the cashier was able to do the entire transaction, including running the debit card and saying ‘thank you’ without looking at me throughout. Amazing coordination and tenacity there, in fact I’m not sure that I could even do that. The prime rule – never engage in conversation otherwise the customer may enjoy it, come back and disturb you again.

  • Avoid customers who look like they may need help.
    You’re at work so its right to look busy. If a customer is loitering or looking lost make sure you look very busy and make it quite clear that you are not to be interrupted. Under no circumstances ask if they need help because that just invites problems that may have to be solved. Move out of the way if you can, preferably to an area just out of sight and certainly out of earshot. Was that the customer who said something? No problem, you can never hear properly while you are walking away so you’re covered. If the customer does find you and pester you, pretend you didn’t hear the first time (you’re working on something important right). After all, if the customer really wants help they’ll ask again.

  • Make the customer thank you before ending the transaction.
    You know, all these customers have nothing better to do than walk around looking to buy something or to get something serviced, but you have given up your valuable time to go to work. Make sure the customer thanks you before you end a transaction in fair recognition of your sacrifice. Hold the receipt a little longer and wait, most especially if a tip is expected. If there is still no response from the customer, this might be a time to break rule 1 and look them sternly in the eye with an expectant glare so they quite firmly get the idea you’re waiting on them for something.

  • Find more important things to do when the customer comes near.
    There is a queue for service and there are two people serving customers. The queue is taking about 5 minutes to get through. There is one other cash register not in use. A perfect time to straighten the boxes on the table behind, replace loose items back on the shelves or racks just in case other customers need them – after all these in the queue have already stopped shopping so let them wait.

    In one marvellous case, a customer asked a bus driver if his was the number 81 bus. The driver said he didn’t know and started plugging away at the controls on the bus. Two minutes later the electronic display on the bus beamed ‘81’. When asked why he could not have said it was going to be the 81, the driver simply said he didn’t know back then. Of course, don’t waste effort. Why answer the customers question when the bus makes it owns decisions on where it’s going. Clearly this was totally out of his hands, wasn’t it?

  • Express exasperation at customers stupidity and ignorance.
    Sometimes customers are just unbelievable. You gave them terms and conditions in 37 pages of small print and they didn’t memorise them, or perhaps even read them? Also, the product or service you are giving is so simple even a child could work it out. Didn’t they read the instructions and see the diagrams that required a contortionist to assemble the finished unit? Make sure you show the customer while clearly pointing out that you can’t believe their level of stupidity and lack of coordination. If you can actually say ‘it’s so simple’ or ‘this is child’s play’ while helping them it adds to the effect. If the item now no longer works, make absolutely sure the customer knows it was their fault and in the slight chance that you’ll be able to remedy the situation, they should be very grateful for the effort you will have to go through to help them out.

  • Never tell the customer more than they need at that moment.
    Many transactions are quite complicated and take several steps to complete, sometimes over several days. A bank transfer or an online order for example. These processes are far too complicated for mere customers to understand so rather than set a real expectation, tell them that it will take two days. Don’t tell them it will take two days to process, three days to send, one day for delivery and the confirmation will come the following week. If they get worried, they will call a different customer service number anyway and you won’t have to deal with it.

    When announcing a delay of a flight, the gate staff said the inbound aircraft had landed and that the flight would depart in 25 minutes from now. Never mind the aircraft takes 10 minutes to come to the gate, 10 minutes to disembark passengers, 10 minutes to clean and 30 minutes to load the assembled throng around you. But the electronic board said 25 minutes so better not contradict that. Then, 25 minutes later, a further 25 minute delay was announced – who knew?

  • Avoid answering the phone so you can do more important things.
    How can customers have the nerve? They can’t even be bothered to leave home and they’re pestering you. If you answer the call, you may have to go and find something they want and that’s the customers’ job not yours. Oh, they’re calling because your website doesn’t list your opening hours - well the hours are about the same as other places so can’t they just take a shot? If you had the time you’d notify the web team to fix that, but they sometimes act like customers too with difficult questions like “which web page?” Or is the information there on the page but just too small to see without an electron microscope? Better to leave it be and cause all that fuss. One way to show nearby customers you care is by letting them see you ignoring the phone so you can stay at your station in case someone comes with a question. However if they do come closer, quickly pick up the phone as it will probably take less overall effort in the end.

  • Never let a customer interaction interrupt your personal calls and texts.
    You have a life. Your friends and family have a life too. Now that you can communicate 24x7x365.25 you must have your devices set to see what’s going on. See if you can keep reading and responding while helping the customer before you. Great, you’ve given them a form to fill out, perfect time to catch up on a Tweet or a text, rather than fill it out or to help them answer the questions. Hopefully they won’t have any silly questions about the form. If it’s close to closing time, remind the customer of that fact, twice, so you have time to text forty-eight of your closest friends and let them know you’ll soon be out, especially as you leave at exactly the same time every single day.

  • Quote policy and stand your ground.
    So, the customer had 72 hours to return an item if it was defective and here they are in front of you. The serious problem is that its 72 hours and 5 minutes after purchase – you checked the microscopic date on the receipt to make sure of it. What to do? First call a supervisor who is somewhere hidden and ask. No luck, try a manager? Easy for them to say no when they’re not facing the customer. So tell the customer that you are really sorry but the terms are 72 hours and they are clearly over the limit – almost 15 minutes over by now. What, there was traffic that delayed them coming in? Tell them they clearly should have allowed more time for the journey to make sure they met your terms. Whatever happens, quote the policy, stand your ground thus establishing that the customer is 100% responsible for the problem.

  • Make it clear the customer has no choice but to deal with you.
    This service aspect was hard to fathom at first, but I persevered and I finally got it. Of course the customer has to deal with you no matter how you treat them. They don’t really have a choice do they? Of course they do you think, but who really puts something down and goes elsewhere to get the same item? The time, the hassle of parking or taking another bus, sifting through piles of merchandise seemingly placed to hide that one item you’re really looking for. Who has the time for that? So the service provider really wins. Rarely will the customer actually go elsewhere. But rarely will they ever come back?
If you need to give staff an enjoyable experience while learning amazing, simple techniques to turn customers into raving fans.