Start Planning Now for 2014

The Patient Protection and Affordable Care Act (PPACA) has generated many questions from our industry members. I wanted to share some examples of these great questions and use them to explain why advanced prepping for 2014 and beyond is necessary. 

Employers who intend to keep offering health coverage for their employees have asked (or thought about) these issues:
• Why offer health coverage if I don’t have to and will those reasons change? (i.e. recruitment, retention, productivity, etc.)
• Will my competition discontinue their coverage?
• Should I do something different than for a competitive advantage?
• If I drop my plan will the employees request additional compensation?
• Will the tax break offset the additional expense we’ve heard is coming?
• Will the exchanges even be ready by 2014?
• Will my employees be better off in the exchange and with the premium tax credit?
• How important is the health benefit to the compensation package?

Members who choose to continue offering coverage going forward have asked:
• Does it make sense to enroll in a small business health option program (SHOP) exchange?
• If I enroll in the SHOP exchange, can I amend my Section 125 plan to allow for pre-tax payment of the SHOP premiums?
• If I keep my existing plan can I modify the plan design?
• How will I budget for the additional expenses we expect for 2014?
• Will it require additional staff for reporting and processing?
• What about staffing for inquiries about the plan design or exchange?

Members who decide not to continue offering coverage have asked:
• What are others doing about the requests for additional compensation? Will everyone simply gross up the base salary? How, and when, will we know for sure what tax considerations the exchange plan will provide us?
• When can we do a plan design change to prepare for 2014?
• What employment numbers will they use? This year or next?
• Is the SHOP exchange open to all employees, regardless of hours?
• How, and when, should I communicate to our employees that we intend to discontinue our existing program?
• Will this decision overwhelm our existing HR staff?

As you can see, more questions than answers have been generated from concerned businesses about the future of health coverage. The number of employees (49) seems to be a deciding factor and the tipping point for making the decision. It also seems to hinge upon the owners belief that providing health coverage is a core benefit of the company, and one that is done to attract and retain employees.

I want to share these questions to get you thinking about this now and not wait until your 30 days from your renewal date. This isn’t a typical year and you need to think about what you’re going to do… now. We are here to help with this. NSCA can help you network with others and get you pointed in the right direction. Leave your comments below with more questions you have in preparation for 2014. Be on the lookout for more webinars and information from NSCA to help you prepare. – CW

Serving up KPI’s and Stretch Goals

One of the industry’s legendary sales managers, whom I’ve known for years, called me a few months ago with an interesting story. He was telling me about his new 35 year-old boss who had just given him something called a KPI and asked for his initial thoughts and 10 matching stretch goals. In a quiet voice he asked me, “what is a KPI?”

I’d guess that this guy is in his early 60’s and has been in the industry his entire adult life. In January he decided to resign his management position and get back to what he really loves – selling. He felt it was a great way to keep a steady income, but without the stress of managing people. Like so many great salesmen, he is good with people, but not as good at managing people. He is a relater, but not a persuader. He thought this was the perfect wind-down position as he nears retirement. What he didn’t anticipate was a 35 year-old with an MBA telling him to create stretch goals. I know the owner of this company as well – and here’s the situation…

The owner knew this move would leave a void in sales management and accountability, so he hired a young business professional from a totally unrelated industry, gave him the authority to run the sales team anyway he saw fit and off he went. The first thing the new manager did was create key performance indicators (KPI’s). They include a number of direct sales calls, proposals, close ratios, sales funnel metrics, etc. With the KPI’s in place – so far so good.

The next step for the new sales manager was establishing, and then presenting the sales goals and developing a forecasting method. In an effort to be inclusive, he felt it best to let the experienced sales person have some input. His only request was for them to be stretch goals, meaning to work harder and smarter and be more productive than ever before. That was a well-planned approach as my friend had already prepared to sandbag (a slang term used for intentionally underestimating sales to keep quotas low). The new manager was smart enough to anticipate this when he asked for a stretch.

Here’s where the problem came in. My old friend just wants to slow down, take life easy, be home every night and enjoy this phase of his career. The younger guy had a different plan. The new manager wanted to implement the techniques and methods he learned in college and use these skills, his energy and enthusiasm to exceed his goals. See where this is headed? You guessed it, right to the owners’ office.

The first thing my friend told the owner is, “If I wanted to work this hard I would have kept my old job.” The new manager told the owner, “If I can’t manage to goals and establish reasonable revenue per sales person forecasts then I can’t be held accountable for our overall numbers.” As you would expect my friend said he wanted to be left alone to do what he knows best and bring in as many sales with the clients he kept. Again, another problem quickly surfaced…

The owner asked a great question; who would determine what accounts and markets will stay with the older salesperson? An even better question; can they afford to have their very best customers managed by someone who implies that they might retire any day now? Because of the dynamics and tension can you see this relationship working well? I pose this question; if you were the owner what would you do?

Here’s what he did. He finally decided that the new sales manager should oversee the other sales staff except for my old friend. He would be allowed to keep his special accounts and report directly to him as before. Here’s what the new sales manager did. He quit. My old friend is once again the sales manager and is completely stressed out again. If this scenario sounds like a familiar story or a path you might be heading down, feel free to give me a call to discuss preventative measures. I’m afraid this happens far more than you might think. – CW

Predictable Outcomes

Do you know people who say, “I could have told you that would happen?” Perhaps a parent, a coach, a former boss, or maybe even a co-worker? It drives me crazy when people do that – and I hope you don’t do that with your employees. Hindsight is useless unless used to improve predictable situations from reoccurring.

“I didn’t see that coming,” is an all too familiar business phrase these days. It applies to banking relationships, your bonding company relationship, employees quitting, a competitor taking away a large account, etc. Here’s the thing, in many cases you can see it coming if you have the right information, the right tools, and the right relationships.

Here’s why NSCA is so valuable to your business success, we don’t just tell you, “I knew that would happen,” we inform you based on the experiences we have and what we learn from others in our industry. As you become more engaged with a professional trade association, you begin to realize that others are experiencing the same things you are. Here are a few examples:

• A large customer informs you that the new competitor in your area has earned their business. You ask why and they say price. You tell your employees that we don’t compete on price and move on.
• A key employee comes in, shuts the door and says that they’re going to work for the competition. You ask why and they say more money.
• A large project is being bid and you come in 20% over budget. The GC calls and says you can have it if you get down to 80% of your proposed price. You value engineer, sharpen the pencil and reduce labor and get the job. The owner moves in and begins using the system. They didn’t get what they wanted. You ask why and they say it isn’t what the design person promised.
• A new vendor stops by with the most fantastic substitute product for one of your core technologies that practically sells itself. The offer is to take a demo unit and some inventory and you will become their exclusive dealer in your area. The relationship with your current vendor evaporates.
• Your integration business is operating at break-even, yet you hear of others who are growing and profitable in the same markets. You race to the conclusion that it must be a sales problem and implement an off-the-shelf sales tracking software package and get sales activity reports sent to you directly.

For all of these situations, what predictable outcome will happen next? The thing is, we see so many situations repeated by individual member companies that we have established best practices that really help to see these things coming. But if you don’t get in the loop and network with other industry professionals, it will seem like these situations only happen to you. Building a network of peers and trusted advisors such as you have with NSCA makes the membership dues looks pretty reasonable after all. – CW

A Situation – Not a Problem

Sometimes I feel like I drive people crazy because of my calm demeanor. Many people call me in a panic over some gigantic problem they are experiencing only to have me react by reminding them that this is just a typical business situation – not a problem. We can figure this out and it will be okay.

I try to say, without sounding like a Jamaican bartender, “No problem man! Here’s what we can do.” Having that calming effect typically irritates people, especially those who are wound pretty tight. Over time I’ve learned to separate the people from the problem, the emotion from the facts and the personal issues from the best interest of the company. My job is to listen, separate, then advise.

People want you to panic when they panic so you can relate to how they are feeling. They might think it will produce faster results, but it doesn’t. For example, on a job site when the project is delayed and you are just showing up, they want you to compress your timeline and accomplish the impossible – and they want this done without compromise. It’s only your problem if you let it be, otherwise a common situation that you should know how to respond to.

In my mind I see a difference between problems and situations. Problems seem to create such a negative or difficult environment to accomplish results, whereas as a situation is simply a combination of circumstances that have risen from the very nature of the business we are in. I like to separate the two and coach companies on the cultural aspects of this.

Every résumé you see today describes the potential new hire as an “experienced problem-solver,” – they get told to write that. I’d rather hire someone who can come in and help prevent normal situations from becoming problems. Or better yet, someone who establishes a culture of dealing with situations and difficult people without triggering negative behaviors in others. The best employees will help buffer these situations and isolate them from the customer.

There needs to be someone in every organization that provides the voice of reason for others. The person with the voice of reason eventually elevates themselves within the project team or management group. A person who always seems to take a positive approach to whatever they are faced with is quite valuable – and becoming scarce.

In the end, your customers and co-workers will value a calming influence more than an alarming behavior. I believe that teaching situational awareness and encouraging positive approaches will promote rational thinking which dictates a positive outcome far better than the instant reaction from a person who panics.

Your employees will go crazy if all they did was deal with problems all day long. I enjoy hearing about all the different situations our members are faced with and then advising them on proven methods and best practices for dealing with them. If we dump problems on key employees all day long they too will become problems and/or leave. – CW

Re-Channeling Work Ethic

I had to laugh at a friend of mine last week when he called with a tremendous business opportunity, and was ready to invest in this new deal. The funny part was this call came only two weeks after he was telling me about his retirement strategy and plans to divest his current business. It was as if he had forgotten all about the previous call with the excitement over this new deal.

This guy, like many of us, can’t stand it if he’s not at work by 8 am, he hates being out of touch with daily decision-making, hates the feeling of not being involved at the office. He has a tremendous work ethic and always has. So I had to ask, “What are you thinking? I thought it was time to retire?” His response was simple, “I can’t pass up this great opportunity!”

This guy loves his job, loves the industry and what we do. And he’s good at it, and has become wildly successful. The problem is, he can’t see beyond what he does today and what his future role in the company could be if he let go of his daily routine. He is obsessed with being the owner of a systems integration company and to him that means working side-by-side every day with his managers. Sound familiar?

So, I told him to become a mentor to others while he maintains the drive and passion for our industry and his company. He has always been a do-er and problem solver. To him, work ethic means doing something related to sales, operations or accounting. He doesn’t relate at all to what a mentor role could mean for him or the future success of the business – which is very typical of our industry.

Mentoring is simply coaching with a structured action plan. It’s very hard to accomplish this when a structure has yet to be developed. Years ago mentoring was simply on the job training to build or produce a product. Now it is more about teaching the processes and recourse for decisions that need to be made. A good mentor goes well beyond demonstrating how to build something and shares why the product or service is important to customers, why the company does what they do in the first place. They share the culture, the history, the past successes and failures, the best methods of communicating and vision for the future.

There are many decisions you make on a daily basis that you don’t need to be making. These can easily be made by those who you empower and delegate if you’ve coached them to think like an owner… like you think. This process breaks down when senior managers try to prove how irreplaceable they are by not properly mentoring those empowered to make decisions on their own. It’s a waste of company resources, and will most often drive good people away from the company.

It’s OK to have your key employees know everything you know as long as you have taught them how to think like an owner. But, the fear is that they will leave and start their own business if you share your secrets and intellectual property with them. The reality is, this can happen, and that’s a risk you’ll have to take. The bigger risk is having no one ready to lead if something were to happen to you.

So when should the transition to mentor begin? I would suggest when you can honestly say you have nothing left to prove or accomplish as a “hands-on” manager or owner. I also believe we can wait too long before realizing when that time has come and run the risk of losing good people who don’t see a future because of it.

Someone recently told me that a good financial plan for a retiring business owner is to have at least the same value in equities outside the company as what the business is worth. That allows for more exit strategy options and far less stress. But in reality, most of the owners/partners in our industry have nearly everything tied up in their own company. The reason why is that they have more confidence in their own work ethic and capabilities than they are willing to place in others. I strongly suggest identifying others who have your work ethic and then channeling your efforts into mentoring them. This will protect your investment and allow you more options and eventually far less stress. – CW

Gratitude

Coming off of what was simply an outstanding event, the 15th annual NSCA Business and Leadership Conference, I was asking myself what presentation was the most influential. I couldn’t really pinpoint the exact session as they were all so impactful and well connected with one another. I concluded that all the sessions were great and that the primary take-away for me was how incredibly close and tight-knit this “community” has become.

I am so fortunate that I’ve been allowed to share the challenges of so many of our members. They look to NSCA as an outside advisor on so many things and not just business related. To me that is the best feeling in the world.

Somehow we have developed a sense of belonging and a sense of mentorship amongst one another. This community genuinely cares about one another and can express their gratitude openly for the many friendships they’ve built along the way. The best thing about our conference is that it has become your conference. The systems integrators themselves help shape this event and strategically plan the fantastic networking sessions. Our team simply facilitates the learning and interaction.

One of the greatest things about our community is the diversity. At our networking events we see multi-million dollar corporate executives sharing laughs with first time attendees from start-ups. We see people sitting around the fire pit or the lobby bar talking about life and not just about work. They talk about their parents, their kids, their worries, the future of our society and everything real friends talk about.

The diversity comes in many forms, but our community is open and honest with each other and egos are left at the front door. So much conversation and friendship was created this past week, the resort told us that the first time ever – they ran out of both Miller Lite and their finest single malt scotch. We’re honest and we’re excellent consumers! NSCA is a strong community of like-minded people – all focused on being successful business professionals. We thrive on the fact that this community enables us to become a single voice when needed. Our community requires evidence, information and strategies to build a better business. Our community seeks out NSCA to be a credible and trusted advisor for companies who need our support.

So I am grateful… for our volunteer leaders, our staff, our attendees, our sponsors and this community we serve. I’m very grateful for how much involvement and engagement our members demonstrated this past week. I’m still not exactly sure how I got put in charge of this outfit, but I’m sure grateful that I am. CW

Business Continuity

Five years ago I learned a valuable lesson on being prepared for business interruptions. In the summer of 2008 the entire downtown area of Cedar Rapids was flooded, the NSCA office building included. To make matters worse, our off-site storage facility located five blocks away was also flooded. Everything there was a total loss. Most downtown businesses had to scramble to relocate, just as we did. That experience changed the way I look at continuity, disaster recovery and preparedness.

That type of business interruption is rare, but what is becoming quite common is disruption to the business due to employee health issues, departures and unforeseen cash flow or liquidity issues.

Employee Health
More and more, it seems that we are all under a great deal of stress. My theory is this – we all love this industry, we love the technology and we love how exciting it is. It’s so easy to get wrapped up and work day and night burning the candle on both ends with little or no down time. A lack of sleep maybe, but no real stress there… The real stress comes from finding ways to make a profit doing what we love. That’s the real problem.

Departures
Unexpected departures of key people causes both stress and business interruption. It’s hard to plan for these departures, but having a strong bench helps immensely. Map out in your mind who would replace you and the others in case something unexpected happens and then you can relax a little more knowing you have a back-up plan.

Cash Flow
Cash flow is our lifeblood. Expect the unexpected such as multiple jobs landing at once and the bank reducing your revolving line of credit. The way to get out in front of that is by scenario planning. Speak to your banker and maybe even line up a backup plan just in case. Know all about alternative project financing models before you need to use one.

What You Can Do
Here are a few tips that can significantly help. One is getting the “back of house” in order and keeping it in good working order. The back of house is the infrastructure for your company. Activities such as accounting, order processing, contract management, HR, inventory management and service are needed to run smoothly and without your day-to-day involvement. If you get that dialed in it takes a lot of pressure off so you can focus more on leadership, strategy, sales, project management, new business development and so on. If you keep getting sucked into the back office stuff, you get frustrated and stressed out and end up working longer and harder.

The second tip is developing a team of advisors. I know what you’re thinking… “I can do this myself – things are running smoothly. I have every aspect covered and no one knows the company better than me. I can manage this by myself. If something happens, I have it covered.” Saying that would be like me saying that the river that runs by the office would never go 31 feet above normal levels. Unexpected things do happen and having a go-to team of advisors when you need help is such a stress reducer.

It will take a few uncomfortable conversations and meetings, but it’s very important to plan for the unexpected. This means a discussion about what happens if you or your partners, senior staff or an entire department leaves the company. It means talking about business interruption insurance, key employee insurance and buy/sell agreements. It means having this well documented and known by your key advisors and senior management.

NSCA can be your resource for this type of planning. Please feel free to use our many years of experience to help you plan for the unexpected. Believe me, I hear something new every day and we find ways to make the situation better. – CW