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News from International Mgm't Consulting Associates
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How Healthy is Your Company?

May 2009

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In this issue
-- Healthy Employees
-- Loyalty Today?
-- Ponzi, Anyone?
-- What Does it Take to Build a Healthy Company?
-- Healthy Company Prescription


Healthy Employees
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Many companies encourage their employees to become healthier through a number of measures, among them physical fitness. Some companies even provide fitness rooms with treadmills, weights, and other equipment. What is the benefit for the company? Healthy employees miss fewer workdays, have more energy, and consequently have lower medical costs. It is a mutually beneficial effort.

Presumably, the executive management and the employees also take care of the company's health. But do they? As the automotive industry, Wall Street brokerage firms, banks, and the insurance industry have demonstrated, many of these executives could care less about the health of their companies, and will do anything to get their bonuses. The executives get their money, and the shareholders don't.

How about the employees? Do they care about the health of the company? As we have seen during recent times, the only thing many care about is their paycheck and benefits and their continuity.


Loyalty Today?
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It is not unusual for executives and employees to feel no loyalty to their companies, oftentimes with good reason because companies frequently show they feel no loyalty toward their employees. Loyalty is a noble sentiment, but it must be earned. Nowadays, however, both sides pretty much view loyalty as a thing of the past.

So, what holds companies together today? For the most part it is short-sighted personal interest. What is more, even benefits and bonuses tend to become entitlements. At a manufacturing plant in Chicago, a newly appointed plant manager discovered that, in recent years, most of the production employees had been getting up to 20 hours of weekly overtime on a regular basis. He analyzed the work flow, made some changes that increased productivity within the regular work hours, and eliminated the need for overtime. How did the employees react to this? The employees didn't feel they had been under-producing and getting overpaid; they felt they had been cheated out of something that they deserved to keep.


Ponzi, Anyone?
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Over many decades, we saw automotive executives granting cost-increasing, profit-killing, benefits to the unions; why did they do this? They wanted to avoid strikes that would have reduced sales and, consequently, their bonuses. Did they realize they were loading their companies with unbearable and unsustainable production costs? Most likely they did, but felt that the consequences would not show up until long after they had left the company. What kind of business promises returns that they know will inevitably become unsustainable? Perhaps, Mr. Madoff can tell you.


What Does it Take to Build a Healthy Company?
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What is the purpose of a company? To provide products and services that offer value and benefits to customers, and generate a worthy return to shareholders and other stakeholders. To do so, it must create a dynamic organization that cares about people, and motivates them. Who are those people? Customers, employees, shareholders, and the community. It must also become an organization that is never satisfied with itself, one where everyone constantly strives for improvement. The following 10 guidelines are a prescription for building a healthy and profitable company


Healthy Company Prescription
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  1. Study Your Customers. Study customers constantly to determine their needs and preferences; that's how you learn which products to create and offer
  2. Learn the Lifetime Value of Your Customers. Go beyond making sales to making customers who will buy time and again. Then nurture those customers to ensure their continued purchasing.
  3. It Takes a Team to Win. You can't do it alone. No one human being has all the talents it takes to do all the right things the right way. Even Leonardo da Vinci had to rely on others to help him with his projects. Build a team of talented, motivated people with the right expertise, share your vision with them - and let them do their thing. Make sure, however, that they work as a team not as silos.
  4. Focus on Being Profitable and Profit-Able. Start by making sure all your products/services generate a worthwhile profit. Sales that don't make a profit aren't sales, they are donations. Review your product mix and gross profit mix regularly.
  5. Set Productivity Standards. What you don't measure, you don't get. Make striving for constant improvement part of your company's culture.
  6. Value your employees. Their dedication and motivation gain and retain customers - and that is the secret of success.
  7. Establish and Guard Your Brand. A good brand is vital to your company's marketing health. Keep your brand simple and compelling. Make it stand for something customers value. Avoid doing anything that veers away from what your brand means to customers. Remember GM offering a cheap version of the Cadillac? You don't see Lexus doing that.
  8. Generate Enough Cash. You want at least enough cash coming in to cover one and a half to two times your expenses over the next six months. Create reserves for unforeseen emergencies; they will come up.
  9. Avoid Becoming Product-Oriented. Managements tend to think in terms of products and production rather than getting, serving, and retaining customers. You will know if you are product -oriented if you start thinking that the purpose of the business is to keep your plant (or plants) running, and you make marketing decisions on that basis.
  10. Innovate. Get used to the idea that you must continually be self-renewing everything. We can all learn a lesson from the Wright brothers. When they were working on creating the first airplane, they constantly challenged their own ideas They would take opposing sides of an argument, and challenge one another until they ran out of ideas. Then, they would switch sides and defend what they had been attacking previously. By using this method, they constantly challenged their assumptions as well as those of others. The result was that they analyzed everything thoroughly, forced themselves to think differently, found new solutions, and figured how to fly before anyone else did.
Healthy companies are not that common. Even those that fit the description, are frequently side-tracked by hair brained ideas and schemes, fads and knee-jerk responses and, as we saw recently in the financial industry, even economic pandemics such as the greedy "Swine" Flu that flooded the industry with undeserved bonuses.

Put your company on the right track to a long life with healthy performance and profits; contact Profitability Expert Michael Wynne for a complete Profitability Physical of your business. Remember; preventive steps work much better and are less painful and less expensive than emergency treatments of advanced business maladies. Call 630-420-2605, or e-mail mykwyn@aol.com.



Contact Information
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phone: (630) 420 2605
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