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As we write this, people around the world are getting ready to spend several billion dollars preparing for Halloween. Here in St. Louis there are haunted houses where people go and pay good money to get the crap scared out of them. They are treated to a series of events designed to surprise and terrify them at every turn. We will not be attending…everyday life seems to offer plenty of surprises that are much scarier. While there are good surprises, the ones that seem to shock us the most are the bad surprises. This column will offer some business surprises that you may be able to avoid if you focus on their root causes.
An important disclaimer: We are not attorneys, accountants or labor law experts. As you consider the implementation of any of our suggestions, you must discuss them with your advisors to insure they are correct for your situation and area.
Surprising your banker: We think rule number one of banking is: Don’t surprise your banker. Bankers hate surprises. Surprised bankers often panic, which is a little like scaring an elephant…you may get trampled in the process. Many wholesalers take their banking relationship for granted. They have an operating line of credit. They send financials to the bank every month, quarter or year, as required, and are pretty detached until it is time to renew the loan. Currently we are enjoying an unprecedented time of low interest rates and lots of money is available. This will end at some point. While there are now more regulations than ever that limit the bankers latitude in your relationship, make no mistake, your bank and banker have options as they operate within those regulations. When the bank trusts you and likes you, they can help you. Few bankers understand our industry, so part of your assignment is to educate them about our industry and why many wholesale companies are good business customers/partners for banks. If there are major changes or problems in your business, you may not want to spring those problems on the banker at renewal time. As you build your relationship with your bank, you may want to discuss the kinds of business issues that they want to be alerted to.
Surprise! A key employee leaves: As we look forward, we expect that this will continue to get worse. Many baby boomers have looked for long-term employment but might have had several jobs in their work life. Most of their parents had the same job for most of their life. Millennials, however, are cut from a different cloth than their parents and grandparents. What fulfills their needs is different in many ways, but the most significant surprises will relate to their lack of attachment to their employer. As a better opportunity beckons, there will be little hesitation to move on to their next adventure. As an employer, this leaves you vulnerable to having key people leave through no fault of your own…they just want to go do something else. Further, the smarter members of your team will be shown more opportunities. There are a couple things you can do:
Surprising an employee with a bad review: Good supervisors maintain an ongoing dialog with their team. When a periodic review surprises an employee, it often indicates that this ongoing dialog has not occurred or has not communicated the performance problems clearly. Some supervisors are so fearful of hurting the employee’s feelings, they discuss all the good things the employee is doing along with the area that needs improvement. Balance is important but when, at the end of a performance discussion, the employee thinks he going to get a raise and you think they are barely doing the job, the balance was wrong. The ongoing dialog should clearly describe: the expected performance, how the performance is measured, how the employee is performing and, when possible, obtain input from the employee regarding what he will do to improve and when. For significant problems like showing up for work under the influence, the tone of the discussion should differ from problems that do not relate to the safety of the employee and others.
Being surprised that an employee is stealing from you: If your company has employees, the potential is always present. Based on our years of working with clients, we would hazard a guess that most companies with more than five employees probably have a problem.
We think the most common item that is stolen is TIME. As employees carry their phone with them, it has become quite common to call, text, tweet, facebook, candy crunch, etc. while on the clock. Employees carry their phone to the rest room and “camp” there for extended periods. Many naïve employees think this is a constitutionally granted right like free speech and are surprised when someone tells them to stop doing it while on the clock.
We think the next most prevalent theft is product. This can come in two forms, the employee steals product for himself or he steals product for someone else. Stealing for himself is fairly clear although the methods can be pretty sophisticated. The stealing for others is much more subtle and can occur in the form of discounts, returns, “freebies” or as they now say “hooking up” a friend.
While there seem to be fewer instances of this, you cannot forget the all-time favorite, embezzlement. Over the past 20 years, we have been told some amazing stories of people stealing huge amounts of money from their trusting employer.
What can you do?
Surprising an employee with a dismissal: Good managers come to a performance-related termination meeting knowing that the employee already knows that they are being terminated and why. The ongoing progressively more stern discussions between the employee and his supervisor have alerted the employee of the problems as well as the clear metrics and time frame that have driven the timing of the meeting.
Ideally, this kind of rational progressive approach is perceived as fair by the other employees. Even when the dismissed employee is a no-good, dirty rat, the other employees might extrapolate your treatment of that individual to how they might be treated if there are problems.
There are exceptions when an employee committed some illegal acts, egregious safety violations or when the employee has exceeded the “OK to steal” amount. Stealing terminations are complicated when the company has not published the number and, we hear in some states, are subject to labor claims. “I know you caught me red-handed and that this is a felony but since nobody told me that I wasn’t allowed to steal from the company I think this is a wrongful termination.”
Surprise! A key customer leaves: Since customers are often able to change suppliers on a whim, it might be good to consider some actions to reduce the likelihood that they will surprise you. Some ideas:
1. Get compromising photos or video of the customer stealing candy from a small child and threaten to post it on YouTube.
2. Remember to tell customers that you appreciate their business…it’s hard to overdo this one.
3. Continue to ask them what you need to do in order to continue to deserve their business and to earn a greater share of their business. This is often most powerful during an executive visit to their place of business. A lot of wholesalers have forgotten how much can be learned in a customer visit. Some wholesalers like to think of themselves as the lord and master of the realm holding court with their customers (who cast are in the role of peasants).
4. Build a suite of services to offer along with your products. This is actually almost as good as those compromising photos. When customers become addicted to your service offering and are afraid to leave you, they become day-in and day-out steady buyers and they are less concerned about price. These services can range from a killer webstore to lots of other services that help them close business, complete jobs profitably and bill for the jobs when finished. For our white paper with ideas on some services you can provide, email email@example.com
As always we hope this gets you thinking about these and other business surprises that you want to avoid this Halloween season and beyond.