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| Volume 6, Issue 1 |
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In This Issue:
 The man who said no to Wal-Mart
Scenes from the culture clash
 How to raise your firm’s financial IQ
What really drives your strategy?
When Benchmarks don’t work
Making credibility your strongest asset
 Best practices in Cash Management: Information and automation are key
Tax planning after the split
Can the budgeting competency gap be narrowed?
 The best defense
The little things
 U.S.: One big reason to expect a decent year for jobs
Cursed by the “perfect” colleague
Stamping out cookie-cutter managers
A tale of two goof-off employees
The struggle to measure performance
 Cost effective team building exercises
 How to make a potential employer fall in love with you
 Seven No-Nos when asking for a raise
Best bets for business trips
How we get fat
 6 more reasons to exercise in 2006
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The Man Who Said No to Wal-Mart
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We're not obsessed with volume," says Wier. "We're obsessed with having differentiated, high-end, quality products." |
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Every year, thousands of executives venture to Bentonville, Arkansas, hoping to
get their products onto the shelves of the world's biggest retailer. But Jim Wier
wanted Wal-Mart to stop selling his Snapper mowers.
What struck Jim Wier first, as he entered the Wal-Mart vice president's office,
was the seating area for visitors. "It was just some lawn chairs that some other
peddler had left behind as samples." The vice president's office was furnished
with a folding lawn chair and a chaise lounge. And so Wier, the CEO of
lawn-equipment maker Simplicity, dressed in a suit, took a seat on the chaise
lounge. "I sat forward, of course, with my legs off to the side. If you've ever
sat in a lawn chair, well, they are lower than regular chairs. And I was on the
chaise. It was a bit intimidating. It was uncomfortable, and it was going to be
an uncomfortable meeting." It was a Wal-Mart moment that couldn't be scripted,
or perhaps even imagined. A vice president responsible for billions of dollars'
worth of business in the largest company in history has his visitors sit in
mismatched, cast-off lawn chairs that Wal-Mart quite likely never had to pay for.
The vice president had a bigger surprise for Wier, though. Wal-Mart not only
wanted to keep selling his lawn mowers, it wanted to sell lots more of them.
Wal-Mart wanted to sell mowers nose-to-nose against Home Depot and Lowe's.
"Usually," says Wier, "I don't perspire easily." But perched on the edge of his
chaise, "I felt my arms getting drippy." Wier took a breath and said, "Let me
tell you why it doesn't work." Tens of thousands of executives make the pilgrimage
to northwest Arkansas every year to woo Wal-Mart, marshaling whatever arguments,
data, samples, and pure persuasive power they have in the hope of an order for
their products, or an increase in their current order. Almost no matter what
you're selling, the gravitational force of Wal-Mart's 3,811 U.S. "doorways"
is irresistible. Very few people fly into Northwest Arkansas Regional Airport
thinking about telling Wal-Mart no, or no more...
Read the article. Back to top
Scenes from the Culture Clash
Companies are just now waking up to the havoc that the newest generation of workers is causing in their offices.
Beverly Hills psychiatrist's office is an unlikely triage center for the mash-up
of generations in the workforce. But Dr. Charles Sophy is seeing the
casualties firsthand. Last year, when a 24-year-old salesman at a car dealership
didn't get his yearly bonus because of poor performance, both of his parents
showed up at the company's regional headquarters and sat outside the CEO's
office, refusing to leave until they got a meeting. "Security had to come and
escort them out," Sophy says. A 22-year-old pharmaceutical employee learned that
he was not getting the promotion he had been eyeing. His boss told him he needed
to work on his weaknesses first. The Harvard grad had excelled at everything he had
ever done, so he was crushed by the news. He told his parents about the
performance review, and they...
Read the article. Back to top
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How to Raise Your Firm’s Financial IQ
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| We all live and die by the numbers—but do we really
understand what they mean? Here’s how managers can
help all employees understand cash flows and
liquidity ratios. From the new book Financial Intelligence. | |
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When the numbers are out there for everyone to see, it’s tough for people to forget or ignore them.
Teach those basics in a way that ensures that no one is embarrassed about what they didn’t know.
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If your goal is to have a financially intelligent workplace or department, your first step is to figure out a strategy for getting there.
We don’t use the word strategy lightly. You can't just give a one-time training
course or hand out an instruction book and expect everyone to be enlightened.
People need to be engaged in the learning. The material needs to be repeated,
then revisited in different ways. Financial literacy needs to become part of
a company’s culture. That takes time, effort, and even a little monetary
investment. But it’s very doable. We’ll outline three approaches—not
mutually exclusive—that we have seen work...
Read the article. Back to top
What Really Drives Your Strategy?
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| For better or worse, why do so many companies veer off
their strategic plan? Look for a disconnect between
strategy and how resources are allocated, say Harvard Business School’s Joseph L. Bower and Clark G. Gilbert. | |
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If I’m the top management, how can I shape that process,
manage it, and give it direction? —Joseph L. Bower
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"While companies might have an intended strategy, the strategy that actually
emerges can be very different," says HBS professor Clark G. Gilbert.
It is a topic that Gilbert and professor Joseph L. Bower have explored at length
for a new book they have edited, From Resource Allocation to Strategy, published
by Oxford University Press. Contributors to the book include Harvard Business
School's Clayton M. Christensen, Walter Kuemmerle, and Thomas R. Eisenmann, as
well as nine other scholars.Bower and Gilbert recently sat down with HBS
Working Knowledge to explain how internal and external factors play a surprising
role in strategy formulation and execution. As Gilbert explains, "A lot of our book
is about understanding (a) that realized strategy is often different from
intended strategy, and (b) there are forces that shape strategy in unintended
ways."...
Read the article. Back to top
When Benchmarks Don't Work
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| Benchmarks have their virtues, but professor Robert S. Kaplan argues they should be saved for surveys of commoditized processes or services. From Balanced Scorecard Report. | |
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Armani would probably not benefit from studying Wal-Mart's selling process.
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Benchmarking certainly has its virtues.
Comparing production time or the cost of a standard process to that of peer
companies can yield important insights about your own efficiencies—and
ultimately, competitiveness. But benchmarking also has its limits. When you ignore
the differentiated output that internal support or shared services groups provide,
such straight-across cost or numeric comparisons become meaningless. Today's
successful support unit earns its keep by being a trusted partner to the business
units it serves. So, comparing its results to those in a benchmarking survey is
counterproductive. Companies should save the benchmarking surveys for
commoditized processes or services. Benchmarking became popular several decades
ago as part of the total quality management movement. An IBM executive defined
it as
" . . . the ongoing activity of comparing one's own process, product, or
service against the best-known similar activity, so that challenging but
attainable goals can be set and a realistic course of action implemented
to efficiently become and remain best of the best.
In one dramatic benchmarking example, General Motors, in the early 1980s, learned
that a Toyota assembly plant could change its stamping presses from one model to
another in eight minutes, compared with the eight hours GM plants spent to change
over the same basic equipment. Clearly a deviation of this magnitude between its
current performance on a critical process and industry best practice served as a
wake-up call for GM. Benchmarking works well when...
Read the article. Back to top
Making Credibility Your Strongest Asset
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| Dealmakers often forget the power of a good reputation. In this article from Negotiation,
HBS professor Michael Wheeler tells why having a
storehouse of credibility will put you head and shoulders above the competition. | |
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You can succeed without explicitly swapping favors.
The fact that [Tony] Lucci didn't condition his helpfulness made it more likely he'd get calls in the future.
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Negotiation is a breeze if you're selling a unique product or service that others desperately need: Just sit back and let the bidding begin.
Likewise, if you're a buyer in a buyer's market, getting a bargain is a snap.
But what happens when lots of other people are selling what you've got, or many
others are bidding for what you want? One solution to distinguishing yourself
in competitive environments is to build your bargaining endowment—storing up
credibility and resources by developing relationships, burnishing your reputation,
and controlling key assets.When you're trying to prevail amid fierce
business competition, your bargaining endowment can spell the difference between
closing the deal and being shut out. A healthy bargaining endowment explains how
Darren Rovell won a job on national television while other journalism graduates
were lucky to be doing programs on cable access. It's also how Tony Lucci got box
seats for the World Series when thousands of others were shut out. And it explains
how Bob Kraft positioned himself to buy a professional football team.Although
Rovell, Lucci, and Kraft operated in very different contexts, they all met their
goals by enhancing their own credibility and discerning the interests of other
key players. Their three stories illustrate different elements of the process of...
Read the article. Back to top
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Best Practices in Cash Management: Information and Automation Are Key
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The organizational spotlight is pointed squarely at the treasury function
as businesses recognize the need to develop better methods for managing cash flow.
Spurred by the need to develop solutions that support Sarbanes-Oxley
compliance -- and by companies' increasing activity in global markets with
divergent payment terms -- finance executives are standardizing and
improving cash-management activities and turning to tools that monitor cash
balances in real time enterprisewide. In fact, treasurers today are striving
to automate virtually every activity in the cash-management function. The other
thrust in treasury operations is toward implementing new tools and methodologies
to deter fraud -- a rising threat to business. Attempted check fraud alone has risen
to over $5 billion in recent years. Various safeguards, including positive pay,
are helping companies and banks protect themselves against major losses. In
this special section we explore some of the best practices that leading companies
are adopting to build a stronger treasury function through automation. And we
examine the controls that businesses -- with the help of their banks -- can
implement to take a bite out of fraud...
Read the article. Back to top
Tax Planning After the Split
Tax and audit services are no longer provided by the same firm at many companies,
so CFOs must refocus to ensure tax savings.
Sarbanes-Oxley's requirements for auditor independence and new rules from
the regulatory agencies have reshaped tax and audit services. Many companies
that once achieved certain efficiencies by using one firm for both tax and audit
are now struggling to maintain the same level of tax savings with separate
providers and a long list of new restrictions. CFOs must ensure that optimal
tax planning continues under the new structure. This means that they must build
a deeper relationship with tax advisers and strengthen internal tax capabilities
to guarantee adequate controls. "The biggest piece is making sure that the provider
is jointly investing in institutionalizing knowledge about the company," says
Brad Brown, national director for Sarbanes-Oxley Section 404 at KPMG LLP in
Los Angeles. This effort includes consolidating the work product and information
in a single place that provides a team gateway to background information on
the company...
Read the article. Back to top
Can the Budgeting Competency Gap Be Narrowed?
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A survey shows the real value of leading practices in budgeting, planning and forecasting.
An unmistakable gap in budgeting, planning and forecasting (BPF) competency
continues between world-class companies and less stellar organizations. According
to recent research conducted by Houston-based American Productivity and Quality
Center (APQC), a nonprofit process-improvement and benchmarking organization,
top-flight businesses use leading practices such as the rolling forecast, a
single instance of ERP software, activity-based budgeting and analytic applications.
Average enterprises still rely on annual forecasting, multiple instances of
ERP software, budgets driven only by financial metrics, and spreadsheets. Among
the objectives of the APQC survey, sponsored by Business Finance and IBM, was
learning how much leading practices improve BPF processes and cycle time and
then deciding whether those improvements warrant adoption...
Read the article. Back to top
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The Best Defense
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Last year, former McKesson Corp. CFO Richard Hawkins faced criminal charges
after a $20 million accounting error was discovered at HBO & Co., a subsidiary
McKesson had acquired in 1999.
Together, the charges, including securities fraud and conspiracy, carried a
maximum sentence of 25 years in prison. With executives from Tyco, WorldCom,
and HealthSouth also on trial, and with public outrage at corporate scandals
mounting, Hawkins decided to take a gamble: he waived his right to a jury trial.
"We didn't have a lot of comfort that a jury would take the time to wade through
the accounting rules — particularly in this climate, with so many other
executives going to trial at the same time," explains Walter F. Brown Jr., a
partner at Orrick, Herrington & Sutcliffe LLP in San Francisco and a co-leader
of Hawkins's defense team. The gamble paid off. The defense convinced the judge
that the former CFO had made accounting judgments in good faith, after consulting
with outside auditors. Hawkins was found not guilty on all counts, one of the
few recent victories for a CFO on trial...
Read the article. Back to top
The Little Things
How CFOs reenergize their finance staffs.
Every year finance departments put themselves through the wringer, racing to meet
an endless parade of deadlines. The crunch has intensified recently as finance
teams labor to comply with new regulatory requirements even as they try to keep
up with routine tasks such as quarterly and annual Securities and Exchange
Commission filings and special projects like acquisitions or stock offerings.
As a result, many finance staffers are simply exhausted. With still more work
to do, how can CFOs motivate their most important assets to gear up again?...
Read the article. Back to top
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U.S.: One Big Reason To Expect A Decent Year For Jobs
Companies can no longer meet demand with existing forces.
The Labor Dept.'s monthly employment report contains perhaps the government's
most politically sensitive data, especially in an election year.
Take the December
jobs numbers. The Bush Administration and other Republicans are playing up the good
news in the 4.9% jobless rate. Democrats are pouncing on the
much-smaller-than-expected 108,000 rise in payrolls. By the time politicians and
media folk run it all through the spin cycle, it's hard to know what to think...
Read the article. Back to top
Cursed by a "Perfect" Colleague
Co-workers and bosses who blame everyone but themselves are a nightmare. But there may be something you can do.
I was at a networking event the other evening, and got to chat with the
panelists -- all successful businesspeople -- after their discussion. One of them
was kidding another about a recent event where two of them had also spoken on a
panel. "I couldn't believe what you said when that woman on the panel [a very
well-known business and TV celebrity] was asked to share the biggest mistake she
had ever made in her career," said one speaker. "She answered 'I've never made
a mistake,' and you guffawed right in front of her!'" That was a well-timed guffaw.
Such an authentic, instant reaction to an outrageous statement surely takes
chutzpah, but can you imagine the nerve -- let's go ahead and call it hubris -- that
it takes to say to an audience of experienced businesspeople, "I've never made
a mistake"? Man, I wanted to have been there that night. I wish, wish, wish I had
been sitting on that panel, so that I could have said to the poor woman, "How sad
for you, to miss the valuable learning experiences that our failures provide."...
Read the article. Back to top
Stamping out Cookie-Cutter Managers
People who use the same approach to any challenge can hinder your business.
Here's how to spot them -- and how to improve their performance.
A few months ago, my husband and I sold our house. Based on advice from a few
friends, I called in a "stager" -- a person who would help us spruce up the
place and get it ready to go on the market -- and asked for her recommendations...
Read the article. Back to top
A Tale of Two Goof-Off Employees
What should you do about a co-worker who doesn't get the job done? The answer depends on how it affects you.
I speak to a lot of employee groups, and the folks in the audience always have
terrific workplace questions. There's one question that comes up in almost every
group, and everyone laughs when it does, but it's almost impossible for me to answer
it on the spot. The question is: "What do you do about a co-worker who goofs off
all the time?" When I get that question, I have to ask the inquirer to see me
afterward, so I can learn more about the situation. The reason is that over the
years, I've learned that there are two very different kinds of workplace
work-shirkers. One might be called the Optical Slacker, and the other could be
nicknamed the Physical Slacker. And there's a huge difference between them.
ACTION REQUIRED. The Physical Slacker works with you so closely that you rely
on his or her results. That's a problem, because the Physical Slacker doesn't do
what he or she promises to. When you say you need something by Friday and he
says "Sure," you're lucky to get it the following Tuesday...
Read the article. Back to top
The Struggle To Measure Performance
Rigid rankings hinder the teamwork and risk-taking necessary for innovation. But what combination of methods works best?
Holiday shopping, yearend deadlines, and emotional family dramas aren't the
only stresses in December. 'Tis the season for companies to embark on that
dreaded annual rite, the often bureaucratic and always time-consuming
performance review. The process can be brutal: As many as one-third of U.S.
corporations evaluate employees based on systems that pit them against their
colleagues, and some even lead to the firing of low performers. Fans say such
"forced ranking" systems ensure that managers take a cold look at performance.
But the practice increasingly is coming under fire. Following a string of
discrimination lawsuits from employees who feel they were ranked and yanked based
on age and not merely their performance, fewer companies are adopting the
controversial management tool. Critics charge that it unfairly penalizes groups
made up of stars and hinders collaboration and risk-taking, a growing concern
for companies that are trying to innovate their way to growth. And a new study
calls into question the long-term value of forced rankings. "It creates a zero-sum
game, and so it tends to discourage cooperation," says Steve Kerr, a managing
director at Goldman Sachs Group Inc. (GS ), who heads the firm's leadership
training program...
Read the article. Back to top
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Cost-Effective Team Building Exercises
Instead of trying to design a team building exercise where people play
games or climb rocks to develop team spirit, explore fun, cost-effective ways
to engage your team. Below are three proven team building strategies that
embrace community, meaningful dialogue and learning.
Studies show that companies that encourage and support their staff to get
involved in the community is a great way to motivate employees and increase
team spirit. But instead of sending folks out on their own to volunteer, take
your team out for a day to support a local group. This builds collaboration and
a sense of respect and accomplishment. Taking your team out to volunteer has a
direct impact on retention and morale. According to Council on Foundations,
employees who participate in community-based efforts through work are more likely to...
Read the article. Back to top
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How to Make a Potential Employer Fall in Love With You
Do the Right Things Right.
Looking for ways to impress a potential employer? Want to make your resume or
job application stand out from the pack? In the past few weeks, I've reviewed
485 resumes and applications for 18 different positions. I've interviewed 23
candidates and brought six back for a second, more intense round of interviews.
Believe me, I can tell you what rang my chimes. Some of this advice may surprise
you. Some may even make you angry because it doesn't seem fair or right to you.
I can't guarantee that all employers will agree with me, but why take a chance
in this employers' market?...
Read the article. Back to top
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Seven No-Nos When Asking For A Raise
You want more money. Great. Who doesn't?
Asking for a raise requires preparation, skill, timing and a fallback plan.
It also demands wrapping your mind around a basic fact many employees miss: A
pay increase is based on performance and the market for your skills. "The worst
thing you can do is base a request for a raise on personal issues," says Bill
Coleman, senior vice president for compensation at Salary.com in Needham, Mass.
"Saying, 'I need a raise because I have a gambling problem' is a loser. It's also
a bad idea to ask for a raise if the company is having layoffs. Superstars can get
a raise because the company must retain its best performers. If you're not sure
that you're among the elite, you're not." Build your case for a raise by making a
list of your accomplishments in the previous year. If, for example, you've
outperformed other sales representatives, have the figures handy to back up
your statement. Remind the boss of the new accounts you've landed, or the
current customers you've kept from jumping to the competition. Don't be bashful
about listing your accomplishments, but don't be boastful, either. Let the numbers
tell the story. If you're a manager...
Read the article. Back to top
Best Bets For Business Trips
Business trips are like pornography: overpriced, exploitative and highly repetitious.
Over time, the red-eye flights, 4 A.M. wakeup calls and indigestion from
expense-account dinners tend to blur one trip into the next. Beijing looks a lot
like Berkeley--or Berlin or Boston--especially when all one sees of a city is
from a hotel meeting room. But breaking the monotony of huddling over spread sheets
and pounding at a BlackBerry is possible, even if you only have an afternoon, or
a few hours, to spare before your flight home. After all, business travel can take
you to cities you might not otherwise visit. Why not look around a little? According
to the experts, your company may actually want you to...
Read the article. Back to top
How We Get Fat
At one point in nearly everyone's life there comes a moment when you catch a glimpse of yourself in a mirror or shop window and think, "Whoa, I gotta lose some weight."
It's not like it's a big surprise. Weight-gain is not a head cold or a boil
that magically appears overnight. Like muscle, it's something that increases
gradually with time and with your complete awareness and collaboration. Except,
of course, that building muscle is hard and takes lots of exercise, whereas
getting fat is pretty easy and requires no exercise at all...
Read the article. Back to top
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6 more reasons to exercise in 2006
It's not just about weight loss, as a look back at the year's headlines shows.
Once again it's that time when many Americans will resolve to lose weight. Health
clubs will run membership specials, hoping to draw in legions of people
freshly committed to making 2006 the year they finally shape up and slim down.
But if history repeats itself, most people will have fallen off the weight-loss
wagon before spring — some even before the Super Bowl. More than half of people
who begin exercising drop their program within three to six months, according
to the American College of Sports Medicine. We know why...
Read the article. Back to top
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