Be the Most Positive Person in the Room From Leadership to Clients to Pitching Investors, Positivity Pays
We’ve experienced burnout and a mental health crisis like we’ve never seen before. Truthfully, we’ve had a rather bleak outlook for a long time. For business leaders and/or entrepreneurs, there are even more stressors. Not only do we have to worry about ourselves and our families, but also our teams, clients, and potential investors. Despite feeling like we’re stuck in a rut, we know there is power in positivity.
Contrary to what some may think, positivity is not the opposite of reality. You can be realistic, acknowledging challenges and struggles, without allowing them to diminish your attitude and deplete your energy. You can even be cautious, as long as it doesn’t slowly morph into pessimism.
American philosopher and psychologist William James once said, “Pessimism leads to weakness, optimism to power.” And what company doesn’t want to be powerful? As business leaders, we want to build strong companies, not weak ones. Positivity has the power to build energy and resilience, and improve decision-making. Simply, it has the power to create a stronger, more resilient company. Here are three ways you can be the most positive person in the room:
Positively Leading a Team
Positivity is a crucial component of leadership. No one wants to follow someone down a path of despair and despondency. Your team needs optimism. They need to feel encouraged and energized. And it is up to you to provide the impetus for those feelings. Remember, positivity is contagious (as is negativity).
There’s no doubt that it can be a struggle at times. It’s difficult to lead with positivity when you have mounting team challenges or are experiencing trying times. Here are a few tips:
Focus on resilience
Focus on what you can control
Stay calm and objective
Remember the importance of connections and relationships
Practice empathetic, active listening
Move quickly past failures
Celebrate small wins
Positivity when Working with a Difficult Client
We’ve all had clients who aren’t the easiest to work with. Maybe they’re pessimistic. Maybe they’re obsessed with control. Maybe they’re simply not nice people. However, if we focus on the strengths of the relationship, we begin to see more opportunities and less challenges. Listen to them and support their needs, where you can. Your positivity may even start to rub off on their rough exteriors. Through it all, ensure that you have boundaries firmly in place, so their negativity doesn’t start rubbing off on you.
Positively Pitching an Investor
Investors hear hundreds, if not thousands, of pitches. And if you want to stand out among all the rest, it will come down to your story and how you are telling it. When you are preparing to pitch, make sure optimism is woven throughout your story. Of course, you never want to forget about the importance of the numbers, but don’t be scared to humanize them with an exciting narrative or even a joke (where appropriate).
Yes, your nerves are probably rattling in your ears, your hands might be shaking, but try reversing your thought process. Instead of thinking about trying to win them over, think about them trying to win you over. And if you’re smiling and laughing a bit here and there, they’ll remember you long after you walk out the door.
In any scenario, one of the keys to being the most positive person in the room is gratitude. Be thankful for everything you have – the business, your team, those difficult clients, and investors and the opportunity to pitch them. Focusing on what you have and what you’re thankful for will only bring more positivity into your business … and your life.
Choose energy. Choose creativity and innovation. Choose positivity. Otherwise, you and your business may get left behind.
Barker Associates provides strategic guidance to companies of all sizes. We can provide the higher level of strategy your company needs to grow. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Remote CFOs – Is Success Really Possible? It’s All a Matter of Trust
More people are adjusting to the idea that our “new normal” includes remote work in some capacity. And this realization brings along new considerations, including which positions are better suited for remote work and the opportunity to attract additional top talent in various geographical areas. But when you’re talking about a leadership role, there are a number of other factors to consider, especially when that role is based in accountability and highly sensitive, confidential information, like a CFO. As such, many wonder if it is possible for a CFO to have success remotely.
As we all know, the CFO holds the top financial position of an organization. Some focus more on financial planning and strategies, while others focus more on budgeting, accounting, reporting, and risk management. In either case, the CFO ensures that the organization’s numbers fairly reflect its performance. Also, in either case, the foundation of the CFO role is relationships, which are generally viewed as stronger when individuals are physically together.
The key to working remotely is developing solid relationships with your direct reports. You need them to feel comfortable reaching out to you, as they would if you were in the same office. Previously, when we all worked together, you could see fear and anxiety in someone’s face and body language when they were nervous about something. It was palpable because, in large part, it was right in front of us. Now, we no longer have that ability, as it is far easier to hide nervous tendencies when you are in front of a computer camera. As the CFO, it is your responsibility to build trust in any situation, including when you are not physically present.
Remote CFO … In the Beginning
If this is a new role and you are just coming into an organization, spending one-on-one time with each team member is crucial in developing a strong foundation. If you do not live in the same area, that will essentially mean more travel in the early stages, but it will pay dividends in the long run. Simply, there is no better way to establish trust in a relationship than being face-to-face, sharing a cup of coffee (or your beverage of choice), and empathetically listening to the other person with whom you work.
In these meetings, learn their strengths and weaknesses, their aspirations, and their fears. Further, be abundantly clear about how and when you will be available when you are working remotely, as well as your expectations. Setting boundaries and clearly communicating them from the beginning will save you headaches down the road.
Building Trust as a Remote CFO
Continuing to incorporate relationship-building and trust as you perform your day-to-day responsibilities is key. Schedule weekly one-on-ones with your team and other stakeholders, and keep that time sacred. These meetings should be non-negotiable for anyone, including the CEO, to continue to build trust. One tip on virtual meetings is insisting on the use of cameras, despite everyone’s fatigue of them. Seeing the person with whom you are working, even though a camera, is better than not seeing them at all. Finally, when your team members reach out to you when you are not available, make sure you respond to them as soon as possible.
Another tip with virtual meetings is to be cognizant of differences in time zones. More than ever, you could be working with team members and clients across the globe. It is not always easy to accommodate others due to their various locations, but in your position as CFO, and to continue to garner trust, you must be flexible. If that means getting on a call at 5:00 am or 10:00 pm, that’s what you do. However, be nimble only where it counts. If other stakeholders or team members are reaching out to you off-hours (and time zone is a non-issue) regarding ordinary work activity, then put a stop to it immediately. Determine how to proactively communicate to them to keep it from happening again.
As always, boundaries are a key piece of trust, and they are never more important than with remote work when we are seemingly available at all times. Of course, if there is an emergency, all bets are off. In your position, you must answer that call and help find a solution. But be aware of the distinction between the two scenarios.
Your team members are not the only ones with whom you need to build trust. To build trust with other C Suite members, take time to understand their issues and challenges. For example, if you find out that an SVP is spending hours a month on a manual task that the accounting or IT department could easily automate, offer the solution, and help make their lives easier. These instances become huge wins all around, as you build stronger relationships within the organization.
More than ever, after a global pandemic and resulting economic crisis, organizations understand that a CFO is an investment and not an expense. And to have the best fit, that may mean hiring someone as a remote CFO. While this will require a different type of critical thinking and creativity in addition to the ordinary technical knowledge and risk mitigation skills of CFOs, many will find it more challenging and fulfilling. Their success is not only possible, but likely when trust is established from the beginning.
Barker Associates provides strategic guidance and outsourced CFO services to companies of all sizes. We can provide the higher level of strategy your company needs to grow. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Shifting Five Thoughts for a More Strategic Mindset
We’ve talked about the transition workplaces are going through – from employees resigning in record numbers to the emphasis on employee experiences to the shift in hiring philosophies that prioritize skills over experience. Many employers are working diligently to fill the consequential gaps from those who left and advance those who stayed. And while those who are advancing are eager for the new challenge, the question begging an answer is – do they have the right strategic mindset to successfully transition into their new roles?
Becoming a strategic leader is about much more than the new title or position. It is about broadening the employee’s perspective from focusing exclusively on one area of expertise to focusing on the organization’s bigger, future picture. A strategic mindset simply cannot have a narrow focus.
Many avoid the transition from task oriented to strategy oriented when making this move. And it’s not that surprising. Task oriented roles and responsibilities are often more fulfilling in the day-to-day. There is instant gratification in many instances, as checking tasks off a list can be very satisfying. In contrast, you generally do not see the needle moving from a strategic perspective until months or even years later. And, as a society overall, we tend not to favor delayed gratification. However, to successfully make this transition, the strategic, broad, forward-thinking mindset must be embraced wholeheartedly.
Crossroads to Shift Your Thinking
For those who are at this crossroads, here are five shifts you can make today to begin having a more strategic mindset:
1. Think long-term instead of short-term. Instead of looking at your daily list and identifying what tasks you can cross off, think about the organization’s future. Ask yourself:
What are the possibilities for the future?
What are the opportunities available?
Where do we want to be as an organization in one year? What about in five years?
What can we do today to help us get there?
2. Think bigger rather than smaller. Think about how the tasks on those daily lists impact the company’s overall strategy. Are the things getting done today aligning to the company’s strategy and future plans? What are the long-term impacts of decisions that are being made and actions being taken today?
3. Think about opportunities instead of challenges. Some of the most innovative solutions (in any industry) have been brought about during tough times. It is only when we can no longer do the things we’ve always done that we begin to scratch the surface of alternative methods. And often, those alternatives open various new doors of opportunity that would have otherwise remained closed.
4. Think about future trends, not just the here and now. Join think tanks or find other resources that focus on market research. Ask yourself:
What is happening the industry?
What is happening in the marketplace overall?
How will the events and trends outside of the organization impact the organization’s future?
5. Think about spending time on strategic planning, not just current responsibilities. This is often the biggest challenge for leaders. As noted in a Harvard Business Review article, “How can you avoid getting overwhelmed by day-to-day tasks that feel so urgent, at the expense of game-changing initiatives that are truly important?”
Higher-level strategic thinking needs time, space, and dedicated focus. The most effective strategic leaders recognize this and block time on their calendars consistently to devote to strategic planning.
Cultivating a strategic mindset is crucial for those transitioning into a leadership role. It’s not always easy, but it is attainable by shifting these thoughts. Barker Associates provides strategic guidance to companies of all sizes. We can provide the higher level of strategy your company needs to grow. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
We’ve been inundated with various headlines regarding the Great Resignation. And while they all have different perspectives, one commonality exists – the value placed on employee experience. Employees are making it very clear that while money is important, it isn’t everything. They want to be valued and appreciated, and find meaning in their work and in those with whom they collaborate.
According to a recent Gallup survey, the percentage of engaged workers declined in 2021 for the first year in more than a decade, in large part because organizations have forgotten about the basics. “Among the engagement elements Gallup measures, the greatest declines were in clarity of expectations, having the right materials and equipment, and the opportunity for workers to do what they do best. These elements are foundational to employee engagement.”
For employers, prioritizing the employee experience has arguably never been as important as it is right now.
What Exactly is Employee Experience?
Think of the employee experience as a journey that includes every interaction and observation during an employee’s lifecycle with your company — from recruitment and onboarding to development and retention to exit. It encompasses all that they encounter and observe during that lifecycle, including their role, workspace, leader, team, and company culture. At their foundation, employee experiences should be aligned with the company’s purpose, values, and mission, and have the full support of leadership at every level.
Why Should You Care?
I don’t know of any leader who would object to decreased absenteeism, low turnover rates, or increased productivity. And these are all very valid reasons that every leader should care about employee experience. In fact, it should be given the same time, attention, and resources as launching a new product or service.
An enhanced employee experience results in increased engagement, a stronger company culture and brand, growth, and better customer service. Think of it this way – your employees are on the frontlines of customer experience, helping to build and represent your brand. And whether they have a positive or negative experience at work each day will invariably impact these crucial relationships, and by extension, your company.
Additionally, as we discussed in At the Intersection of the Great Resignation, Professional Services, and Those Who Stayed, the employees who did not join the Great Resignation are burnt out and often feel underappreciated. These employees, who have more leverage than ever before, could still choose to leave in search of something better, and that often means a better employee experience. However, if their leaders are proactive and look at this instead as an opportunity to enhance employee experience before it’s too late, those employees are more likely to stay. Simply, companies who place value on employee experience have a significant competitive advantage over others who don’t.
At the Intersection of the Great Resignation, Professional Services, and Those Who Stayed Shifting Perspective from Those Who Left to Those Who Remain
The Great Resignation of 2021 has left more than vacant seats … although it has left plenty of those too. In its wake are thousands of desperate CEOs and the often forgotten-about, frenzied, and burnt-out workers who chose to stay. In their desperation, what these CEOs aren’t realizing is that while they struggle with finding new talent in this overly saturated candidate market, they are often not paying enough attention to, or completely disregarding, those who are still right in front of them.
These employees, whether they stayed because they had no choice (after all, not everyone can quit), felt a sense of loyalty to the company and/or their co-workers, or simply loved their jobs, are now feeling undervalued and underappreciated at the same time they are working harder than ever. And, while they pick up the slack and feel underappreciated by their supervisors, they are often also dealing with increasingly demanding clients and customers. It’s as if the country is in the grips of a new pandemic of impatience, rudeness, and intolerance, and these employees are left to deal with it all. Additionally, the resulting shift in power and bargaining positions of the Great Resignation have forced companies to offer more money than ever before … to secure new talent. That’s great for them, but what about the others?
As it stands today, in return for all that they’ve done and sacrificed, these employees are getting depressed, having panic attacks, and getting sick, with some turning to alcohol or drugs to try to ease their physical, mental, and emotional exhaustion. With our nation already struggling with massive mental health issues, something must be done to curtail this destructive path.
The Impact to Professional Services
While this challenge has impacted nearly every industry, professional services, including accountants, lawyers, finance, and IT professionals exemplify it even more. The mental and emotional anguish of a professional who is trying to do a good job when it is physically impossible to do so (because they have too much work to do) takes away their ability to think clearly and make quality decisions. All accounting firms – from the Big 4 to regional companies – are short staffed. And the ones who stayed are having to work extra to cover multiple jobs. Despite this dynamic, it seems companies are reluctant to increase their salaries to meet current market demands. According to one recruiter, if you want an accounting professional work in the office, the rate will be 130% of the market because they are demanding to work from home.
Like millions of others, professionals are tired, burnt out, and frustrated. And money isn’t everything. The pandemic shook people to the core – they are looking for more meaning and know that meaning rarely comes in a paycheck. In fact, there are professionals walking out of jobs that pay $250,000 per year because they can no longer cope with the constant stress of doing everyone else’s jobs. That’s a lot of money to walk away from, demonstrating the increasing severity of this situation.
It’s About Retention
It’s incredibly short-sighted to keep working those employees who chose to stay to a breaking point, while keeping them at below market salaries. It’s time for employers to shift some of that focus from securing new talent to securing the talent they already have. If they don’t, they will never find the right balance, as those who chose to stay before will likely soon also leave. According to Harvard Business Review, “employers need to recognize that it takes significantly longer to recruit someone than it does for them to give their two-week notice and depart.”
Increasing retention can come in many forms, including:
Providing opportunities to grow
Elevating the company’s purpose (and communicating it with the team)
Prioritizing culture and connection
Investing in taking care of employees and their families
Further, while we are at a time when there is increasing emphasis on Environmental, Social, and Governance (ESG), we cannot decrease emphasis on the health and welfare of our employees. It is counterintuitive to work on ESG initiatives while the company is short-staffed and burning out the employees they have.
A word of advice …
For Professionals. Know your worth! Do your research and ask for a raise with your current employer or seek a new position in this market to increase your salary.
For CEOs. Retain the talent you already have by treating them well! Pay more attention to the professionals you already have on staff than those you are attempting to get on staff.
The Great Resignation may have been considered empowering for those who were taking a stand, demanding more, and walking out the door. But for those chose to stay, it has been anything but empowering. And the resentment and exhaustion they feel isn’t going away anytime soon. It’s time for decisive action now to retain those who remain.
Barker Associates has extensive experience as an outsourced CFO. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Unwrapping the Top Three Overlooked CFO Year-End Processes
The holidays are upon us. And while we all may enjoy the traditions, family time, gift-giving, and merriment (likely even more so this year), there is still work to be done … particularly for CFOs. It’s time for year-end analyses and processes to end 2021 in an organized, balanced way in order to start 2022 with a clean slate. While it can all be overwhelming at times thinking about reviewing operations, marketing expenses, and all financials, it’s imperative these responsibilities are met accurately.
Unpredictability Doesn’t Change the Basics of Financial Planning
With all its tasks and checklists, end-of-the-year financial analyses and planning comes down to the assumption that when you evaluate where you were, you can better understand where you’re going. However, the past nearly two years has made this assumption somewhat unreliable with unpredictability appearing to be the only thing that’s predictable in business.
Despite this volatility though, CFOs ultimately remain responsible for performing the same duties – analyzing financial reporting, balancing accounts, preparing records and documents to file and pay taxes, and creating budgets. These tasks remain stagnant regardless of outside economic factors. But it has never been more important to dig deeper into some additional, often overlooked, processes.
Top Three Overlooked Year-End Processes
For many, we think CFO and Year-End and we automatically think financial statements, balancing accounts, and preparing for tax returns and payroll reports, but there’s so much more. The end of the year presents a unique time to unwrap real opportunities. Whether its negotiating with vendors, securing investments, or looking for better deals with health insurance, in some instances, you can start over in the new year, advancing your company even further (not to mention faster).
So, before you start the countdown to midnight, readying yourself for all that the new year has to offer, make sure you count the top three overlooked CFO processes so that your company is just as ready for 2022.
1. Accounts Payable. Sure, we remember to look at accounts receivable – our team has worked diligently, and we need to collect the money owed for that work. But what about what we owe?
Analyzing the company’s Accounts Payable is not merely a process to get caught up on payments though (although that is also clearly crucial). Rather, it is also an opportunity to review vendor contracts and negotiate better terms in an attempt to save money in the new year.
Are there any other options?
Are there hidden cost savings?
What does the competition look like?
If the CFO doesn’t look at ways to save the company money, no one else will.
2. Financial Technology. Technology has perhaps never been as important as it has been recently. Technology is what kept businesses running and team members connected when they couldn’t physically be together during a global pandemic. And yes, from an expense perspective, you’re likely spending more on it than ever before. But are you also considering what financial technology you are using? Are you asking yourself –
Is it up to date?
Have we switched over to the cloud, where there are automatic backups?
What does your accountant use and prefer?
If not, you probably should. This is a great time to do an end-of-year financial technology audit.
3. Future Scenario Planning. You may be saying, “Of course, we take time to strategically plan out the year,” and I’m sure you do, but things are different now. Knowing the challenges unpredictability creates in successfully running a company, it’s crucial to expand this planning by using future scenarios. Essentially, you create different scenarios and develop the response or plan of action for that particular set of circumstances. While this type of planning was historically the foundation of crisis management, with crisis permeating every aspect of business, it plays a more prominent role in day-to-day strategy.
With future scenario planning, you define triggers in advance and commit to be flexible and nimble enough to account for them. For example, a common future scenario planning topic this year is PPP forgiveness. For those who do not know yet if their PPP loan has been forgiven, future scenarios include full forgiveness, partial forgiveness, and no forgiveness. Analyzing how each of these scenarios will affect your business next year is key to unlocking future success.
Barker Associates has extensive experience in year-end processes and planning. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Five Steps to Committing to Financial Management Fundamentals
We seem to take one step forward and two steps back lately – with the pandemic, the economy, and life in general. In many instances, things are so close to “normal,” we’re ready to embrace it all again wholeheartedly. We need the familiar, especially during the tradition-filled holidays. We long for some normalcy and comfort. Yet, we’re hesitant in many respects, especially in business. And while this hesitancy is understandable after all that we’ve been through, we can’t run a business this way, especially as it pertains to financial management. In fact, our financials never needed more attention. As 2021 comes to a close and 2022 begins, it’s the perfect time to make a resolution to get back to financial management fundamentals.
Five Steps of Financial Management Fundamentals
Read Monthly Financial Statements
While this may sound entirely too elementary, we’re starting with the basics because there are those who tend to ignore them. By reading (and understanding) financial statements, you will quickly see what looks good and what doesn’t, if there are any red flags, and any trends. Monitor inventory levels against projected sales, receivables, and cash and identify other critical financial indicators and ratios from the balance sheet. If something doesn’t make sense to you, chances are there may be a problem that needs to be solved.
Review Bank Statements
Similar to your review of the financial statements, how will you know if something is off, if you don’t review the company’s bank statements monthly?
What’s coming in?
What’s going out?
Do the amounts look reasonable?
Do the canceled checks (reviewed online) look appropriate?
With this review, you shouldn’t be in the details of every single transaction (or you’ll never get any work done). Rather, your goal should be to get a good sense of the company’s overall activities. In this way, you can track monthly sales-to-expense ratios to better understand when to adjust spending and to identify the top impediments to profitability, so you can deal with them quickly.
Review Payroll Reports
Payroll reports should be reviewed quarterly when Form 941s are filed. During this review, you want to look at year-to-date wages paid for employees and ensure everything looks reasonable. If it doesn’t, find out why immediately.
Assess Expense Reports and Spending
Review credit card usage, expense reports, and overall spending, including meals and travel expenses. Take note of any entries that appear off, whether they are too high, too low, or too frequent. Once again, you don’t need to have all the details, but rather perform a high-level view – often, all that is needed to identify an issue sooner rather than later.
Listen to Feedback
No one has all the answers. The best leaders understand the intrinsic value of listening. In this case, that feedback should be from far more than the accounting department. It should also include feedback from operations and any other impacted department, as well.
What are the concerns?
Does anything need to be investigated?
These five steps will help ensure you are practicing financial management fundamentals, increasing oversight, and increasing overall engagement. Remember, the most successful CEOs are those who delegate, but also who stay close to the heart of the company’s financial picture. The consistent financial monitoring required of businesses takes attention and it takes work, but without a true long-term plan and careful monitoring, you cannot forecast or grow to the next level. So, in 2022, make a resolution to stay committed to financial management fundamentals. Barker Associates has extensive experience in financial management. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Thanksgiving has come and gone, and I sincerely hope you all took advantage of that special time to take a break from your busy lives, gather with loved ones, and remember to be grateful for all that you have. Too often though, we think about gratitude only in terms of our personal lives. Thoughts of gratitude invoke images of the Thanksgiving table filled with delicious food and sweet pies, surrounded by those we love most. And there’s no denying how important it is to remember to be grateful for our health, our family and friends, the home we live in, and the food we eat, but as leaders, we shouldn’t stop there.
Gratitude in the workplace is equally as important as at home, with long-lasting beneficial effects not only on you, but on those with whom you work. So, the question is—Are you accounting for gratitude in the workplace?
The Benefits of Gratitude at Work
Emotional intelligence, empathy, mental health, and gratitude have never been as important as they are right now. We have undergone a psychological and organizational shift through the pandemic. Now, more than ever, employees want to feel valued, appreciated, and empowered. Long gone are the days of clocking in and out for a paycheck. Rather, employees have a higher psychological need to feel a sense of meaning at work.
Gratitude, which can be closely aligned with recognition, goes a long way in finding value and meaning in the workplace. And the benefits include far more than putting a smile on someone’s face. Gratitude not only increases well-being in ourselves and others, but also morale, energy, and engagement, positively affecting performance and retention. In fact, in the Global Happiness and Well-Being Policy Report, the Global Happiness Council estimated that “a meaningful increase in well-being” yields, on average, about a 10% increase in productivity.
Tips for Gratitude in the Workplace
Below are a few simple tips to remember at work:
Be authentic. Authenticity creates the human connection so many long for now. If you are not authentic, the other person will quickly pick up on the insincerity, and your efforts will backfire.
Remember the power of simply saying, “Thank you.”
Don’t just recognize the big wins. Remember to recognize even the smaller, day-to-day ones.
Recognize those on your team who regularly show gratitude.
Incorporate gratitude into your culture not just around the holidays, but all year long.
With gratitude, not only do we feel better about ourselves, but we inspire others and help elevate them to be the best version of themselves. Lifting up your team members throughout the year will have long-lasting positive effects in your workplace. Then, you can be grateful for even more as you watch the successes unfold.
My hope is that each person who reads this chooses gratitude each and every day. Particularly after this past year and a half, we have seen firsthand how delicate life is and how our personal and professional lives can be disrupted without notice or question. So, please remember to choose gratitude.
I am exceptionally grateful to my clients, referral partners, friends, and family, all of whom help contribute to my ongoing journey.
The Impact of Management Practices on Business Outcomes New Research Shows Direct Correlation with M&As and Financial Performance
It’s no secret – good management is good business, plain and simple. But is it possible to actually quantify the impact on business outcomes, such as mergers and acquisitions and financial performance? According to research conducted by the Harvard Business Review, we can.
In an effort to determine whether there is a direct correlation between management practices and certain business outcomes, researchers used data from the US Census Bureau to examine the practices of 35,000 manufacturing plants. And while it is well established that much of management may be subjective, including leadership styles and how they align (or don’t) with various team members, objectivity can be found with the right questions.
Quantifying Management Practices
According to the article discussing the research, studies were conducted using more unbiased, neutral questions, leading to more definitive, measurable answers. For example, questions such as how much managers tracked employee performance, if they used the data found to improve practices, how production goals were set, and if they utilized standardized incentives are a few variations. Other questions included:
How many key performance indicators (KPIs) were monitored at this establishment?
What best describes the timeframe of production targets at this establishment?
What were non-managers’ performance bonuses usually based on?
Answer choices provided were specific and assigned a value. As noted in the article, “For example, responses to the question ‘What best describes what happened at this establishment when a problem in the production process arose?’ were: i) No action was taken, ii) We fixed it but did not take further action, iii) We fixed it and took action to make sure that it did not happen again, and iv) We fixed it and took action to make sure that it did not happen again, and had a continuous improvement process to anticipate problems like these in advance.” The results were gathered and quantified to define more structured management practices as those that were more specific, formal, and frequent.
Impact on Mergers & Acquisitions
Researchers then tracked mergers and acquisitions among the companies included in the management practices study with additional data from the U.S. Census Bureau. The intent of this comparison was to quantify the extent to which management practices influenced outcomes in mergers and acquisitions and overall financial performance.
The findings included the following:
Companies with more structured management, operations, practices, and procedures are more likely to become acquirers in an M&A.
Companies even one deviation higher in management score were 7.5% more likely to become acquirers.
Companies with less structured management and fewer standardized policies and procedures are more likely to be targets.
A mere one deviation point lower in management score resulted in companies being 2.8% more likely to become targets.
There is a strong spillover effect post-acquisition. A target company is more likely to adopt more structured management practices, similar to the acquirer company.
The management scores of target companies increased by an average of 26% post-acquisition, including additional KPI monitoring, goal setting, and incentives.
There is a direct correlation between improved management performance and productivity. “[F]or plants whose management scores increased by one standard deviation following their acquisition, productivity increased by an additional 3.3%, while value added per employee, value added per worker-hour, and profit margins increased by an additional 3.13%, 4.19%, and 1.16% respectively.”
Ultimately, the last point is what we should all take out of this research. It’s about much more than the effect management practices have on mergers and acquisitions. Rather, it exemplifies the importance of structure in management practices that affect the day-to-day operations and productivity of a company. Simply, it adds value, which will inevitably improve business outcomes – whether its M&As, increased profitability, or looking more attractive to investors who understand that implementing stronger management practices now is an effective strategy for long-term success later.
Barker Associates has extensive experience in both specific CFO needs and more general management practice ones. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.
Attention CFOs: Financial Targets Don’t Motivate Employees Tips on Motivation Minus the Numbers
Without a doubt, as CFOs, our language is the language of numbers. Simply, numbers make sense. So, it’s probably no surprise that we use them more often than other people. And while it seems intuitive to us that numbers are a great way to motivate employees, that thought process tends to be counterintuitive to others.
Most people appreciate having a clear-cut goal to meet—something to strive for and work toward. However, financial targets don’t generally motivate employees in the same ways. Financial results are the outcome of hard work, performance, and productivity, not the cause of it. As such, when we focus on the numbers, employees don’t feel as if they have control over achieving that goal and ultimately begin to feel less motivated. In fact, using financial targets has actually been said to decrease morale among employees.
This is not to minimize the importance of financial targets and metrics. Let’s face it—we’re CFOs, to us, there isn’t much else that is more important. And logically, we know that if we don’t hit those numbers, we may not be able to pay those employees we’re so worried about. But just because financials are important to the company does not mean they’re an effective motivational tool for employees. Rather, if we want to motivate, we need to bolster support for our organizational purpose, emphasize the value the employees bring to it, and focus on their specific impact on customers or the community.
Three Tips to De-Emphasize the Numbers in Motivation
Reevaluate what you communicate.
Put the metrics, measurements, and dollar signs aside for the time being. Instead, communicate goals over which employees have some control. They should be able to clearly see what they can do to help achieve company goals. Of course, some numbers will likely need to be included, but be cognizant of keeping the focus where it needs to be. Increasing focus on numbers will decrease focus on what actually needs to be done and dilute the overall strategy.
Be specific and use emotion when you talk about customers and clients.
Employees are more likely to go the extra mile when relationships are built, and they can see individual, specific, and actual impacts on those relationships. They want to know what impact they are having on customers and the community. Employees want to feel good about what they are doing, so show them the impact they are making, not in the aggregate, but in specific instances.
Do not overshare every metric.
Employees generally don’t need to know every single item that is being measured regarding financial performance. When all they see is numbers, they feel as if they have to figure out how to get there when really it should be the other way around. Tell them what they have control over and then the goal that was met because of what they did to get there. Think about where you want to direct their attention and remain focused there.
A Harvard Business Review article described it best, “You cannot spreadsheet your way to passion. With ambitious goals on the horizon, it’s tempting to double-down on financial metrics. But hitting financial targets requires employees who are excited and care about their work.” This has never been as true as today. Employees want to feel appreciated by leadership. They want to have joy and pride in their work. And as we talked about previously, they are far less likely now to tolerate anything less.
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