In today’s business environment all organizations are under tremendous pressure to do more with less. Businesses and Governments at all levels are held accountable by their stakeholders to reduce cost and improve their operating margins. Municipalities are under pressure from their citizens to minimize tax increases yet they face increasing costs for the services and infrastructures that are provided by their employees.

Employees are expected to get better and develop new skills just to stay on top of ever increasing expectations which creates an expectation for higher compensation levels.  More and more organizations have to limit wage increases just to keep costs from escalating out of control, especially those where wage costs account for a large percentage of the total expenses. We just have to look at the cost of our health and education systems and the pressure that increasing wages has on provincial budgets.

So what can be done to ensure employees are compensated fairly for the work that they do and still deliver on the expectations of minimal year over year cost increases?

It is incumbent for the leaders in all organizations to focus on the following;

• Eliminate any work that is not adding value to the organization or the clientele that they service
• Simplify required processes so that customer service expectations can be met with the minimum amount of resources
• Provide your employees with clarity on what is expected from each of them to help the organization succeed

Organizations which strike the right balance between compensation increases and continual productivity improvement such that the unit cost for wages continues to decrease will have a sustainable future.

In my next blog I will share some thoughts on how these three principles could be applied in our education system.

Mike Dick 

When I grew up in business we talked about “win win” solutions. Instead of making an either/or strategic choice we were encouraged to look for the “both/and” strategy to increase our ability to succeed. Today we seem to be so entrenched in our various positions that there is no room for a compromise.

We are looking over this fiscal cliff because the Republicans have signed off on an agreement/rule that says there will be no increase to taxes. Obama has stated that all he wants is to increase taxes on the top 2% based on income and then he is prepared to work on spending cuts. We continue to dangle over the cliff because the power of the agreement appears to be greater than the interest to negotiate by at least one of the players.

The Mayor of Toronto has been asked to leave office as a result of some poor judgement and a rule that says if you do this then there must be a consequence. Does the punishment fit the crime???? Yes Mayor Ford used City of Toronto letterhead to request donations for his football team. (I hope at least you signed it Rob Ford Head Coach versus Councillor Rob Ford). Yes he then chose to vote on a council motion in which he had a clear interest. Clearly some poor judgement from the Mayor but was there enough wilful misconduct and was he truly going to benefit significantly from the decision that he should lose his office and throw the city into a period of uncertainty?

Rule based and zero tolerance policies make it very easy to defend your position but make it harder to negotiate. Policies based on principles give you the flexibility to negotiate the outcome to fit the circumstances of the situation. The owners of the National Hockey League would like to increase their share of hockey revenue with the players so they can make more money. The players are willing to reduce their share on a go forward basis providing that the League honours the contracts that they have already signed. Both parties are firmly entrenched in their positions and neither is willing to find the “win win” solution and each appears willing to let the health of the game continue to deteriorate right before their eyes.

Mike Dick

The Grandkids have just started school, the leaves are beginning to fall and the youngest Baby Boomer is turning 46 having spent over 20-25 years in the workforce.  Soon they will be looking to pursue other interests in the next two decades.

The first of the Baby Boomers as defined by David K. Foot in Boom, Bust & Echo has just turned 65. While many demographers, including Foot have forecasted a skill shortage in the future, that time has come and many organizations will be facing skilled labour shortages as the Baby Boomers begin to exit the labour force.

Currently in Canada the Baby Boomers account for 50% of the labour force over 25 years of age and 50% of the Baby Boomers labour force is over 55. While there is no longer any mandatory retirement at age 65, organizations are going to have to deal with a very huge skill and knowledge gap as individuals with 35-40 years’ work experience begin to leave their organizations.

So as a leader of an organization or an owner of your own business it has never been more important for you to have a well-developed and thorough succession plan in place for the key roles within your organization.

A solid succession plan will avoid surprizes. You don’t want to be forced due to health issues or an untimely death to do something that is not in the best interests of the business. Having the next leader ready to step in will maintain stability in the organization during turbulent times.

A good succession plan takes time to develop and implement. Not only do you need to identify the right candidate to succeed the current leader,  you also have to allow those individuals time to get the right opportunities in advance of their succession so they will truly be able to succeed once they take on the role.

Finally a well thought out succession process will maximize the return on investment that you are making in both the business and the individual. Remember it has taken years for you to gain the knowledge that allows you to be successful.  It would be a shame not to provide your replacement with that same opportunity.

We will have another blog later this month that will focus on the importance of succession planning when it involves a family run business and the need to properly focus exiting the business or passing the business on to the next generation.

Mike Dick

Two companies run by their founders for the last 30 years recently had to replace their CEO’s. Both were forced to make these changes in response to a death and a dramatic decline in shareholder value. In comparing how each of these companies handled the succession planning at the very top of the business we can learn some valuable lessons.

RIM

Faced with rapidly declining share price, lower market share, aggressive competition and shareholder demands both Lazaridis and Balsillie stepped aside in January of 2012 and put their handpicked replacement Thorsten Heins in charge of turning around the fortunes of one of the biggest technology companies in Canada. (In 2007 RIM had a larger market cap than RBC.) This left many business analysts scratching their heads and trying to figure out just who was Thorsten Heins. Hired by RIM in 2007 from Siemens, Heins had three short senior operating positions in RIM’s handheld, product engineering and sales / business development divisions before being appointed as CEO.

Apple

Knowing that their founder had serious health problems, it was clear to everyone, even my son who is a shareholder, that Tim Cook would eventually take over the company when Steve Jobs stepped down from his role as CEO. So to no one’s surprize when Mr. Jobs passed away in 2011, Mr. Cook seamlessly transitioned into the role as CEO of Apple. Hired by Apple in 1998 Mr. Cook is credited with restructuring Apple’s approach to manufacturing and was promoted to the position of COO in 2007. He also was given the CEO position during Mr. Jobs’ medical leaves during the first decade of this century.

Key Learning’s

Mr. Cook had nine years with the company to make significant contributions to the business success before being promoted to COO in 2007. He also had a chance to step into the role as CEO for brief periods before taking on the role on a full time basis.  Mr. Cook’s transition to the top position was accepted both by Apple personnel and the industry analysts that watch the company, and had limited to no effect on the Top Leaders within the organization or the company’s share price.

Succession planning requires organizations to identify their top talent early in their careers and give those individuals the assignments and projects that, when delivered, will make them promotable when the opportunity arises. I bet you that the Board at Apple already is working on who will succeed Mr. Cook and RIM will begin the search for their next CEO if Thorsten cannot execute the turnaround that is required. Who do you think did the best job of planning to succeed in the future?

Mike Dick

Would governments be as despised by their citizens if they actually helped their citizens and tried to meet or exceed their expectations? Instead of continually cutting services (and while I certainly don’t mind eliminating the gravy) it may be more appropriate and required to find ways to increase the revenue and improve the cash flow. We are starting to see cities and municipalities who are running out of cash declaring bankruptcy. You just can’t keep running on debt -- you need to increase the cash flow to meet the required expenses.

How do you get business growth in today’s turbulent times?  With any successful organization it starts with engaged employees who strive each and every day to meet or exceed their clients / customer expectations. These employees create a positive environment for the customers creating a clientele that is more likely to return and purchase more services or product. These same engaged employees will work to meet all corporate objectives and deliver improved results because they clearly understand what is expected of them and the benefits of delivering superior results. 

Procter and Gamble, West Jet, Apple all get it. Success is delivered through their employees and plenty of leadership time is focused on empowering these employees to improve results and create a positive consumer experience generating ever increasing cash flow.  What are your thoughts on the importance of employees with respect to business growth?

 Let me know at @mdick54

Mike Dick

How do you get business growth in today’s turbulent times?  Is the business world capable of managing the tide of social change that is beginning to take hold of the global agenda?

Many governments are losing control and several countries in Europe and the Middle East are in turmoil as they struggle to meet the demands of a more engaged population that are not accepting the status quo or reluctant to make the necessary changes required to offset the collapse of their respective economies.

Even within North America “Occupy Wall Street” is starting to show the large distrust that exists between the vocal representatives of the 99% and big corporations. Given this growing unrest what should business, organizations and yes even governments do to make sure they survive and change to deal with the social and vocal upheaval that is taking place throughout the world.

I firmly believe that for any organization to succeed it boils down to three fundamental areas of focus that leaders must ensure are embedded in their organizational culture. Cash flow management, employee engagement and client/customer satisfaction. West Jet gets it -- Air Canada doesn’t.  Apple gets it -- RIM doesn’t. Where would you start within your organization?

Let me know at @mdick54

Mike Dick