Tag: managing directors

There are many types of metrics companies use to measure success, but how do you know what the most effective Key Performance Indicator (KPI) is for your particular business? John Raftery, executive coach at LEAP, explains how keeping a Core Score  can dramatically improve your business performance and drive behavioural change.

The Core Score and Performance Management

One of the key issues that people have when they’re trying to run a business and trying to come up with Key Performance Indicators, is that most of the KPIs are financial. But in order to have a balanced score card you need to have KPIs across 4 elements of the business. One is obviously the financials, the second is people, the third is customers and the fourth is processes.

Sometimes though you can find a unifying score or KPI which is a core score for the business; the Core Score for the business is something you can map in graphic format, as in a bar graph. It captures the essence of the business and it becomes like a flywheel within the business that will drive all the other elements of the business.

The New York Metro Example

I’ll give you an example from Malcom Gladwell’s bestseller The Tipping Point, about how behavioural trends take hold in society. A candidate was assigned to take over the running of the New York City metro, a system which looked and behaved like a sewer in terms of its business performance and its visual impact on the customers. He was tasked with the job of turning the metro around. He disappeared into his office for a number of weeks and thought about the strategy for bringing the subway system back to success. He emerged after a long consultation and thinking process with an answer.

All the staff eagerly waited to hear what the answer was. They thought it was going to be a very complex strategy involving lots of financial data. But his answer was this: we are going to cut down on subway fare dodgers. We are going to adopt a zero tolerance policy towards people who get on the subway without paying. Everybody thought this was ridiculous; if you were going to solve the major problems of the NY metro that’s not where you should start.

But he persisted and added additional security to catch fare dodgers. The security company started catching so many dodgers that the NY police had to become involved and set up their own porto-cabins in the underground platforms to cope with the problem. They were arresting people in large numbers, sometimes with fare dodgers handcuffed and lined up like a daisy chain on the platform. The police also found that when arresting the fare dodgers some were carrying weapons or drugs or they were wanted for some other crime. The message went out very quickly across NY that if you want to travel on the subway, you don’t carry weapons or drugs, you pay your fare and generally behave yourself.

It then became evident that the safest way to travel in NY was by subway which resulted in an increase in footfall. With that increase came an increase in revenue which allowed authorities to clean up the trains, get rid of the graffiti and so on. The clean-up had a further effect of increasing footfall and revenues even more. Essentially what he had identified was a flywheel within the business that was easy to manage and would trigger other positive things throughout the business.

The Core Score Effect on an SME

The question is how would you apply that flywheel effect to the SMEs that we deal with? I’ll give you an example of a service repair business, where a service team was going out to repair domestic equipment in the home and it was €70 for a call out. A lot of the repair engineers were not completing the task the first time.

They had to go away again and return with a different part for the appliance or different tools that they didn’t have in their vans. So we looked at that and decided we had to start measuring first time completion rates on the job. It turned out that first time completion rates were just over 50. Almost half the engineers had to return to complete jobs on another day. That led to customer dissatisfaction as well as loss of revenue because you could only charge the customer for one call out. So there was huge inefficiency within the business.

We began to measure each engineer for their first time fix rate, and we figured out that if they could increase their first time fix rate by a certain percentage it would bring a serious amount of cash into the business, without having to make extra investment in resources. The second effect was that increasing first time fix rate also increased customer satisfaction rates. The third effect was it allowed the business to see which engineers were performing well and which ones were performing poorly. This helped to identify where the deficiencies were in terms of where training was required. Often just by measuring something there is a natural improvement in performance and we began to see improvement straight away. Cash began to flow into the business and there was no requirement for additional resources or investment. The business was transformed as a result.

So the key really is to try and find what the Core Score is, the flywheel in the business that will drive the rest of the activity within the business. Finding the right KPI that not only tells you how the business is performing, but will actually drive performance and drive behavioural change, and will drive other things within your business if its measured in the right way. So what I would recommend is that visual management tools such as a bar graph represents something that can drive behaviour and drive other activities within the business. If you can identify that it can have a very powerful effect on the business.

 

Success in business depends on so many factors – clarity of vision, product innovation, great customer service, leadership, management capabilities, employee retention, new customer acquisition. Many business owners and management teams are aware that these factors are critical to success, but fail to implement performance processes that hold individuals to account. Accountability for delivering on strategic goals and objectives remains a critical issue for many businesses, particularly in the SME sector. John Raftery, business advisor at LEAP, explains what successful companies do differently, and how less successful ones can learn from them.

John, what do successful companies do differently?

I’ve been working with the SME sector for many years now, and one of the most successful things I do with them, in terms of impact is to give them a tour of a multinational company, particularly an American multinational. What they see there is a huge emphasis on clarity of purpose, measuring performance and accountability.

Visual Management

Multinationals are very clear on what their vision is and what they want to achieve. They get huge engagement from their employees through a lot of visual management systems. Their walls are literally covered in charts, graphs, timelines, value stream mapping, process improvement projects and so on. It’s all visual and it’s all there on display. What I find then when I go to less successful companies is that all the information is kept in peoples’ heads, on their laptops or on spreadsheets; it’s not visible at all. As a result there is no clarity about what the company is trying to achieve, there is no clarity about what the performance levels are, there’s no clarity about who is doing what, or what effect they are having. If KPIs exist at all they will only be kept by a few senior managers and hidden away on laptops and spreadsheets. We need to get them out there, we need them displayed, we need to get people buying into them, we need to get people understanding them, we need people taking ownership of them and delivering on them themselves.

Can big business practices work in an SME environment?

There is always a question of ‘how do we do this? Can we take the best practices of the successful multinationals and adapt it to our own SME environment? The answer to that question is yes, we can do it. The first thing people say is that it’s not suited to the Irish culture, but that’s totally untrue. One of the most successful countries in the world in terms of adapting to the American multinational culture is Ireland. The Irish workforce lap this up because it’s about engagement and communication, it’s about ownership and empowerment and teamwork. These are all the things that turn on the lights of the Irish workforce. But how do we do it then for SMEs? Is there a process, a method that can be undertaken to take these good ideas and implement them into a small company? And again the answer to that is yes.

The futureSME process

We have a process called the futureSME which is a well-researched, well developed process and its sole aim is to take the best practices from the most successfullarge multinational companies, and adapt them for the SME environment. It is a well-structured, well organised, well developed programme that undertakes to do just that. It’s delivered through ManagementWorks in the Management Team Programme and creates the culture of accountability necessary for success.

futureSME

Visual mapping strategies are at the heart of the business model known as futureSME, a methodology that extracts the best practices and disciplines in strategic management used by successful companies, and applies them to small and medium enterprises. LEAP is the licenced provider of futureSME in Ireland. Here LEAP’s managing director Mike Gaffney reveals why this model is working for business owners.

What is the Management Team Programme?
The Management Team Programme is a government supported business development programme as part of the Action Plan for Jobs, funded through ManagementWorks, to allow companies to focus on both implementing their strategy and developing their management team simultaneously.

Who is the programme for?
It’s for management teams, including the managing director, and as many of the managers that are critical to the decision-making process in the organisation should participate in the programme.

What areas of training and development does the programme focus on?
It focuses on helping companies build the business through a clear strategy, and also to ensure that operationally, the company is being run as a tight ship.

What are the methods used on the programme?
LEAP has been on the go for 14 years and our biggest challenge is finding the methodologies and developing disciplines that companies can work with long after LEAP have moved on. We use visual strategies and visual management tools that are at the cutting edge of strategy development, not just in the multinational sector, but in any sized business that wants to be highly successful and effective.

It’s well documented that we remember 10 of what we write. We remember 50 of what we see. However, we remember 90 of what we interact with. So the use of a visual strategy by key team members who interact, develop and validate the content of that strategy, is 9 times more effective than the normal approach to developing business plans.

Also the extended team in the organisation can clearly see through visual representation, where the business is going and where each of them is having a direct impact in developing the business.

Why should a business consider doing the Management Team Programme?
The simple answer is: “because it works.” Irish businesses are poor at thinking and acting strategically. Whatever chance they have of creating a strategic plan, their execution of it is very poor. The Management Team Programme takes away any requirement to have the expertise in-house in strategic thinking and strategic execution. FutureSME is a visual methodology that if applied, will change the functioning of your organisation, improving it incrementally on a continuous basis.

What feedback have you gotten from participants on the Management Team Programme?
The message is keep going. Keep engaging with our company and doing what you’re doing because it’s working. This programme would normally cost €7200, but with the governments support through the Action Plan for Jobs under ManagementWorks, the cost per participating company is €3500. That’s all in, for as many members of the management team as they require to attend the programme. It’s run in-house and it’s sharp and snappy: 6 workshops, typically delivered over a 12 week period.

Visual strategic management is driving company success

 

The primary goals of an Executive Coaching Programme are to support business owners by helping them to clarify their vision for the business, delegate more effectively, and to create the space necessary for innovation in order to drive the business forward. In this video John Raftery, executive coach at LEAP, addresses 4 main questions regarding leadership development for business owners.

  • What is the role of an Executive Coach?
  • What are the 3 most common problems faced by business owners?
  • How does an Executive Coaching programme impact on the business?
  • How can business owners benefit from an Executive Coaching programme?

Gain valuable insight into the role of the executive coach, how business owners benefit from a leadership development programme and crucially, how these programmes help your business become more profitable.

At the core of the executive coaching programme is the theme of personal development. To understand more about this see  5 Key Factors in Personal Development for Managing Directors where John delves deeper into the kinds of skills and traits that successful business leaders spend years practicing and developing.

Please feel free to leave a comment on the video using the box below. Thank you.

 

Mike Gaffney managing director at LEAPYou may wonder what the mentor’s role is when investing in a leadership and management development programme for your company, such as the futureSME programme. Managing directors need tangible results that will boost performance across all areas of their business, from daily operations to profit margins and market share. LEAP’s Mike Gaffney explains the role of the mentor on this programme and how it affects overall business performance.

Mike, what’s the purpose of a mentor on the future SME programme?

Well futureSME provides many proven business practices, tools and disciplines that can be applied to your business. The role of the mentor is to help the individual identify how to actively apply those tools to his or her given situation. Mentors are steeped in the best practices of futureSME and how they can be applied. They work closely with the owner to ensure they are applied in the most relevant and practical way to suit the particular needs of the company.

How does that benefit the company?

From the outset of the programme the focus is on practical application and tangible results.  This is a programme that uses theory to drive changes and secure results.  The mentor has that focus clearly in mind and ensures this is happening at each step in the process.  The mentor works with the owner to complete the company diagnostic at the start of the programme and again at the end of the programme so there is a clear comparison – evidence of change, evidence of improvements.  So mentoring is a critical component of the overall programme.

Is the mentoring process the same for every company, or does it differ by industry and size?

There are some common threads to the futureSME solution, like a visual strategy, and the application of visual management tools. The essence of futureSME is to enable the company to develop its strategic, managerial, operational and adaptive capabilities. What is applied to the organisation often depends on what is most critical to their specific needs.

For some companies, getting the operational side of the business right is the most critical issue. For others it could be having a clear strategy or better managerial capabilities. So the mentoring process is not the same for everyone. There is the same outline regarding the disciplines and practices that are put in place, but how they are put in place, and which areas are prioritised, is very much company specific.

What kind of ROI can a client expect from the mentoring side of the programme?

Business is tough for any organisation so there has to be real tangible benefits, be it increased turnover or profitability, increased market share or new customers. There has to be tangible business performance deliverables. The best example I can give is ourselves; LEAP has applied the futureSME methodology and we doubled our turnover in 2013 compared to 2012. So it’s important for any company engaging in futureSME that they clearly state what business performances they need to see improved, and how that will be measured. We are very comfortable with measuring the implementation of futureSME in a company against tangible financial performance, and other core performances, that the company determine.

 

In the business world, managing directors face a variety of challenges when trying to develop their companies into successful and profitable enterprises. As business leaders they need to arm themselves with a set of skills and traits that will allow them to maximize their own potential and the potential of their staff, and thereby maximize profits. But how do successful business leaders get investors, employees and consumers to trust their vision and ideas? The answer is through effective leadership and at the heart of that lies the concept of personal development. There are no magic formulas for success but as LEAP’s John Raftery explains, there are 5 key factors in personal development for managing directors that can influence your company’s bottom line.

1. Self-Awareness

“The key factor that dictates success in any endeavour, whether it’s in a business, a family, social settings or in a community, is emotional intelligence. The concept has been around for years, but essentially the most successful people in all walks of life are people who have high levels of emotional intelligence. What defines emotional intelligence more than anything else is self-awareness. There are lots of techniques to develop it such as psychometric tests and personality testing, but essentially what you need to do is devote a lot of time to reflecting on your behaviours, your attitudes and emotional responses to situations. It’s about questioning yourself and trying to reflect as much as possible in order to build up self-awareness. The reason why self-awareness is fundamental to emotional intelligence is because without it you won’t know what needs to change, or what issues need to be addressed in the way you behave. Self-awareness is the foundation to good personal development and making an impact on the world around us. Without it we are lost and it’s a never ending quest. We can spend our whole lives developing and honing self-awareness.”

2. Motivation

“There are two types of motivation; intrinsic motivation and extrinsic motivation. By intrinsic motivation I mean you are motivated internally, by something you want to achieve or gain for yourself in order to find personal fulfilment. Extrinsic motivation is where you are motivated by external factors such as status, money or power. Both internal and external motivation can be quite strong and lead you to achieving huge success, but ultimately intrinsic motivation is the stronger of the two because that always remains with you. And linking that back to self-awareness; the more awareness you have, the more you can tap into your source of motivation to drive you on.”

3. Self- Efficacy

“The third element is one of the more important ones. Self-efficacy is the ability to control your responses and your emotions without being stoic or frigid in your responses. In other words you give the appropriate response in appropriate situations. You can decide what your response is in a particular situation and you can control your behaviours. That includes behaviours relating to alcohol, exercise or diet and more importantly having control over your emotional responses. It means accepting you are in control of your emotional responses.”

4. Empathy

“The fourth element is the one that is most lacking in the world today. Essentially empathy is the ability to put yourself in another person’s shoes, to see things from their point of view. All conflict comes from a lack of empathy, from major conflicts to minor ones. People who are psychopathic have no empathy at all so they can’t feel another person’s pain. They can’t relate to other people. People with high levels of empathy can tune into other people and read situations better. They are better at reading the emotional responses of the people they’re trying to manage, or motivate or develop or relate to in some way. They are much better listeners than talkers, and by listening more you learn a lot more. There’s an old truism that God gave us two ears and one mouth and we should use them in that proportion. Listen twice as much as you speak. Allow others to speak without interrupting. Often when we are in conversation we are thinking about what we are going to say next rather than listening to what others are actually saying, and being inquisitive about what others are saying to us.”

5. Social Dexterity

“The last thing is what I call social dexterity which, at its most basic level, means interacting with other people. Basic things like shaking people’s hands, how you look them in the eye, and what your body language says about you. How confident are you in certain situations? How assertive are you? How do you relate to others in your network? How do you communicate with people? Can you actually lead teams or teams of teams? Can you lead an organisation? Can you relate to and manage large numbers of people? Social dexterity is something we try to develop in our children; we try to make them socially comfortable. We try to get them to relate to their peers, to get them to develop leadership skills through sport and so on. Ultimately this is the foundation that should lead people to greater levels of social dexterity further down the line. It’s one of the key components of leadership. I believe if an individual can develop the five key areas of self-awareness, understanding motivations, develop high levels of self-efficacy and empathy, and are comfortable and assertive in terms of social dexterity, then you’re looking  at an individual that can have a great  deal of influence on the people they come into contact with.”