Cliche #10 - The Value of a Plan

Frank's management cliche #10:

“The real value of a plan is not in stating what to do, but in defining the universe of what not to do”

Image source:billivorylarson.com

Explanation:

I have always been a big fan of planning. In fact, every organization I’ve been responsible for in the last twenty years has written and executed a plan. Some plans encompassed whole companies. Maybe some managers who have written them over the years will comment. Here is my favorite example of how plans go wrong if not managed closely and “the universe of what not to do” creeps into a manager’s world.

We had recently completed a comprehensive plan for the entire company when I received a call from Mary, our controller. “Hi Frank, We’re (the accounting department) meeting with a software vendor today at lunch to talk about new time keeping system and they’re bringing in lunch, do you want to join us?” I was busy at lunch and I thanked her for asking and declined. After I hung up I continued thinking about her request and called her back. “Hi Mary, I was just wondering why you are meeting with this software company since new timekeeping software isn’t in the very comprehensive plan you gave me last week for your department that covers at least 12 months of activity”. She objected saying that our timekeeping software had never worked well. “Then why wasn’t it in your plan?” I continued, “Not only that, but the IT group also has a comprehensive plan for the next year that doesn’t include researching and installing new time keeping software. The manufacturing group, which would take the brunt of the disruption in learning to use a new timekeeping methodology, also has a comprehensive plan that doesn’t include new timekeeping software. And last, but not least, the maintenance department, which would have to install the new timekeeping hardware does not have this in their plan”. “That’s the reason we wrote a plan and coordinated the activities of all the departments so that their respective resources wouldn’t get pulled in whatever direction some other department dictated. So now I’m wondering why you would waste your department’s time and the vendor’s time exploring a project that has zero chance of moving forward for at least a year. If new timekeeping software really is a critical need for the company, you should propose it in next year’s plan and if it survives the planning process, all the other departments will also have it in their plans. If that happens, then it would be a good idea to start meeting with potential vendors. Remember my cliché, “Decide what is important and then call vendors, not the other way around”.

I think Mary actually carried through with meeting the software company since it was already arranged, but I didn’t hear another word about installing a new timekeeping system. It was a good teaching moment for Mary where she learned that one of the main reasons for writing a plan is to define what we weren’t going to work on that year.

That's what I think.  Tell me what you think.

Ops #4 - Phone Sex

I was swapping business stories with a friend the other day and after about the fourth one they suggested I include them in my blog.  She said "you have a hundred of these stories and other people would enjoy hearing them, especially if they illustrate a point you are making in another posting".  So here is the first one.  I don't think it illustrates any particular point, but it is kind of amusing.  Yes, each story related actually happened and is accurate as best I can remember.

Image source:callruby.com
In the mid 1990's, I was the GM for a plant of a building products company located in a southern state.  I was sitting at my desk when the HR Manager asked to speak with me.  She wanted to let me know that an employee had let her know that our new receptionist of about two months, who was young and attractive, was having what the employee called "phone sex" with customers.  "Wow, that is a pretty serious accusation" I said. 

The receptionist sits behind a window to the lobby where there were frequently visitors waiting for someone in the company, or filling out an employment application.  The receptionist reported to the HR Manager.

I asked the HR Manager to look into the complaint and let me know what she found.  She came back an hour later and told me the following.  "I stood in the hallway outside the door to the reception area where she couldn't see me and listened to her taking phone calls.  After a few that were uneventful, I got an ear full of very graphic language between her and the person on the other end of the line that went on for several minutes.  I'm sure anyone in the lobby could hear it too."  The HR Manager then went on to detail how she had confronted the receptionist, and learned that the person on the other end of the line was a married distributor of our products, who was "just having some fun".  It turned out that he wasn't the only person who was having this type of fun with the receptionist, although it never went further than conversations on the phone.

So I asked the HR Manager how she wanted to handle the situation, since the receptionist reported to her.  She thought about it for a few seconds and said "I'll talk to her about it".  To this I responded, "good idea, and while your talking about it with her, make sure the words "your fired" come out of your mouth".

 Yes, this really happened.  How would you have handled it differently?  What factors would you consider in making a decision on how to respond to this situation?

Cliche#9 - Initiative

Frank’s Management Cliché #9


“I’d rather re-direct someone every day than have to push them to do anything.”

Image source: ehealth.va.gov

Explanation:

How does a manager develop initiative and risk taking in subordinates? I think it starts with letting them know that they are expected to take initiative and that they are allowed to make mistakes. Additionally, they need to know that, as the manager, you will re-direct them in a constructive way if they are going in the wrong direction. Here is an example from my Navy days that illustrates this point.

I was a junior officer on the bridge of a ship standing watch as the Junior Officer of the Deck. I was giving commands to the helmsman (steers the ship) and the Lee Helmsman (communicates with the engine room to control the speed of the propellers). The ship’s captain happened to be on the bridge and was sitting in his cushy chair to watch as we were maneuvering with several other ships in the battle group. Only the captain and the Executive Officer are allowed to sit while on the Bridge, everyone else must stand. It was a pretty precarious situation and a bad maneuver on our part could be embarrassing to our ship, or disastrous if we actually hit one of the other ships. Because of my anxiety and inexperience in this type of situation, I looked over to see how the captain would react after every command I issued. After several commands, the captain called me over to his chair. “Ensign Moreman, why do you look over at me every time you give a command?” I probably gave some lame excuse, like I didn’t realize I was doing it. He then said “let me tell you something. You can’t screw up bad enough that I can’t get you out of it.” “You just do your job like I’m not here and you’ll hear from me if you make a mistake - and we’ll fix it together.” I never looked over again, and he didn’t need to step in.

There are two parts to the deal struck between the manager and the employee about initiative. The first is that the manager will allow, and expects the subordinate to act on their own initiative. The second part is that the manager must be allowed to redirect the subordinate without fear of discouraging future initiative. Some employees (like teenagers), once they get a taste of being independent, resent any interference by the person in authority over them. It is best to discuss this before it happens and make a deal. “I will allow, and expect, you to take the initiative, and you’ll agree to let me participate when I see the need”.

Image source: laprogressive.com

Listening to Succeed

There is a tremendous amount of information available about listening in personal relationships, but this post is primarily focused on the listening skills needed for a manager.  We will start with the basic questions of why we listen and expand to obstacles to effective listening and the best listening behaviors.  One of the primary differentiators between the most effective managers and the least effective is their ability to listen. Depending on the study being quoted, we remember a dismal 25-50% of what we hear.  Make sure the 25% of what you remember are the important points.

Image sources: ehow.com, livestrong.com

Why do we listen?

1. To obtain information. 
2. To understand. 
3. To learn.
4. For enjoyment. 

Why are good listening skills important to a manager?

1. Saves time.
2. Can keep the manager from making mistakes.
3. Employees will talk to a manager that listens.

When does a manager need to exhibit good listening skills?

1. Counseling
1. Evaluations
2. Career development discussions
3. Coaching
2. Getting improvement suggestions
3. Investigating a disciplinary event
4. Giving or receiving a task - to make sure requirements are understood exactly
5. Meetings – A person can only have influence if they are “present”, and are carefully following the discussion at a meeting. The person who pays the closest attention in a meeting will be in the best position to shape the decisions made and outcome of the meeting. Those that are in the room, but not “present” will just have to go along with the decisions made.
6. Negotiations – The key to a successful negotiation is knowing what is important to the other side. Sometimes what is important to one side is superfluous to the other side, but can be traded for what is wanted. This means listening very carefully.
7. Selling – Hearing what the customer wants, or more importantly what they will pay a premium to get.
8. Meeting with customers/suppliers – Listening carefully will win business and higher prices with customers and better service and lower prices with suppliers.

What are some obstacles to effective listening?

1. Doing something else while the other person is talking – reading emails, answering a ringing phone.
2. Distractions
1. Noise – background noise that makes it difficult to hear what is being said.
2. Other conversations – dividing attention between more than one speaker is usually not possible.
3. Physical environment – temperature, air quality, not enough space, etc.
4. Discomfort of listener
1. listener is ill
2. Hungry
3. Need to use restroom
5. Inability to stay quiet – Some people just need to talk to hear themselves .
6. Not interested in topic
7. Lack of understanding of jargon used - medical, legal, indusrty terms.
8. Selective listening  - to only those things that the listener agrees with, or has interest.
9. Hearing what you want to hear - instead of what the person is saying.
10. Prejudice or bias
11. Being preoccupied with accents or speaker’s ability to communicate
12. Listener formulating their response instead of listening to the whole message.
13. Lack of attention span
14. Listener’s worry, fear, anger, or preoccupation with other problems

What are some good listening behaviors?

1. Practice, Practice, Practice – Not everyone is born with good listening skills, but every manager can get better applying the things learned in this post and practicing them.
2. Show respect for the speaker
3. Stop talking – Learning only happens when listening.
4. Look and act interested
1. Nod head
2. Make comprehension noises - uh hoh, right, I see, etc.
3. Lean towards speaker
4. Maintain eye contact – This doesn’t mean to literally stare into the eyes of the speaker. Most people actually look at the mouth of the speaker, which is better for the listener and less distracting to the speaker.
5. Don’t interrupt - obviously there are times when an interruption is appropriate, but the point here is to allow the speaker to finish their thought before barging in. At an appropriate pause in the conversation, asking clarifying questions is OK.
6. Remove distractions – background noise, etc.
7. Be patient - the listener will have ample opportunity to rebut, or make a counter point.
8. Hold your temper or opinions - especially if the speaker isn't even talking about you personally.
9. Notice body language - Body language link
10. Use positive non-verbal communication skills – body language that shows interest and not defensiveness.
11. Avoid emotional involvement -when too emotionally involved, a listener tends to hear what they want to hear-not what is actually being said. Stay objective and open-minded.
12. Listen to understand, not just hear -.get the speaker’s real message.
13. Repeat what was said in a way that shows understanding - not just memory.
14. Ask questions for clarification and to show understanding
15. Pay attention to what is not being said – recognizing that a speaker may leave out certain details on purpose can sometimes help the listener hear the “real story”.
16. Focus on content, not delivery. Message, not messenger.
17. Refrain from side conversations when listening in a group setting.
18. Manage the physical environment - temperature, noise, proximity to others
19. Take notes - if appropriate to the situation
20. Make sure there is enough time to effectively listen - or reschedule to a better time.
21. Don’t put words in the speaker’s mouth.

What are the consequences of poor listening skills?

1. Only getting part of the information
2. Making bad decisions
3. Missed opportunities
4. Making the wrong personnel decisions (not promoting or hiring the best person)
5. Wasting time
6. Getting the wrong message
7. Taking wrong, or no action
8. Frustration for the speaker and the listener
9. Poor Morale
10. Loss of credibility for the manager
11. People won’t talk to you
12. Cost to the company financially
13. Arguments

Ops #3 - Sources of Cash

Image source: 4ingrid.com
I’ve often said that every manager should have the experience of worrying about making payroll, or paying the company’s bills. It has a way of focusing the mind and giving a greater appreciation for money and how precious it is. I learned this lesson when I had to lay off almost half the office staff and was having daily conversations with vendors and asking them to extend us a little more credit while we got the company’s operations and finances healthy. At one point, over half of the company’s payables had aged more than 120 days.

I had been in the job for less than a month when I called a meeting with my staff and wrote the single phrase on the white board that you see as the title of this post. After explaining the severity of our situation, we brainstormed how we might find some money to keep us afloat.

Here is what we came up with:

Owners invest cash

Borrow money

Sell Shares (ownership)

Sell Assets

Cut expenses

Delay vendor payments (stretch AP)

Collect Accounts Receivable (AR) faster

Reduce Inventory

Make a profit

That’s what we wrote, so let’s take them one at a time.

Owners invest cash – The owners had no money to invest.

Borrow money – The owners had already mortgaged their homes to keep the business going and we were only able to keep operations going using a line of credit from an asset lender. Basically all customer payments went straight to the lender and they would release cash according to their asset calculations. This arrangement impacted many of our other suggestions because selling assets or reducing inventory had the unintended consequence of reducing our ability to borrow.

Sell Shares (ownership) – There was no appetite for this from the owners. It was a family owned business and they were not ready to bring in additional partners, even if they could find some.

Sell Assets – Buildings were leased and the equipment was pretty unsophisticated and very old.

Cut expenses – Half the staff was already gone and we had been in the situation for so long, there was really no where else to cut. We didn’t spend a nickel that wasn’t absolutely necessary.

Defer payments (stretch AP) – We already had over 50% of vendors more than 90 days past due. Any further and we would be shut down.

Collect AR faster – We had very little leverage with customers due to poor quality and their concern for our viability. We did redouble our collection efforts, but it didn’t make much difference. Most of our customers were reasonably good payers.

Reduce Inventory – This turned out to be the silver bullet and was the only realistic chance to get a one time injection of cash. Through very aggressive actions and by doing everything anyone could think of, we reduced our inventory by half. It created the cushion we needed and gave the business some time to fix operations and do what was really the best way to generate cash – make a profit.

Make a profit – The company had experienced two years of steady losses. We turned our first profit in the second month of the turn around with a 50% increase in revenue, which was entirely from past due orders. With dramatically improved operations and quality, the profits started to be predictable and the company had healthy cash flow from operations after about a year.


Yes, this really happened.

Can you think of any other sources of cash?

How do you keep a company from getting into this situation in the first place?

Leave a comment.

Cliche #8 - Tell yourself the Truth

Frank's Management Cliche #8

"You can lie to other people, but never lie to yourself"



Image sources:jgfmarketing.com, vicdorfman.com

Explanation

I am not advocating lying to anyone, but most importantly, don't lie to yourself.  I'm mainly talking about the big things here, not where you will spend the weekend.  The lies I'm talking about are about the things you are putting off to another day, when in reality you know in your heart you will never get around to doing them.  here are some examples:

I'm going to work for myself someday.
I'm going to graduate school, but I need to make some money first.
I'm going to move to San Francisco and get a job someday.
I know I need braces, and I'll get them someday, but not now.
I'm definitely going to get back in shape as soon as I have a little more time.
I'll spend more time with the kids after I get my career on track.
I'm going to learn how to invest in stocks and manage my own money.
I'm going to write a book.

This is not a call to action.  Just a call to be honest with yourself.  When you say these things to other people, they already know, probably better than you do, if you will ever do them.  Try asking someone if they think you'll actually start your own business someday, or that you'll take the time to get in shape.  They probably won't be totally honest with you, but you'll be able to see by their reaction to your question whether they think there is a 10% , or a 90% chance you'll do it.

There are lots of people that when they make a promise, they always keep it.  But that only applies to promises they make to other people.  Promises we make to ourselves are constantly being broken, or pushed further down the road.   Here is a small one I made to myself that I still get a chuckle from when I think about it.  When I was first starting my career, I didn't like the commute I had.  I figured out that if I wanted to get someone to drive me to work and back, it would cost me about $18,000 per year.  So I told myself that as soon as my salary increased by $18,000, I would hire someone to drive me to work.  Well, I never did it and I know I never will.

One way to get better at this is to link things you know you'll do with things you think you might not do.  For instance:  Tell yourself that you will not buy a house until you have gotten your graduate degree, or at least enrolled.  Tell yourself, and others, that you won't go on vacation until you get back in shape.  You'll be able to tell by your reaction to the link how serious you are about what you are telling yourself.  If you are really hesitant to make the link, then you are probably lying to yourself.

Bottlenecks in Manufacturing

All the posts up to now have been applicable to any company or industry. This one is specific to manufacturing companies.


The concept of bottlenecks in manufacturing has been around for at least 20 years, and many managers feel they are well educated in the need to eliminate them. It is, however, always a good idea to refresh this concept and look at it from a few different angles. The concept of a bottleneck was popularized by Eli Goldratt when he published his remarkable manufacturing book, The Goal.


Let’s start with the definition of a bottleneck:

A bottleneck occurs when the demand or need for a process exceeds the available capacity. This is characterized by the fact that time lost cannot be made up.

Image source: zubinmehta.wordpress.com
A bottleneck is not necessarily permanent, but can emerge and disappear with changing demand. For example, the welding department, that is used in the fabrication of several products for a company could become a bottleneck every time a particular product is run, but the department usually has plenty of capacity. This is why it is sometimes difficult to identify bottlenecks. Someone will think a department is a bottleneck, but the very next day the function has no demand and is idle.

It is also difficult to pinpoint bottlenecks because of the dynamic nature of any endeavor that requires lots of people, which means there can be lots of noise in the system. For example, consider the following day in the life of a particular company that makes a simple product that is made from four components fabricated in separate departments and then assembled. Each department has a different capacity. Let’s call the departments A, B, C, D and Assembly

Hour 1: Rough start - lost production in every department. Also department C has a worker that is late – lost production for the first two hours of the day in C.
Hour 2: A machine breaks down in dept B, but is fixed quickly – lost production in B.
Hour 3: Because of the breakdown in dept B in hour 2, the assembly department is idled for 20 minutes.
Hour 4: Workers are getting hungry and anxious as they wait for the lunch hour to begin. Lost production in all departments.
Hour 5: A worker is injured in dept B and is out for the rest of the day. Workers in dept A help the injured worker – Lost production the rest of the day in dept B, and lost production in dept A.
Hour 6: The work orders for dept D are incorrect. It takes 20 minutes to get them corrected – Lost production in D.
Hour 7: A worker in dept C has a parent teacher conference and has to leave early. Lost producton in dept C for hours 7 & 8.
Hour 8: The workers in dept A decide to do a major clean up of the department spaces – subtract all production for hour 8 in dept A.

You can see that what management thought was a balanced process is anything but balanced in practice. There are just too many things going on to accurately predict the output of each department. This is why it is important to know which processes are constraining the output at any given time.

It is a very powerful concept to understand that the output of a bottleneck process determines the output of the entire plant or organization. Consider this simple financial example:

Let’s say that a small department of three people is the bottleneck of a factory that has 300 people and produces $100mil per year and could easily take another $10mil in orders if they had enough capacity. There really isn’t enough work to justify another full person in the bottleneck department because they are very highly skilled people and expensive. If another person was hired, the department would produce the additional 10% needed, but then all four people would be idle for 20% of their day. Many managers would balk at having four expensive people idle for this amount of time. But look at what it would mean to the plant. If the cost of the additional person was $100,000, this would be the investment needed to increase the plant output by $10mil. Let’s make the scenario a little more complicated and say that the value of what the three person department produces is less than what it costs the company in pay and expenses of the department. The value of the bottleneck should be viewed as the value produced by the whole organization when making decisions about that department. In this case the company produces approximately $500,000 per hour ($100mil/2,080hrs). This is the true value of the bottleneck’s production. When the expense of $100,000 over a full year to is compared to the additional production of $500,000 per hour for the plant, the decision to hire gets a little easier. Of course, another department may emerge as the next bottleneck before the entire $10mil in output is realized, but the fact remains that the additional expense will be small in comparison to the benefit.

Although it would be too time consuming to get into how to find a bottleneck in this post, particularly because there is almost always very different opinions in any team on where to find the bottleneck. The reasons provided are usually entirely anecdotal. This is a good place to start however. Try to get the team to agree on a few candidates for the bottleneck and then begin to collect data to find out which one is the biggest constraint according to the data collected.

Once you have identified what is believed to be the real bottleneck, what things can you do to make sure the output of that process is maximized. Here are some suggestions:
1. Add people
2. Move people from non bottleneck areas
3. Add Equipment
4. Reduce set up time
5. Farm out work to other departments
6. Farm out work to vendors
7. Train people to be more efficient
8. Move in more talented people
9. Speed up equipment
10. Move equipment from other areas to the bottleneck
11. Stage parts
12. Ensure quality
13. Redesign product
14. Improve process
15. Provide better supervision

When else should bottlenecks be considered?

1. Buying equipment – Don’t buy equipment for any other area if the bottleneck area needs anything.
2. Sick days – If someone calls in sick who works in the bottleneck area, take action immediately to backfill.
3. Starting & stopping times – Make sure that work is being performed every minute available, either through extra supervision, or other methods.
4. People coming in late or leaving early – make sure this doesn’t happen unless planned ahead with backup personnel to keep the work moving.
5. Maintenance – Make sure the machinery in the bottleneck is the most reliable.
6. Inventory (safety stock) – extra components may be wasteful if they are everywhere, but it will pay off in the bottleneck area.
7. Work order accuracy – Extra time checking for 100% accuracy is cost effective in the bottleneck area, but probably not factory wide.
8. Scheduling priority – Make sure anything needed by the bottleneck process has top priority if it will keep the area from losing time.
9. Better supervision – The bottleneck area should have the best available supervision.
10. Engineering Changes – Any changes from engineering to make the process more efficient in the bottleneck area should be implemented immediately, even if it is only an incremental improvement and large improvements could be implemented in other areas.

Ops #2 - The Power of Data to change minds

The Myth of Expander Nine


When I joined the Raychem Energy Division, we had to design and build the machines that made the product. The product was heat shrink tubing and one of the machines we needed to design was called an “expander”. I was hired as the Plant Engineer, which meant that I was responsible for the engineers who designed the machines, the machinists who made the components, the machine builders that assembled the machines and the maintenance crew that maintained the machines once in service. One of these expanders was very expensive to build. A fully loaded expander would cost about $1.5 million dollars to build. We had four expanders in use in the plant. The oldest of the expanders was called expander 9. The logic of the numbering system wasn’t obviously apparent because we were in the process of building expander 4. I have no idea where the numbers came from. These were very complex machines and broke down often. The maintenance crew was “old school” and mostly wandered the shop waiting for someone to call for their assistance and their favorite tools were a hammer and a screw driver. There was no formal maintenance program and no records for the machines existed.

The conventional wisdom in the plant was that expander 9 was on its last legs and needed to be replaced. There was actually an approved requisition for a replacement for expander 9 with a budget of $1.5 million. Being new to the plant and not having the experience and history with the machines, I asked that any work performed by the maintenance department be documented with a work order. This was easier said than done because the maintenance crew didn’t support the effort. They quickly figured out that I could not only track the work performed on the machines with work orders, but the work orders also showed how much work was done (or not done) by each maintenance mechanics. Over a period of several months the work order system became part of the routine and useful information was gleaned from the database that was being built. As we started to see recurring breakdowns we were able to strategize permanent fixes and order the right spare parts as the history told us what we needed to have on hand.

The most remarkable thing we learned was that expander 9 was not only more reliable than everyone thought, it was in fact the most reliable expander we owned. The old cliché about “perception is reality” comes to mind. When another machine, that was much less reliable, broke down it didn’t get much attention, but every time that expander 9 broke down, everybody knew about it. The myth was constantly being reinforced to the point where managers signed off on a $1.5mil replacement.

It is amazing how quickly perceptions can change with credible and enlightening data. After presenting the data on expander 9, its reputation was immediately restored, the plans to replace it went away, and everyone stopped talking about how bad it was.



Yes, this really happened.  Here is a picture of an expansion machine and some heat shrink products.

Image source: best-b2b.com
Image source: heatshrinkchina.com

Cliche #7 - Principles that hurt

Frank's management cliche #7

"A manager's principles are not shown when they hurt others, but when they hurt themselves"
Image source:norcalblogs.com
Explanation:

Most managers profess to not tolerating unprofessional or unethical behavior.  They will swiftly take disciplinary action on people they catch breaking the rules.  These decisions obviously impact the perpetrator and others adversely, but what happens when the adverse impact is on the manager themselves?  Will the manager still take the same swift and decisive action?  If it puts their own reputation, or income, in jeopardy, will the manager turn a blind eye or give second and third chances?  Here are a few examples:

1. The division "rainmaker" is caught submitting inflated expense reports.
2. The programmer that wrote the code for the company's best product is sexually harassing and making inappropriate advances to their direct reports.
3. The technical guru is repeatedly showing up for work hung over and sometimes still under the influence.
4. The account manager for the biggest customer, who love him, is discovered watching pornography in his cubicle on the company laptop.
5. The best technician, with by far the most product knowledge, initiates and takes part in a fight on the factory floor.

In all of the examples above, disciplinary action is probably needed.  In each case the employee involved is very important to the business and their removal will make the boss's job much more difficult.  Will the boss find a way to overlook the transgression, or address it but in a much severe way than they would for another employee? 

If the manager takes the pain and treats the star employee as any other employee, it will show that this really is a principle that they take seriously.  They believe the principle is more important than the next month's profit, or an uncomfortable conversation with their boss, or ultimately less money in their pocket.

What examples of this have you experienced in your career, or witnessed in other managers.  Have you seen a manager fall short in this area.  Leave a comment with your story.
Image source:funonthenet.in

Ops #1 - Prisoner returns with a message

I was swapping management stories with a friend the other day and after about the fourth one she suggested I include them in my blog. She said "you have a hundred of these stories and other people would enjoy hearing them, especially if they illustrate a point you are making in another posting". So here is the first one. I don't think it illustrates any particular point, but it is kind of amusing. Yes, each story related actually happened and is accurate as best I can remember.



A Visit from the Big House
Image source:lookingglassfancydress.co.uk

It is not unusual in this particular town in the south for many family members to be working at the same factory. The factory where I was working, recruited from San Francisco to be the GM, was no different. We had several father/son combination employees. In one case there were three generations represented. The family at the heart of this incident had the father and two sons working at the plant. Although good people, they were big and rough. Mountain men comes to mind and not to be trifled with, if you wanted to stay healthy. The younger brother, let’s call him Buck (not his real name), was about 6’-5” and about 200 lbs. Pretty lanky, but strong. His older brother was a little taller and weighed about 300 lbs. Buck was quiet and hard working and living with a young woman who also worked in the plant. She was about 5 feet tall and weighed about 90 lbs. They were raising her young daughter from a previous relationship.

It turns out that the previous relationship of the woman ended because her man was sent to prison. I never learned the offense, but he was there at least two years. On the day he got out of prison, he showed up at the plant and gave the receptionist a box about the size of a shoe box and asked her to give it to Buck. Then he simply left. The receptionist dutifully walked out to the shop floor on her break and gave the box to Buck.

Inside the box was a single sheet of paper and what looked to be a couple hundred letters in envelopes. The single piece of paper said “I don’t want this bitch. Keep her away from me, she’s yours”. Buck then started to read a few of the letters and quickly realized that his girlfriend had been writing her ex-boyfriend in prison on an almost daily basis. The gist of the letters was that she couldn’t wait for him to come home and the only reason she was with Buck was to have somewhere for she and her daughter to live.

Buck saw red. He walked over to her work station and picked her up over his head and slammed her to the ground like a rag doll. Before anyone knew what was going on, he had picked her up again and threw her against the wall. By then about four guys jumped on him to stop him. The plant superintendent, who was also very big and very well respected by everyone in the plant was able to separate the two of them and calm Buck down, at least for the time being.

The Superintendent came to me to relate the story. He was incredulous when I told him that Buck would have to be terminated immediately. It was an education about the culture of this small southern town and what happens when a man’s honor is at stake. Although they respected my authority in the situation, I had a parade of lead men and others in the plant making a plea for leniency. The basic message was that "she had it coming” and was lucky it happened at work where there were people around to step in. My message to them did resonate though. I told them that there are two places people should be safe and their loved ones could relax knowing that their family members were safe. One place is school and the other is at work. I was responsible for safety at the plant and took that responsibility seriously. The bottom line was that the woman was entirely the victim in this incident, regardless of what one might think about what she had done at home.

Yes, this really happened.

How would you have handled this real life incident? What factors would you consider in making a decision? Think about it before reading below what actually happened.

Buck was terminated and the woman remained working at the plant for several more months and then left for another job.  About a year later, Buck came to the plant and asked the Superintendent if there was a chance he could get his job back.  Since the woman was no longer in the plant and Buck had paid for his offense with a year away from work, we gave him another chance.  He was re-hired with the understanding that he would basically be on permanent probation.  We never had another problem with him.

Get Your Priorities Straight!

One of the most important things that managers do is set the priorities for their group.  As much as we would like to get everything done today, choices need to be made.  The effective manager will be very clear about how they want the choice to be made when an employee has to decide what to work on and what to set aside.  Without clear direction, employees will diligently do this:
Image Source:vintek.net


There are Strategic Priorities and Tactical Priorities. 

What are Strategic priorities?

Strategic priorities are the guiding principles of a company that tell employees the relative importance of competing principles. These give the values of a company and the general direction, but they don't tell a person specifically what to do on any given day.  The tactical priorities should be in alignment with the strategic priorities, but are much more specific and do tell an employee what to work on.

Typically strategic priorities are not what a worker thinks about when they are planning their activities for any given day, but they need to know what they are so that their daily activities support those priorities, or don't specifically contradict them.

Where can an employee find the company's priorities?
If a company structures their priorites correctly, and they are in fact part of the fabric of the company and not just lip service, they will be apparent in many places.  There are several places where a company tells an employee what they want them to do.  This is the company's "Priority System".  A person should be able to enter this system at any point and get the same direction for how they should handle competing priorities.  Here are a few:

1. Mission Statement - This is usually not very specific, but creates the umbrella that other, more specific priorities come under.  Creating a good mission statement is easy.  Creating a company culture that reflects that statement is very hard.                                                                                                                     Image Source: getentrepreneurial.com
2. Business Strategy - The company starts to give direction here.  What markets the company intends to pursue, where investments will be made, how the company will differentiate itself from the competition, etc.  The business strategy should be in alignment with the Mission Statement.
3.  Published Quarterly and/or Monthly Priorities - This is where the manager actually spells what is important for the group to work on, or achieve in the current period.  Each employee can use this direction to decide where to spend time on a daily basis.  This is what I am calling "Tactical Priorities".
4. Performance Reviews - There are only three things to discuss in a performance review.  They are:
1. What the employee did well.
2. Where the employee needs to improve.
3. The objectives for the next period - This is where the priorities are spelled out for the individual employee.  These priorities should be in alignment with the buisiness strategy.

What does a Priorities Document look like?
It is easy to make a list of priorities, but it takes a lot of thought to put these priorities in order of importance.  It is, however, important for a manager to do this if the priorities document is intended to be used as a tool for employees to make decisions.  Since there are many things a manager wants to accomplish, they must decide which ones are really important and which ones are not quite as important, or which should be moved forward incrementally.

Here is an example of the wording of an effective Priorities document:

From:  Manager
To:  Team
Subject:  Third Quarter Priorities

There are many challenges that each of you must address every day and it is important that I convey to each manager the priorities for the short-term future. Please share this memo and its content with your staffs. These projects are of the highest importance to the company, even if only a few people are actually working on them. Anyone who can influence the success of these projects should be working on them.

1.  
2.  
3.  
4.  

We must be careful not to over load our resources, which is the reason the above list is short. There are obviously many other items that must be done well for our company to be successful, so here is a prioritized list of items that are important, but do not rise to the level of the top five. 

2.  
3.  
4.  
5.  
6.  
7.  
8.  

_______________________
Notice that there are only a few high priorities, but many less important ones.  I would recommend keeping the high priority list to five and the lesser priority list to no more than fifteen.  Once this document is published, it should be reviewed frequently to make sure that everyone knows the manager is serious about the relative priorities and they are actually being followed..  It is also a good idea to have a formal review when the next set of priorities is published to review/celebrate accomplishment of the previous set of priority objectives.
                        Image Source:littlevic.wordpress.com                Image Source:hollandhub.com

Financial Reports for Managers - The 10 minute MBA

All managers should have a basic understanding of how the finances of a company work.  Accountants have a way of making the financial reports complicated, but if a manager sticks to the basics, they can understand how a company uses these reports to stay healthy.  I know there are a million sources for this information, but it should be in every manager's toolbox so I am including it as a post.
What are the most important financial reports for a manager to understand? 
There are many reports that a company uses to understand their finances, but there are three main reports that will tell whether a company is healthy.  They are:

1. The Profit and Loss statement, also called the Income Statement - This is basically a list of all the expenses of a company in any defined period subtracted from the revenue for that period.  A positive number means a profit and a negative number is a loss.
2. The Balance Sheet - This is a list of assets, which is what the company owns and a list of liabilities, which is what the company owes.  The difference between these two things is the value of the company, or the equity of the owners.  This doesn't mean you can buy a company for this amount, but gives a basis for what is called "book value".  The amount needed to buy a company (another way to "value" it) is either determined by the amount someone will pay for a private company, or is represented by the market capitalization (total value of all outstanding stock) of a public company.
3. The Cash Flow Statement - A company can make a profit and have lots of assets, and still go out of business if they don't manage their cash carefully.  It is like a house.  Let's say a person purchased the house for $500,000 and after 5 years it would sell for $1million.  That means the person who owns the house has made $500,000 profit.  The problem is that if the person can't make the monthly mortgage payments, the bank will force the person to sell the house.  That's great if the objective is to get the money out of the house - it is bad if the objective was to live in the house.

Let's look at each of these reports in more detail.

Profit and Loss Statement
 Image source: tutorsonnet.com
Costs - There are two basic ways that costs are categorized, fixed and variable.  Added together they are called Total Costs.

1. Fixed costs - expenses that are needed to keep the business running whether or not anything is produced.
1. Salaries
2. Rent/Mortgage
3. Depreciation
4. Equipment Leases
5. Property Taxes
6. Debt Payments
7. Insurance
2. Variable costs  - expenses that vary with the amount of goods or services produced.  Theoretically, if nothing is produced, there will be no variable costs incurred.
1. Labor Wages
2. Overtime
3. Materials
4. Utilities
5. Commissions
6. Freight In/Out
7. Packaging Supplies
8. Sales Taxes
9. Scrap
10. Tooling and repairs
3. Total cost  - the sum of all fixed and variable costs, TC=FC+VC, and can be represented in the following way:

Image source: Syncpal.net

Revenue - The amount of money a company brings in through sales.  There are other ways companies can bring in money, but let's just stick with sales for this illustration.

Now let's add two more important concepts, Contribution Margin and Break Even Point.

Contribution Margin - the amount of money left over after the variable costs have been covered for a product or service.  Basically this amount "contributes" to paying for the fixed costs.
Break Even Point - The point at which enough goods have been sold to pay for all of the fixed costs. 


Image source: fao.org

The concept of Contribution Margin is especially important because after the break even point has been reached, the contribution margin represents the profit that will be realized with each additional sale.  Let's use an example to illustrate why this is important.
Contribution Margin ExampleLet's say the break even point for a product that sells for $100, with a contribution margin of $25, is 900 units.  If the monthly sales are 1,000 units, the revenue will be $100,000 and the profit will be $2,500 (all the CM after BE).  If an additional 100 units could be sold, the Revenue would be $110,000, but the profit will now be $5,000.  This shows how a 10% increase in sales can produce a 50% increase in profit.  That's why it is important to understand the connection between Break Even and Contribution Margin.


Balance Sheet

Image source: unchained-entrepreneur.com

Assets - Here is a very simplified list of asset accounts

1. Cash
2. Investments
3. Accounts Receivable
4. Inventory
5. Prepaid Expenses
6. Property, Plants, Equipment (PP&E)
7. Goodwill - The amount paid for a company purchased above that company's book value

Liabilities - Here is a very simplified list of liability accounts

1. Accounts Payable
2. Reserves
1. Unpaid Benefits
2. Unpaid Taxes
3. Notes
1. Loans
2. Line of Credit
3. Notes for equipment

Equity

1. Paid in capital - Money that the owners put into the company.
2. Retained Earnings - All the earnings not distributed to owners from previous years.
3. YTD Income - This year's earnings

Cash Flow Statement
Image source: dailymarkets.com
From Operations

1. Sales (+)
2. Materials (-)
3. Labor (-)
4. Expenses (-)

From Financing

1. Loan Service (-)
2. Dividends from investments (+)
3. Dividends paid to shareholders (-)
4. Taxes (-)

From Investments

1. Capital equipment (-)

How are the Balance Sheet and the Profit and Loss Statement (Income Statement) connected?

Any change to the balance sheet that is not balanced by another account on the balance sheet must "flow through the income statement". For instance, if a loan is paid off, the liability can be cleared by reducing the cash assets, which means the accounts remain in balance and would not have an impact to the Profit and Loss Statement. However, if it is determined that a valuable piece of equipment was stolen, this can not be balanced through a liability adjustment, so it must be reflected as a loss on the income statement.

That's what I think.  Tell me what you think.

Cliche #6 - The Truth

Frank's Management Cliche #6                                

"There can be only one source of the truth"

Explanation:

If there is only one source of the truth, then everyone can rely on it.  If there is more than one source of what is believed to be the truth, then if they all don't say the exact same thing, the organization will not know which to believe.  The best source of the truth is something that everyone can access.  If it is company information, then that source should be the company database in the computer.  Here is a good example: 

Bob, the production supervisor, walks into the manager's office and says "I have twenty parts short on the Alpha machine.  Here is the list I made".  The manager says "OK, let's go over to Production Control and make sure they are chasing those parts."  The manager and supervisor walk over to the planner for the Alpha product and ask her what parts she is chasing.  Jill says "right, I made a list of the missing parts yesterday and here it is". The manager compares the two lists and sees that there are parts on the supervisor's list that are not on the planner's list, and vice versa.  The manager takes the supervisor and planner in tow and walks over to the buyer's desk.  The manager says "It appears there are parts short on the Alpha machine and I want to make sure you are ordering them as an emergency with our vendors".  The buyer, Tim, says "I know, Jack called me the other day and told me to order some parts, and I called and put the parts on order. The parts will be here today."  The manager breathes a sigh of relief until he looks at Tim's list.  It is different than both Bob's and Jill's lists.  The manager notices that all the lists are hand written and muses "I wonder what the computer thinks."  Tim makes a few key strokes and produces a list of parts the computer shows as missing from the Alpha machine.  It is different than all three hand written lists, and probably just as wrong. 

The above example is just one of many that would illustrate the same thing.  Other examples include the group travel schedule, customer contact list, project task list, personnel roster, etc. Basically anything that changes dynamically. 

The manager should insist that there be only one source of the truth.  That way as soon as someone learns of a change, or additional piece of information, the single source can be updated with this new information.  To train people to do this, the manager should only rely on the single source.  If someone brings information from some other source, the manager should send them away to get the single source.  If new information is different from the what the single source shows, a reconciliation must take place to make sure the single source is accurate.

Mentoring

Mentoring was originally part of Employee Development, but it is different enough to deserve its own post.  Besides, many people have told me that my posts are too long to absorb in one read.  This is my attempt to break it up a little.  Interestingly, my longest posts get the most views.

What is the difference between Employee Development and Mentoring?

Employee Development is what a manager does with several employees under their charge.  This is actually part of the job description, or at least the expectation of good management.  Mentoring, on the other hand, is a 1on1 relationship between a "Mentor", and a "Protege" that can, and usually does, last a long time and transcend jobs and companies.  It is common for the mentor/protege relationship to begin when both people working for the same company with the mentor being senior to the protege.  The protege often reports to the mentor, but sometimes they are in different areas of a company.  The relationship can be a long lasting one that stays in tact after both people have left the company and sometimes the mentor may be retired while the protege maintains the relationship while still progressing in their career.  This relationship is usually the foundation for a long lasting bond that is not only professional, but a strong friendship.

How does a manager foster a mentoring relationship?
The basic elements of a mentoring relationship is the mentor believes they have something to offer the protege and the desire to guide them and the protege values the wisdom and experience of the mentor.

1. Mutual trust and respect - For the relationship to work, both parties must trust each other.  This means keeping the conversations confidential.  The mentor must truly believe in the protege's potential and each must respect the judgement of the other.   
2. Be available - If a junior manager or employee seeks the manager's guidance, they must be available to help.  This doesn't mean just physically available, but able to give the protege undivided attention and thoughtful advice.
3. Maintain credibility - The mentor must have more than just good common sense.  They should know the industry, the culture of companies, and the potential political pitfalls of the corporate world, etc.
4. Listen - The protege should make their own decisions and sometimes may just need a sounding board before taking a career step.  Asking questions that will help the protege talk, and think, through all of the factors in making a decision may be the best way to help them.
5. Have empathy - The protege may be struggling with decisions that may seem obvious to the mentor because of their experience, but the mentor must put themselves in the shoes of an inexperienced person, or at least recognize how difficult the decision may be for the protege.
6. Be honest - A protege may want to go in a direction that the mentor does not think will be successful, or that the protege is not yet ready to tackle. It is the protege's decision to make, but if they are not ready the mentor must let them know and have specific, concrete reasons why.
7. Develop good coaching skills - The interesting thing about coaching is that it is about knowing how to perform as opposed to doing the actual performing.  The best coach gets satisfaction from watching, from a distance, while the athlete performs.  The coach knows that their contribution was essential, but may not be readily apparent to either the athlete or the spectators.  The mentor must learn to provide a guiding hand without needing to be in the spotlight.

That's what I think.  Tell me what you think.

Employee Development, Benefits far outweigh costs

The fact that most managers spend zero time on this topic means that they are either too consumed in their day to day duties, or they don't see an acceptable return on the investment of their time or the companies resources.  In this post we will discuss why developing employees is important and worthwhile and then we will discuss how to do it. 

Please keep in mind that this blog is intended for the senior manager to engage in a dialogue, or forum with their managers to help them grow as managers.   The question at the top of each section can be asked of the group, and then the facilitator, or trainer can use the answers provided here as a way to guide the discussion.  I'd love to hear from managers on their own examples, or amplifying or differing opinions about the information provided here. 

Note: The term subordinate is used to mean either a front line worker, an experienced or new individual contributor, or a junior or senior manager, but always junior to the manager reading the text.

Why should a manager spend the time and resources on the personal development of their employees?

1. Strengthen the team - As each team member becomes more confident in their position and learns more skills, the more things actually get accomplished and the easier it is to get things done, and the more time the manager gets to focus on strategy and planning.  It really is an upward spiral.  The more time the manager spends on developing subordinates, the stronger the team becomes and the more time the manager gets to spend on developing  the team further, the more the team gets done, etc. etc.
2. Make the company more valuable - If the cliche about the biggest asset a company has is its people is true, then the better the employees become, the more valuable the company becomes.
3. Improve morale - When the manager takes an interest in their employees as people, and invests in developing their skills, it will improve how the employee views the manager and the company.  Good morale doesn't always lead to better performance, but bad morale almost always leads to worse performance.
4. Succession planning - There are many aspects to succession planning in the manager's mind that is affected by developing employees in their group.  Let's take a look at a few of the main ones:
1. What if something happens to the manager - Hopefully it is a promotion, or a better job somewhere else and not the proverbial "run over by a bus" accident.  If the manager has done a great job of developing subordinates there may be someone who can step in to the manager's role
2. What if the manager wants to leave - The manager may want a promotion or another job in the company, but can't be considered for the job because their current organization can not function well without them at the helm.
3. Morale - Employees feel better about a company that not only talks about wanting to promote from within, but systematically prepares existing employees to be ready for promotion.
5. Attract better talent - When the word gets out that a manager works to develop the talents of their employees and is good at it, everyone will want to work for them.
6. Retention - This works as a retention tool because as long an employee is gaining more skills and developing as a person and an employee, it will take a compelling offer to get them to leave.  One potential down side of developing employees is that they become a target for other managers in the company, or other companies, when they need talent.  That is not an entirely bad thing for a manager, because it enhances their reputation. 
7. Allow employees to reach their full potential - Sometimes a manager will spot great potential in an employee to better themselves and bring significant value to the team and the company.  The skilled manager can help make this potential become a reality.
8. It is a good skill to have - Particularly as a manager becomes more senior, their ability to develop subordinates becomes a part of their primary job description.
9. Enhance the reputation of the manager and of the team - This is the net result of all of the above.

What are the sources of development in employees? 
In other words, where do employees learn the things that either help or hinder their development?

1. Their managers.  That's right.  One of the biggest developers of employees is the example they see in their bosses.  It is not just the good example that will leave an impression.  Employees can also learn what not to do from a poor example.  Unfortunately, junior employees may not know what is good or bad behavior in a manager and may learn bad habits from the inexperienced, or badly behaving boss.  This means that a manager doesn't need to send an employee to a training course, or create a development plan to make an impact on the development of an employee.  Just by behaving with high integrity and competence could be the best way to develop subordinates.
2. Doing challenging jobs or tasks - figuring out what to do, executing a plan they developed, and seeing the results is another top way employees develop.  Both successes and failures can have a profound impact on an employee's development.  Trial and error is a great teacher.  The pressure of making important decisions that affect their reputation, their careers and sometimes the success of the whole team, builds confidence and resourcefulness in both individual contributors and managers.
3. Failures, setbacks, falling short - One of my cliches is "You can tell much more about the character of a person when they get knocked down, than when they win easily".  Reflecting on the job not gotten, the bid proposal not accepted, coming in second (or last) can provide unique insight for a person that can be more valuable than the easy win.  How a person reacts to these setbacks can be an important component of their development as a person, employee, or leader.
4. Life experiences - There are many things that happen outside of work that contribute to the development of a person.  A few include - the way they were raised, participation in sports, a family crisis, or development they gain from coaching or volunteer work.
5. Formal training - I differentiate between formal training  and formal education.  An employee can gain valuable skills and expertise from training.  These can range from a few hours to a few months in length.  Training programs typically concentrate on a narrow scope and provide specific information to be retained and used later.
6. Education - Education differs from training in that although the course may provide significant detailed information that can be used on the job, the developmental aspect of the education is more in the ways a person learns to approach problems and research possible solutions.  Education refers mainly to college level courses, and ultimately degrees, taken at a school of higher learning.

How should a manager go about developing their subordinates?
Now that we've discussed what develops people in the general case, we can now use that  information to discuss what a manager can, and should, do to develop their subordinates.

1.  Provide a positive role model - If a manager wants their team to treat everyone fairly, act with integrity, consider all relevant factors before making a decision, have a balanced work/personal life, then that's how the manager should act.  Bottom line - Lead by example.
2. Delegate important and challenging tasks - Notice that the first two items listed should happen as the normal work routine.  Without even thinking about developing their subordinates, managers that do these two things could be doing a good job of developing them.
3. Analyze the strengths and weaknesses of the team as a whole, as well as each individual team member - If the team needs a second baseman, who has the potential to be good at second base?  Once the team as a whole has been addressed, then the manager can focus on each person individually in developing them based on their individual strengths, which may or may not be a current need of the team.
4. Help the subordinates understand their strengths and weaknesses - this can happen in many formal and informal ways, such as:
1. Performance reviews - This is what most companies use as the primary method of forcing a discussion between bosses and their subordinates.  These can be effective, but the frequency tends to be only once a year, which is too infrequent to actually have a positive effect.  The other problem with annual performance reviews is that in an attempt to make them easier for managers, they have become mostly fill in the blank forms and grading check sheets that don't provide much intimate communication between the manager and their employee.
2. Formal career counseling or development plan discussion - These don't occur very often in the work place, but scheduling and conducting a formal career counseling session with an employee can be very illuminating to the manager about the aspirations of their employee and very morale boosting for the subordinate.
3. Informal discussions - Every conversation with a superior is usually listened to very attentively by a subordinate and what is said can carry a lot of weight, even though the manager may not be aware of how important their choice of words can be to the subordinate.  On the other hand, if the manager listens closely to a casual conversation with a subordinate, they may learn a lot about the direction the subordinate would like their career to take.
4. Encouragement and recognition - Positive reinforcement for any behavior has a good chance of encouraging the same behavior in the future.  If the manager believes that taking risks is important to development, they should recognize and encourage employees who take calculated and reasonable risks.  
5. Provide timely feedback - Feedback is a critical assessment of the employees actions close enough in time to the actual effort to help them see what was effective and what was not effective.  This should be done continuously and consistently in the spirit of helping, but the manager must be careful not to be perceived as a "micro manager" or "nit picker"
6. Hold employees accountable for their performance - Remember that a failure, or setback, can be a huge driver to development.  The employee will remember and learn from the manager's candid assessment and consequences of poor performance, a bad decision, or lapse in judgement.  There is a reason for the popular phrase "Tough Love".
7. Help subordinates see a path to meet their career objectives - Whether it be in job selection, training, education, or volunteer work.
8. Map out a development program with the employee's collaboration
1. Challenging jobs or tasks
2. Identify the need and opportunities for training
3. Recommend a reading list
4. College courses
5. Opportunities outside work

What would a Development Plan look like?
Keep in mind that this is not a performance review, or a superior-subordinate task discussion.  It is an attempt by the manager to help a subordinate take actions that will help them in the future, and that future may, or may not, include the current manager.  In other words, even though many of the elements are similar to other directed tasks, the manager should take a much softer and collaborative approach to this discussion.

1. Pick a short time frame
1. Don't rely on the annual review, the time frame is too long
2. Plan should be executed inside of 90 days or less
3. If longer projects are needed, pick smaller milestones that can be accomplished and assessed inside the 90 day window.
2. Be specific in what needs to be done - If it is a training course, which one should be taken and how will it help develop the employee.  If it is a project or challenging task, what exactly is expected? 
3. Define specific success criteria
4. Establish a realistic time line
5. Focus on strengths, not weaknesses - Managers spend so much time in damage control mode, that it is easy to focus on overcoming the shortcomings of an employee.  Most people will get further in their careers by developing their strengths rather than working on what they don't already have.
6. Involve the subordinate in developing the plan
7. Recognize and reward achievement 

That's what I think.  Tell me what you think.
Leave a comment, or send me an email.  Do you have an example that illustrates a point made here?  Have you tried something that didn't work?  Did you find the post helpful?  Did you forward a link to someone you thought could gain something from the discussion?

Effective Interviewing

Hiring good employees is a primary responsibility of managers. That being said, any manager who says they have never made a bad hire, simply hasn't hired many people. Every hire is a gamble made with very little information.  This post is an attempt to arm the manager with some tools that will help them gather as much relevant information as they can in the one or two hours they get with a candidate before deciding who is the best candidate for the job opening. 

A manager can improve their chances of making a good hiring decision by having the candidate interview with as many people as is practical.  It is their own judgement, however, that carries the most weight.  For the purposes of this post, it is assumed that the manager and HR have done their job in creating an excellent job description and have lined up several seemingly qualified candidates.

The keys to an effective interview are as follows:

1. Preparation of an interview worksheet tailored to the position.
2. Thorough review of the candidate's resume and cover letter.
3. Execution of the interview
4. Post interview summary
5. Bonus - Reference check questions

Let's take them one at a time.

Preparation of an interview worksheet tailored to the position.
An interview worksheet is simply a list of questions that are designed to give the interviewer a thorough understanding of the candidates experience, expertise, and motivation for the position.  By using the same, or similar, questions for all of the candidates provides a level playing field for all candidates.  Once a good interview worksheet has be created for a particular position, it can be saved and reused whenever that position is required.  This allows the worksheet to evolve over time to become increasingly effective and a manager can tailor them to new companies or situations.  Obviously the questions will be different for a manager versus an individual contributor, or an accountant versus an engineer, but some questions are relevant to all candidates.  The worksheet should have a space for the candidates name and date at the top of the first page and no more than 6-10 questions should be printed on each page to leave space for writing the candidates answers, or interviewer observations, feelings, or other comments.

The interview worksheet, and therefore the actual interview, should have four sections.

1. Work History
2. Technical
3. Motivation
4. Business Personal

1.  Work History
This is the section where an interviewer learns about items in a candidates resume and cover letter that are relevant to the job,  What companies have they worked for, what were their positions, who did they report to, etc.  Additionally, this section  is where any questions generated from the resume review will be asked.    There may be many things about the job opening that are not in the resume, and those things will be covered in the Technical section.  Here are several questions that might be asked in the Work History section.  Notice that most of the questions are written exactly as they would be asked. 

1. Tell me about your last company, including size, organization, scope of your position, who you reported to, where did you fit in the organization, what do they make? This question can be shortened or expanded depending on whether the interviewer is already familiar with the companies where the candidate has worked.  It can also be broken up to ask several questions instead of one long question.
2. Who were your main customers at _____?  What percentage of your time was spent with customers?
3. You mentioned that you increased profits at _____.  What exactly did you do?
4. Your resume states that you improved the safety record at several companies.  How did you do that?
5. What coding language did you use at _____ and ____.  Which one did you like better?
6. How often did you close the books at _____.  What was your role in the close?
7. Why did you leave ______.  It looked like you were very successful there?
8. What ERP system did they use at _____.  How proficient are you in using it?
9. What reports did you develop to manage your department at _____?
10. What accomplishment at ______ are you most proud of?
11. What would your subordinates at ______ say about your management style?

2.  Technical
This is where the interviewer explores the candidate's background concerning the specific technical aspects of the job.  These may or may not be in the candidate's resume.  In some instances a candidate may not have any experience in a particular area, but can still discuss what they would do in a given situation, or how they would handle a new challenge.  Here are some possible questions:

1. What is the role of the Document Control Manager in handling new products?
2. Describe a difficult personnel situation you experienced and how you handled it.  How would you do things differently today in the same situation?
3. How much do you know about California Employment Law?
4. How often do you recommend reconciling balance sheet accounts?
5. How often did you have to deal with lawyers?  What are some examples?
6. How would you approach an initiative to reduce product costs ( labor costs, programming costs, freight costs, travel expenses, etc)?
7. What would you do to improve inventory accuracy?
8. How would you handle an upset customer?  What would you do if there was no way to satisfy them?
9. Explain your experience with inventory valuation (tax preparation, cost accounting, payroll, AR collection, AP - discounting & payment philosophy, working capital management & control, budget preparation, asset management, product costing, etc).
10. How would you improve inter-departmental relations between Ops, Finance, Sales, Marketing, Customer Service, HR, Quality, R&D, etc. (pick two)?
11. How do you measure the success of a sales person (hit rate, volume, margins, customer feedback, etc.)?

3.  Motivation
In this section the interviewer is trying to find out what makes the candidate tick.  What is important to them.  What do they like and what type of environment is right for them.  Here are some typical questions:

1. What part of your job do you enjoy most? Why?
2.  Explain a situation, or a few situations, where you showed initiative - what were the reasons for the effort. What were the results?
3. What characteristics do you possess that have helped you be successful?
4. Explain a failure on your part and what you learned from it.
5. What is the ideal work situation for you?
6. What is the ideal relationship you would like to have with your supervisor?
7. Why are you interested in our company?

4.  Business Personal
Always be careful to call these questions "business" personal and not just personal questions.  It can be seen by the questions below that all of the questions are appropriate to be asked, but if you say to a candidate that you will be asking them personal questions, they may become apprehensive about the type of questions that will be asked.  Here are a few:

1. What did you like least (best) about the job at _____ ?
2. How important is the title to you?
3. How long is the commute?  How do you feel about it?
4. How is the search going?
5. Where would you like to be in your career in 5 years?
6. Why are you looking for a new job?
7. What questions can I answer for you?

Thorough review of the candidate's resume and cover letter.
Although some people still swear by them, I have found cover letters to be essentially a waste of time.  However, if one accompanies a resume of a candidate that will be interviewed, it should be read.  The resume, on the other hand, is essential.  The interviewer should have only two things in front of them when interviewing a candidate, and they are the candidate's resume and the interview worksheet.  I recommend highlighting anything in the resume that the interviewer may want to refer to during the interview.  The Work History section of the interview worksheet should be updated with a few questions that come directly from the resume.

Execution of the interview
There are some obvious hospitality items that should be mentioned.  Make sure the interview is conducted in a quiet comfortable place.  Offer the candidate something to drink.  If the interview will be conducted in the manager's office, turn off the phone and don't allow any non-emergency interruptions.  Describe for the candidate the four sections and that the interviewer will be writing constantly, but to ignore it.  Do not sit in such a way that the candidate can read what is being written. 

Try to be consistent in writing things down and don't only write just after the candidate has said something.  The things to write down are a combination of several things, including what is said, the impressions the interviewer gets from the candidate, follow up questions to ask later, unrelated questions or comments that are relevant, etc.

Don't allow the candidate to ramble.  Once a question is satisfactorily answered (or not), stop the candidate and move to the next question.  It may be useful to tell the candidate that this will happen and it shouldn't be interpreted as not wanting to hear what they have to say, but that time is limited and there are a lot of questions to ask.

When asking questions, there are really three things to determine.

1. What was done - This means what did the candidate do specifically.  How did their specific actions impact the result.  The more detailed a person's answer, usually the more they know what they are talking about.
2. What were the results - Again there should be a direct correlation between what was done and what was achieved.  If the candidate does not see this connection, they probably weren't the real driver of the results.  It could be that they were told what to do and they did it.  That may be OK for the current job, but maybe it isn't.
3. Why was it important to be done - This is a little more subtle.  In the universe of things that could be done, and with limited time and resources, why did the candidate pick this item to do and highlight on their resume or in the interview.  It may be that they were told to do it, or that it was obvious, but maybe they have another reason.

Don't feel obligated to ask every question.  If a question was already answered previously, or just doesn't feel relevant, skip it.  If the interviewer decides early in the interview that the candidate is not suitable, still ask one or two questions from each section.  Do not abruptly dismiss the candidate.  The candidate has gone to a lot of trouble to be seated in front of the manager and deserves to be interviewed seriously.  That does not mean to spend the maximum time, but enough to show the candidate the right level of respect for their time.


Post interview summary
After the candidate has left, and ideally immediately after, the interviewer should write a few paragraphs on their impressions of the candidate, both positive and negative.  This is very important.  If several candidates are interviewed for a position and an obvious winner is not apparent, it is the summary that will be referenced most often.  Most people will not go back and review every answer, but will definitely reread the summary.  I also strongly recommend spending a few minutes going back over the worksheet to make sure what was written will make sense later.  The interviewer's shorthand during the interview can be indecipherable later, even to them.


Here is the bonus

After a candidate is selected, references should be called.  Most people who serve as references are given by the candidate and will be an advocate for the candidate.  There is nothing wrong with that because most people won't outright lie.  Here are some questions to get a person to give a more balanced view of a candidate.

1. What was your relationship with _____ ? Do you remember their exact title?
2. How long did you work together?
3. ____'s management style seems very developed and effective, is this how you remember them?
4. Since I will be _____'s direct manager, where do you think I could best help them develop in their career as a manager?
5. Why did they leave?
6. Would you hesitate in putting _____ in front of the CEO, or important customers?  How do you think they would perform in those situations?

Obviously I am a big fan of the interview worksheet.  I have worksheets for the following positions.  If you are hiring for one of these positions, please send me an email and I will send it to you free.  If you want more than one, they are for sale.

Accounting
CFO, Controller, Accounting Manager, Cost Accountant, Plant Accountant, Accountant
Sales
Sales Manager, Program Manager, Customer Service Manager, Customer Account Manager
Engineering
Design Engineer (new grad), Drafter, ECO Manager, Engineering Manager, Industrial Engineer, Manufacturing Engineer, NPI Engineer, Manufacturing Engineer (new grad)
Materials
Buyer, Expediter, Inventory Manager, Materials Manager, Senior Buyer, Sourcing Manager, VP Supply Chain
Quality
Quality Manager, Supplier Quality Engineer
Miscellaneous
Human Resources Manager, Administrative Assistant, IT Manager, Operations Manager, Reference Check