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Kenneth W. Keller: What’s your business’ version of Focus on Five?

Brain Food for Business People

Posted: January 19, 2010 9:05 p.m.
Updated: January 20, 2010 4:55 a.m.
 
In 2008, the management of United Airlines made a decision to run a better airline. According to the Wall Street Journal, United opted to follow an industry leader and borrowed ideas from Continental Airlines, a company that formerly resided in the public opinion doghouse.

United’s program, “Focus on 5” was an initiative for all employees to work to improve five key measures important to customers.
The five are: on-time performance, condition of the airplanes, courteous service, revenue and costs.

Employees got engaged because bonuses are paid to employees for months when on-time arrivals beat rival airlines. United Airlines improved on-time arrivals of flights to 80.5 percent in 2009, up from 71.3 percent in 2008.

United knows this is just the beginning, but sees the on-time arrival numbers as a solid start to long-term improvement.

This begs the question: What is your version of “Focus on Five”? Here are some idea-starters to consider.  

One possible focus could be on revenue. In United’s case, it opted to make money by charging for checked luggage. This is costly revenue, because passengers are not delighted to have to pay for this longtime free service.

Chasing revenue for the sake of revenue comes at a price; Southwest Airlines touts its “no-fee luggage” advertisements exclusively these days.  

A second area of potential focus could be that of retaining and expanding the client base. Many businesses have a hidden problem of concentration; too much revenue and volume coming from too few clients.

Making it a priority to broaden the client base and mix could be beneficial both short-term and long-term.  

A third area of likely focus might be on cost control and purchasing improvements. The past few years have been characterized in many businesses by extensive cost-cutting and expense reduction.

The challenge is to maintain expense control and continue to improve purchasing negotiations in an improving economy, because there is always a temptation to spend.

One area that will yield long-term results is client care. There are two notable truths related to caring for clients. The first is that most sales incentives focus on the securing of new clients and not the retention of existing clients.

The second is that the further removed from clients one is in an organization, the less care and concern there is.

Companies often turn clients into “house accounts.” By translation, everyone is supposed to be responsible for the client, but what in truth it means is that no one is accountable to or for the client.

Sales commissions aren’t paid on house accounts, so profit increases. The problem is that the profit is short-lived and opportunities for penetration selling are never exploited because a house account becomes just another name on a long list, with no one in sales responsible or held accountable for taking care of the client.  

To the second point, an accounting clerk is far-removed from a client, unlike a salesperson who lives, breathes and eats in the world of client acquisition and care.

A clerk cares less than a salesperson, and that lack of caring is going to surface pretty quickly. The clerk isn’t compensated for taking “care” of house accounts; a salesperson lives on client care.

A fifth area of focus should be that of strengthening the management team. If the goal is a better year, the engagement level of the management team has to improve.   

When it comes to getting the most out of everyone in the company, the most critical role is that of the manager. Managers are often seen as overhead. When money is tight, managers are the ones who are not given raises.

When an employee is terminated or leaves the company, the manager steps in and handles the additional work until a replacement is found, if the position is ever filled.  

Horror stories abound of the best-selling salesperson who becomes the worst-possible sales manager. Or people who get promoted because they have been around the longest.

Or because the company has a policy of “hiring from within” even if there are no suitable candidates, a person gets the job they are not qualified to hold.

Management is about getting work done through the efforts of others instead of personally doing it. For that to happen, a successful company must be selective about who it adds to the management team and, more importantly, who it keeps on the management team.  

Scientific research suggests the single-most important determinant of individual performance is a person’s relationship with his or her immediate manager. If someone is supervised by a poor manager, performance lags.

This is particularly true in the ranks of management. If there is a problem with an under-performing department, follow the organization chart up the ladder.

Chances are, the problem lies with a senior manager who doesn’t understand the critical role they play, doesn’t want to understand that role or simply doesn’t care. Getting rid of that person will go a long way toward improving the rest of the management team.

Ken Keller is president of Renaissance Executive Forums, which brings business owners together in facilitated peer advisory boards. His column reflects his own views and not necessarily those of The Signal. “Brain Food for Business People” appears Wednesdays in The Signal.

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