HIRE COUNTER CYCLICALLY by Marty Mattare. Phd
04 Jun 2009 Leave a Comment
in Uncategorized Tags: strategic competitive advantage
New Rules: In Turbulent Times Hire Counter-Cyclically
for Strategic Competitive Advantage
It seems counter intuitive, but now is the time to hire top talent. Why — because you will take advantage of the great talent now available because of massive layoffs in the job market, talent that otherwise would possibly be unavailable to you. These talented people would ordinarily have many choices regarding job opportunities and often are lured by large organizations who offer advantageous opportunities. However, the job market is different now and will be for some time. That is your chance to employ super people who will play a major role in growing and improving your small business.
Because small companies feel the impact of personnel more deeply than larger ones who ‘absorb’ people into their systems, they need to think more strategically about human resources. Each person you hire will play a big role in the growth and development of that organization. Therefore, it is critical that you create a human capital growth management plan for your company.
Step 1: Evaluate the staff you currently have;
a) What are their credentials?
b) What related work experience do they have?
c) How does the compensation package hold up to the job market?
d) Where are the weaknesses – Finance? Marketing? Sales?
e) Write a job description that outlines what you need now.
f) Then, rewrite that job description for what you think you’ll need in 3 years; 5 years.
Step 2: Design your recruitment effort;
a) Where will you list the job opportunity?
b) Will you need a head hunter to help you pre-interview and screen applicants?
c) What are the screening criteria?
d) What is the compensation package? Use www.onet.org for job descriptions and salary ranges that are competitive.
e) What is the interview plan? Conduct yourself? Incorporate others for a multi rater approach?
f) What is your training plan? Small companies can cross-train quite effectively.
Step 3: Recruit and train;
a) Carefully conduct the recruiting process.
b) After the offer is made and accepted, start the training program. Be a mentor to your new employee!
Remember, when the job market turns around, the talented pool of potential employees will be snapped up the ‘the big guys!’
SUPER TOOLS IN SMALL BUSINESS MGT
03 Jun 2009 Leave a Comment
in Uncategorized Tags: breakeven analytics, continuous process improvement, ratio budgeting, sustainable competitive advantage
SUPER TOOLS FOR EFFECTIVE SMALL BUSINESS MANAGEMENT
BREAKEVEN ANALYTICS AND RATIO BUDGETING
By Richard Walton
5/09
In the midst of a recession, it is sometimes difficult to maintain a proactive perspective. We seem to be struggling constantly with issues of cash flow management as revenues decline, and the need to cut costs to maintain profitability. As a result, the longer term need to establish a sustainable competitive advantage is set aside while we fight the daily battles of survival.
It need not be this way. A much better alternative is to use the slow times to do some creative analytical work on the sales and cost data available through your accounting system. For a small investment in time and effort, it will be possible to see clearly where your major market strengths are, and focus your attention on building and maintaining them. There are two tools we will use in this exercise. They are: 1) Breakeven Analytics, and 2) Ratio Budgeting.
First, Breakeven Analytics. This tool requires the perspective of the whole system, in which the average gross profit margin is measured as the dollar contribution to pay administrative overhead. For example, if the GPM average is 40%, and the administrative overhead is $100,000 monthly, then .40 cents of every dollar of sales is available to pay overhead, which means that $250,000 in monthly sales (at the average GPM of 40%) will produce a contribution margin of $100,000 and thus the firm will break even. But since not all products will produce the same margin, we will need to develop BEA on the entire product line, so that we can identify the higher margin products.
To use this tool creatively, we need to focus our marketing efforts on high margin products and services on a consistent basis. The key is to constantly improve the value proposition offered to the customer through the product-service mix by a laser like focus on quality.
Second, Ratio Budgeting. This tool requires the perspective of the whole system, in which the costs of each element of production is measured as a percentage of total sales. The power of this approach can be shown by the calculations taken from a firm doing $5mm in business annually. If the labor costs are 25% of sales, and materials are 30%, then a 1% saving in labor will yield $12,500 annually, while a 1% reduction in materials costs will yield $15,000 annually.
To use this tool creatively, we need to focus our production management effort on continuous process improvement, which is another way of saying higher productivity and thereby lower costs. The key is to have a steadily decreasing cost of production as well as a steadily increasing value proposition for the customer. Thus, even n these times, we can have a sustainable competitive advantage through continuous process improvement
