With such a rapidly expanding operation and increased workload for its two owners, part of the problems facing Dezeen was that they had limited time to spend on future planning for the growth of the business, creating efficient budgeting methods, as well as needing a  structure for dealing with internal administration such as bookkeeping and Payroll requirements. This was needed for the business both in terms of tax efficiency, internal processes, and getting a handle on how they could improve and grow Dezeen as a brand going forward.

Firstly, Ten Forward Finance set about helping to restructure the business into a  more tax efficient vehicle. Costs, budgeting and forecasting methods were established to help identify key areas where the business could improve. Next Ten Forward focused on establishing internal administration processes to handle jobs like Payroll, Bookkeeping and dealing with HMRC correspondence quickly and efficiently.

The Results? Turnover has nearly doubled in the last 2 years alone, with this year set to be another bumper period for Dezeen. Working from their own home with just 2 staff, Dezeen Ltd has now grown to upwards of 7 employees and with it the need for their own offices. Ten Forward Finance now handle the monthly payroll requirements, and are successfully integrating a new online accounting system into the business to help aid and simplify the administration workload.

As a result, Dezeen have now been able to diversify and expand their business into yet other ventures. ‘TFF have really given us the chance to focus on what we do best, says one of the Director’s of Dezeen. ‘Their knowledge of the creative industry, along with their accounting expertise has been invaluable. They strive to keep the processes simple and straight forward, and are available to talk to and discuss any queries that we have.’

Want to know more? Why not check out our other Client Case Studies. Click Here

Easily one of the hardest aspects for a small business owner to master; especially when they have been there building the business from the beginning.  It’s essential for a manager to “let go” and give his employees the room and the confidence to experiment and grow.  Allow them to make mistakes and to learn from them.

TIP: Try to ask someone unconnected with your business what they think your management style is like. Are you informal or autocratic? One of our clients had a friend shadow them for a day and give them an honest appraisal.

• Performance management simplified

There’s been so much written about performance management it’s almost unreal.  It’s great when it works but catastrophic when it doesn’t.  Make it simple and get everyone on board. Clearly define targets and areas for improvement and put in place simple ways of measuring success. Give staff big rewards for achieving these targets.

TIP: Talk to you staff about a system and get them heavily involved from the beginning. Have them help you draw up the principles and methods.  Once they’ve bought in to the system you’ll have won half the battle.

• Be Honest with your Customers.

Don’t’ ever make promises just to win a job or contract.  Be straight and transparent about your pricing. Remember, if you are confident in the service or product you provide and it’s priced correctly then customers sense that confidence.

• Know your limits – and delegate

Humility and modesty; traditionally not the qualities you would associate with top business owners but you would be surprised to know how people’s understanding is changing. There have been countless occasions that we’ve seen a person’s “ego” get in the way of a good decision.  Look for intelligent people to employ who have a skill set that compliments you and your team.

TIP: Try to analyze your strengths and weaknesses and then match these with your current and potential future employees.  This way you can fill the gaps in your abilities and your company won’t suffer.

• Keep your stakeholders informed.

Communicate regularly with investors and bankers.  Good news can wait; bad news should be delivered quickly.

TIP: Try not to exaggerate or minimize situations.  Being candid and honest is always best.

<Back to Beginning

One of the first lessons we can learn is that we need to consider an idea and its application in a broader context, not just in relation to that one problem.
Take for example, the issue of shipping in scenario 4 and its impact on warehousing. Given the pressure to ship faster, the warehouse is probably making more errors and thus adding to the number of returns and customer complaints. Now that every department has cut its staff, the company is probably hiring more expensive temps, consultants, and outsourcing firms. The impact of peer pressure can often have a negative effect too, humiliating employees rarely motives them. If the warehouse workers are praised for putting a box over an imaginary line, they will put it there even if it’s not ready. If you pay the sales force only for sales in pounds, you might end up with more sales, but at bad prices or with too many extra services promised. For example if you pay out sales reps’ commissions at the time they took the customers’ orders you may find that orders never shipped—or that were shipped and later returned for full credit. All of this suggests another truism about performance management: The devil is in the details. It’s very difficult to define the right metric and anticipate exactly how your people will react to it. Your best chance of knowing whether it will have the intended effect is to talk to the people directly involved as well as their immediate supervisors. Spend time in each department doing their jobs and understanding what goes on. Understanding the culture is key.

It would appear that the motive is correct in these examples: they are focusing on performance measures as a way of creating more accountability for results. Unfortunately they are using the wrong measures and have gone about establishing them in the wrong way. As a result, it is sacrificing long term business success for short-term operational gains. What the company needs are performance metrics that are less “employee” focused and more customer focused. But even these kinds of externally focused measures are likely to be ineffective unless management can successfully help workers understand and accept them.
Define the criteria for success. This should be the first step.

What’s the ultimate goal? Sales? Profits? Retained business? When dealing with employees we need to ask:
“What do we want employees to do differently to support the business?” and “Why aren’t they already doing it?” The answers to the second question will yield the greatest insights. Is it that they don’t have the knowledge or skills? Or is it that they don’t have sufficient tools or infrastructure? Is it a question of motivation? And if it’s a question of motivation, do people need to be spurred to work harder or smarter?

It helps to look beyond remuneration for performance and make more effective use of intangible rewards. Public recognition, a letter of appreciation, or a word of praise can do a great deal to focus an individual’s attention on organizational targets. Such motivational tools are powerful yet terribly underused in business settings.

Most company’s today need to focus on two key strategies for short-term and system wide performance improvement: look for people who can be leaders and are performance-driven; and aligning the performance culture with the company’s strategy for the future. It’s imperative to identify and develop these people early on, ensure that they have the right skills, and then place them in positions where they have the most impact. Doing so may be one of the most effective ways to build and sustain a strong performance culture and, in turn, improve performance.

However, creating a strong performance culture isn’t enough. A company must also align its performance and reward culture with its strategies. A company achieves its greatest advantage when performance culture and strategy reinforce each other and senior people are seen to reward the activities they advocate. Many companies also inadvertently discourage behaviours like challenging the status quo and raising difficult issues, which are essential to corporate performance. When candidates who display these behaviours are up for high-level positions, they often lose out because they’re considered rebellious or in need of “polish.”

Performance management is complex area and one that is definitely not defined by “numbers” alone. The key for us is to look for “quality” measures and work out how far we are willing to go in monitoring these.

• Increase productivity.
  The main issue centred on the call-centre where phone representatives took orders and handled questions and complaints from both trade and retail customers.  It was felt that the time taken to respond to enquiries and calls was too long, so the challenge was to improve this metric at the same time as reducing staff levels.
  The solution:
  Two key areas were to be targeted: reduce the time on each call, offer incentives for responding to calls or enquiries within a minimum timeframe.  The changes implemented centred around “peer-pressure!”  They announced the new targets, let everyone know they were being monitored and put up a list of the worst offenders. Now the number of calls a rep was handling per day had improved by 50% and the average time per call was just over four minutes when it used to be seven.
  Unwanted results:
  Worried about the impact on their bonuses most sales reps ended up taking longer to respond to emails.  Since they knew that they were being checked on whether they responded to an e-mail within 24 hours of opening it they just didn’t open it until they had the time to deal with it. Customers began to complain: “In some cases, I’ve been told to take a late date or otherwise forgo the purchase. That becomes the promise date, but it’s not the date I asked for.” Customers also complained of feeling “hurried” on the phone and that it often took several calls to sort out a number of problems as customer reps were unwilling to discuss more than one problem at a time.
• Shipping goods.
  There was previously no measurement of this activity.  So they had no way of determining the level of success in getting the goods to the customers.
  The solution:
  They implemented a system whereby “on-time” meant the goods were “promised to ship.” Nothing was counted as shipped until it left the company property.  Rep’s were told that broken commitments would be punished! As a result the percentage of goods shipped by promise date went up steadily to a level of 95% – a level unheard of in the industry.
  Unwanted results:
  Customers found that delivery times weren’t improving. They regularly complained that they were confused by the company’s determination of what they meant by “shipped.”  They would be told that an order had been “shipped;” only to find out the goods were sitting on a lorry across the street from the plant.
• Overall cost reductions:
  The Company had a policy that allowed current and retired employees to buy products at a substantial discount. But the salespeople who served those earned commissions based on the full retail value, not the actual price paid. So, in effect, employee purchases were increasing the commission expenses.
  The solution:
  A new policy was implemented in which the commission reflected the actual purchase price.
  Unwanted results:
  Unusual amounts of bad feeling and tension began to be noticed amongst employees.  Both current and retired employees were complaining about being treated poorly by sales personnel when they sought to place orders or obtain information about company products. Sales reps did not want to spend as much time on sales that yielded them less commission.
• Simplify the commission structure.
  The company used to calculate commission by using a really complicated formula that factored in at least five different things including; sales (as the most important single variable); mentoring;  prospecting new clients; keeping the account information current.
  The solution:
  It was felt that this was all too subjective, and salespeople were getting very mixed signals. In order to clarify the message they removed the whole system and made it straight and simple:  If you sell the most products in a given quarter, you win.
  Unwanted results:
  The company was inundated with complaints from the sales organization. “No role models.” “No mentoring.” “No chance to pick the brains of experienced employees.” “No knowledge sharing about accounts.” More than ever, salespeople were dissatisfied with their territories and were fighting for the more affluent, high-volume districts.

So what do these examples teach us?

See part 3 for a review and discussion on these measures and what lessons we can learn from them.

The buzz word that is “Performance Management” has been thrown around over the past decade as a solution to almost all the ills in the world of companies and staff management. The fact is that it can often do more harm than good. It almost became the fashion to declare oneself a “Performance Management specialist” and stride into a company suggesting sweeping changes under the guise of improving employee performance. Unfortunately the business world is now littered with countless disasters where those measures have yielded unwanted results.

Its now widely accepted that performance management is one of the hardest areas to get right. It has the lowest success rate and requires a significant amount of planning and effort to yield any results worth writing about. And yet it remains one of the most necessary areas of analysis and, some may argue, one of the key components of any company’s multi-strategy plan for the future.

Why the conundrum? Because “performance management,” at its core, is such a non tangible, and frankly, non-accounting entity! Its foundation of application is based on that one area that we all find almost impossible to predict: the human side. It’s all about what makes people tick, what motivates them, what de-motivates them, what makes Joe Bloggs in engineering stay late at work to get that project finished…

In trying to establish a regime of management that monitors employee’s performance it’s important to consider two clear objectives: how to “motivate” employees to perform better; how to “monitor” that performance without affecting it. Ultimately it is the 2nd point that many companies struggle with. We’ve pulled together six different scenarios where Performance Management was implemented and it had unwanted results. They are excellent examples of how the best intended measures can back-fire. To be clear then: this article isn’t about how to do performance management; we’ll leave that for another time. It’s all about what not to do, because often we learn far more from our mistakes – especially if we understand why we made them.

The scenarios are taken from a company that has just experienced a year of poor results. The slowdown in consumer spending, had taken their industry by surprise. The company has been slower than most to adjust but still has a strong reputation for innovation. Here are the six changes they made and why they went wrong:

• Budgeting.
  They had no budget integrity whatsoever. Very few people paid attention to it because they knew that after three or four months, “nobody looks at the budget anyway.” The reason was that they operated according to one simple rule: “If it’s a good idea, we say yes to it. If it’s a bad idea, we say no.”
  The Solution:
  They implemented a strict regime of budgets and rewarded people for the number of projects that were brought to fruition: fruition being determined by the filing of a patent.
  Unwanted results:
  The company began to experience an unprecedented level of negativity from its R&D department complaining that they were now so highly focused on who’s getting the most patents, who’s getting the most copyrights, who’s submitting the most grant proposals, etc. But creativity was suffering. They noticed that they were filing for a lot of patents for products that will never be commercially viable. However, if a really good prospect came along before its budgeted time, there was no budget to bring it to market.
• High Labour Costs:
  The company had a higher than average labour costs according to its sector.
  The solution:
  Identify the bottom quartile of performers throughout the company and offer them fairly generous packages. The next stage, when this hadn’t attracted enough takers, was to impose an across-the-board headcount reduction of 10% on all the units. During this second stage people were only offered the normal statutory severance package.
  Unwanted results:
  There was a lot of residual unhappiness about the layoffs, and not just because those who remained
  had more work to do. Because the reduction was based on headcount, not costs, managers had tended to fire low-level people, crippling the company without saving much money. And because the reduction was across the board, the highest performing departments had been forced to lose some of the company’s best employees. Others heard about inequities in the severance deals. It appeared to most employees that the lowest performers got a better package than the good ones.

… See part 2 for the next 4 scenarios.

Having dealt with dozens of start-ups over the years, all with amazing ideas and all with varied success, we’ve compiled a list of suggestions.  These are all based on cold hard facts and the experience of our clients in the business world.

• Cash is king

In light of the financial turmoil in recent years, this has never been more important.  It has in fact moved up our list of priorities.

TIP: Make one person responsible for invoicing and cash collection. Treat your account payable departments as a customer and chase cash hard.

• Reign in the spending and plan investment.

Don’t invest in new equipment or services just for sake of it.  Lavish offices and expensive cars don’t send the right message and they burn cash faster than anything. Develop and encourage a culture where everyone “keeps an eye on the cash!” Plan investment and don’t just react to situations.

TIP: Identify areas that need improving. One client felt they needed new equipment and software but after a thorough review by an independent IT consultant it was discovered that only a third of the expenditure was required and even this could be staggered over a period of time.

• Small steps

Don’t think you can build an empire overnight, or even in a year!  Be process driven as well as results driven but don’t add new processes too soon. Acting like a big company is counter-productive.

TIP: Only put processes in place that is essential to your business. Try to do a regular “Mind-Map” plan of your business and constantly look to simplify as you grow. Planning too far ahead can take your focus off the present issues.

• Focus
Focus on customer demand and react accordingly.

Diversification driven by customer demand is key. Don’t go developing new ideas and products for the sake of increasing the business.

TIP: Keep track of your market and focus your attention on changes and customer feedback.  Develop a methodology for analyzing changes and identifying areas that naturally fit with your current products and services.

• Treat your staff well

Make sure they know about everything that is going on in the company – good and bad. Don’t engage in office politics. Recognize successes, no matter how small, and communicate.

TIP: Keep a simple personal record of your employees, this will help you to remember key information and you’ll be able to show a more “personal” touch when dealing with them.

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