In this discussion of: “How Small and Mid Sized Firms Grow” we will discuss good hiring practices and dealing with for non performers.

It is important all the time to maintain the highest standards in ones organization. Yet in recessionary times one is forced to get rid of the so called dead wood, but in good times, such as we are in now this does not have the same sense of urgency and most companies do not maintain the same high standards they are forced to when their future is on the line. To compete in this highly competitive world one must maintain their standards, regardless of whether we are in a good or poor economy. So we are using the term of a “non performer” as shorthand for someone who in not meeting your expectations within the organization. They may well do great somewhere else and you will be doing them a favor by letting them find where that environment is.

Of course no one wants to be an ogre and have to terminate people, but those who are not performing up to standards need to be for the health of the company and the security of the rest of the staff. To start with well managed companies have a highly refined hiring, training and evaluation process to find the best candidates for their company. They are constantly reevaluating and upgrading their staff for if one wants to grow and prosper, atrophy can set in and the efficiency of the organization eventually starts to suffer.

Employees are of course part of a team and they must fit into the group, understand their role in the company, accept its culture and buy into the mission of the company. This is not easily determined and an intensive interviewing process often helps unravel things before someone comes onboard. Some companies will have candidates come back a dozen times before they feel that they have a good handle on things. This may be excessive, but one or 2 interviews are far too few as you have to penetrate the veneer of someone prepped and at their best. Multiple visits wear down a façade so you can get down to the real person. Even after one is hired there is nothing like a probationary period to validate ones fit. Many companies rely on profile testing, reference checks and gut feeling to make their hiring decisions. These elements help, but there is no magic bullet. It is the integration of all of these elements that increases the chances of finding producers for your specific company, with in-depth multiple interviews being the most important. Many people are good and highly qualified in their own right, but just do not fit in a given situation and the sooner that this is recognized the better it is for everyone.

In our next blog we will discuss measuring standards: KPI and KFI.

We welcome your questions as to the challenges you face in order to grow.

To see all articles in this series please go to http://optimal-mgt.com/blog.

Optimal Management is the premier management consulting company to the staffing industry. We act as mentors to owners and managers to maximize their sales, profits and value of their company. We become an extension of our clients operations and are there for all of their staffing and business needs, from sales, marketing and compensation plans, to finance, M&A, general management and everything in between.

In this discussion of: “How Small and Mid Sized Firms Grow” we will discuss the MSP/VMS programs.

Whether you are a user of staffing company labor or a staffing company you should become familiar with MSP/VMS labor procurement programs. Almost all large companies use one today. A Master Service Provider and Vendor Management Services agreement provides a value proposition for staffing company clients who doesn’t want to deal with multiple staffing vendors, but rather a single point of contact for all their staffing needs. In addition, there are benefits of standardization, time to fill an order, attendant cost savings and more. Although the majority of staffing is done today using these systems and great efficiencies have been made, not all of the experiences with these systems have been positive. Some clients however are not happy with a commoditized product, want to have a choice of vendors and feel a lack of the personal touch they have become accustomed to.

For staffing companies’ margins have been reduced, particularly the VMS’s. For the MSP who controls the process it provides substantial scalability and enables them to grow much more rapidly. To do this requires a sophisticated software system to track, report and control the entire process. It meant having people not only capable of meeting the client’s needs internally but satisfying those needs by working through third parties who could be counted upon to work in a seamless delivery process. A VMS vendor could reduce their sales costs as the orders came to them, but they often sacrificed margins and the direct interaction with the client. This worked out well when there was a good tradeoff in the incremental volume they received which made up for what they gave up. When their gain in volume was small the arrangement was not very attractive. And some MSP vendors left the business. Only large staffing companies could acquire a MSP/VMS system and were shut out from the game. This has recently changed as a couple of companies have developed homegrown systems and at least one vendor has found it worthwhile to lower the bar to provide the smaller and mid sized staffing companies with the functionality of the large systems. These can be licensed and even private labeled, but one must be able to not only operate such a system, but invest in the infrastructure, demonstrate the benefits to their clients, perform a needs analysis and do a post audit to validate the cost savings proposed.

In our next blog we will discuss not accepting excuses for non performance.

To see all articles in this series please go to http://optimal-mgt.com/blog.

Optimal Management is the premier management consulting company to the staffing industry. We act as mentors to owners and managers to maximize their sales, profits and value of their company. We become an extension of our clients operations and are there for all of their staffing and business needs, from sales, marketing and compensation plans, to finance, M&A, general management and everything in between.

We welcome your questions as to personal and business challenges you face in order to grow.

In this commentary we will discuss: How Small and Mid Sized Firms Grow we will discuss creating intellectual property.

So what is intellectual property (IP)? It is the essence of what you do and how you do it. It can set you apart from your competition and help avoid pricing your services as a commodity. You likely have a nucleus of IP already but have not recognized it, enhanced it or capitalized on it to your full benefit. It can start out as something very basic that can be converted into something of substantial value and even copyrighted for your protection. All larger companies have lots of IP that they have cultivated over the years. This ranges from little more then puffery to substantial IP that are valuable trade secrets. The former IP may be as mundane, offering superior quality and service, such as “our Super VX Platinum services package will meet your full satisfaction or your money back”. That package is documented and defined and can be copyrighted even though it may not be particularly unique. If properly marketed however one can carry a certain panache and image which can be sold at a premium.

We would rather concentrate on creating real value that is documented to save your client money. Lets take our sample platinum VX services package and add some tangible value, where if the client buys a certain minimum $ volume they will achieve significant savings and you will become a profit, not a cost center to them. The service here will be providing staffing services to a client, but this is applicable to most any business. Every employee has a cost and the economic benefit of hiring them must outweigh that cost. Here are just five profit improvement tools, although this has been customized to 20+ points:

#1 is that we find highly qualified people more quickly then internal searches or our competition and since time is money this can be quantified.

#2 is if you hire 5 or more of our people/year we will provide you with a 15% rebate (similar to airline frequent flyer programs where customer loyalty is rewarded.

#3 is where we demonstrate that via our vigorous testing program our people out produce typical hires by 20% which is converted into annual $ savings.

#4 is that we can use our testing procedures on a limited amount of client employees to test their proficiency.

# 5 is that we have a free outplacement program for those employees that need to be terminated in a humane way, with significant cost savings.

The amount of value added service provided depends on a client’s volume with us. The total profit impact is tallied and typically becomes an eye opener for the client that now gets much more value in doing business with you then he ever anticipated.

In our next blog we will discuss controlling a MSP/VMS program vs. being VMS supplier. We welcome your questions as to the challenges you face in order to grow.

To see all articles in this series please go to  http://optimal-mgt.com/blog.

Optimal Management is the premier management consulting company to the staffing industry. We act as mentors to owners and managers to maximize their sales, profits and value of their company. We become an extension of our clients operations and are there for all of their staffing and business needs, from sales, marketing and compensation plans, to finance, M&A, general management and everything in between.

In this commentary we will discuss: “How Small and Mid Sized Firms Grow” we will discuss the value of building a brand name.

What is the value of a brand name and is it worth the time and expense of creating one? All large companies have at least one brand name, logo and image. It can be worth quite a bit if it represents something of value, whether that value is real or at least has perceived value. But it is not worth much if it doesn’t’ connote something of value to ones audience. In fact it can have negative value if ones brand name is tarnished, such as Philip Morris which had to change its name to Altria, or Blackwater which is now Xe. Some people will pay a lot more, for a brand name that is prestigious even if it is sold for a lot less under a private label. For example, do you really think articles with a designer label are actually designed by the personality that carries its name?  Or is the product that is sold in an upscale store any different from the identical one sold by your neighborhood outlet?

So now let’s look at real value that is created by a brand name that really means something. The first step is to bring tangible value to your brand in terms of quality, service, guarantees, reliability and value. This is engineering value into your product or service. This is done every day by all sorts of companies and this is not that hard to do, given sufficient thought. One can use terms like “organic” or “environmentally conscious” that promotes just the illusion of health or good citizenship (think BP redefining its initials as “beyond petroleum”). Then there are the true demonstrable savings one can quantify with a value proposition that will save them money, such as “our people can do the job 25% faster and better then our competition”, or “we have an unconditional money back guarantee if our product does not last for at least 5 years”. But be sure of your claims that you make as contingent liabilities may follow you.

The next step is to come up with a good and often catchy brand name like Google, Amazon or Apple and spend the time and money to promote it. Today’s social media can often do the job faster and cheaper then traditional ads (how many newspapers are left in your town?) A well designed strategy is essential and services like Yelp and Angie’s List, but this is a double edge sword so poor quality can kill your brand. Top draw service and quality can also create a great word of mouth viral marketing campaign. Then there are key word search engines that can produce great results and is related to branding.

In our next blog we will discuss how to create intellectual property.

To see all articles in this series please go to  http://optimal-mgt.com/blog.

Optimal Management is the premier management consulting company to the staffing industry. We act as mentors to owners and managers to maximize their sales, profits and value of their company. We become an extension of our clients operations and are there for all of their staffing and business needs, from sales, marketing and compensation plans, to finance, M&A, general management and everything in between.

In this commentary we will discuss: “How Small and Mid Sized Firms Grow” we will discuss evaluating growth in sales vs. profits

All we hear today is the importance of growth; but there is a big difference between profitable growth and growth just for the sake of growth. In its most basic terms growing sales is relatively easy, just sell your product or service at below cost. You will likely have all the sales you can handle as you are going bankrupt. Anyone can give away the store, but it takes a business person to make money at it.

Many firms manipulate their financial statements to make unprofitable sales look profitable, these are primarily public companies that need to keep their stock price up. But we will not be talking about creative accounting. Another way to grow is to get an order that at face value is not profitable, but through legitimate avenues such as cost reduction, becoming more efficient, restructuring and finding a way to add on charges. Sometimes one takes unprofitable business as a loss leader, to either secure profitable business later, or as an accommodation to an important client.

We will discuss here taking business “to be competitive” when that business was available for good reason, namely that no sensible competitor would take the order and there is no way the make it profitable, use it as a loss leader or to retain a good client. We are speaking not of understanding business economics and taking business for the sake of the top line and not figuring out its impact on the bottom line. It is surprising how many companies do this and not only take on business at a loss and further its impact on its line of credit and cash flow.

A good business person will often find a way to negotiate a better price by emphasizing quality, reliability, value added services, payment terms and the like. The key here is to get with the person who values these items as opposed to procurement and only cares about the lowest price they can get regardless of the financial impact it may have on their company as “that’s my job”. The good business person will try to bring into the meeting those who will be impacted by just getting the lowest price that procurement hung them with and objects that one gets what they pay for. This is particularly effective where someone’s bonus will suffer by this type of thinking and they will become your ally, pushing back on unreasonable pricing that they and the company as a whole will ultimately suffer for financially.  And when nothing works be able to walk away from a bad deal.

In our next blog we will discuss the value of building a brand name.

To see all articles in this series please go to  http://optimal-mgt.com/blog.

Optimal Management is the premier management consulting company to the staffing industry. We act as mentors to owners and managers to maximize their sales, profits and value of their company. We become an extension of our clients operations and are there for all of their staffing and business needs, from sales, marketing and compensation plans, to finance, M&A, general management and everything in between.