Bob Prosen is the author of Kiss Theory Good Bye: Five Proven Ways to Get Extraordinary Results in Any Company. He’s also president and CEO of The Prosen Center for Business Advancement, which helps business leaders achieve rapid and lasting results in leadership, sales effectiveness, operational excellence, financial management, and customer loyalty.
We asked Prosen how we can help leaders get what they want most—less talk and more results.
The Five Attributes of Highly Profitable Companies
- Superior Leadership: The Relentless Pursuit of Vision and Results
- Sales Effectiveness: Your Company’s Lifeline
- Operational Excellence: The Secret Formula for Extraordinary Results
- Financial Management: Where Information is Power
- Customer Loyalty: The Win That Keeps On Giving
Source: Kiss Theory Goodbye, by Bob Prosen
McLaughlin: How would you characterize the general state of corporate management? Are executives getting better at leading people or just running in place?
Prosen: In terms of financial results companies are doing very well. But we need to dig deeper.
Previous downsizing has led to the “tightening up” of roles and responsibilities while forcing leaders to focus on what matters most. There just aren’t enough resources for all of the nice-to-do things. In fact, in many sectors there’s a severe shortage of talent, and companies are looking for ways to attract and, more importantly, retain top talent.
The leaders I speak with continue to struggle with creating alignment, increasing accountability, and effectively managing the new generation of workers. All in all, I’m cautiously optimistic that corporate management is beginning to understand the importance of sound leadership and the investments required to create a powerful corporate culture that attracts and keeps great talent.
Only time will tell. Some of the indicators to watch include attrition rates, satisfaction survey results, career changes, and average length of time people stay with companies.
McLaughlin: What’s your definition of a superior leader?
Prosen: The most effective plans are those with specific, measurable goals that are evaluated monthly. Long-range plans covering three to five years are useful for setting and communicating direction and should be restricted to senior management. Short-range plans covering twelve to eighteen months are what leaders need most to remain on course and manage results.
Plans and associated measurements must focus on simple-to-articulate goals owned by specific people. Once this is achieved, it’s time to stop planning and get busy delivering.
McLaughlin: Many executives talk about accountability for results. How would you characterize the culture of accountability in organizations?
Prosen: This remains one of the biggest challenges organizations face and where I spend a lot of my time trying to make a difference. In short, most companies are not good at holding people accountable or creating a culture of accountability.
Accountability is one of the most important words in business. And having an accountability-based culture that assigns personal ownership in order to make things happen will ensure your success in outperforming the competition.
Here’s how to instill accountability. Assign ownership to everyone from senior-level managers to line workers. Why? Because in that kind of culture it’s extremely difficult for blame and victim mentality to take root and grow.
Instead, individual owners are forced to be accountable for achieving their goals. If they don’t, there’s no one else to blame. And if tasks are measured regularly, and the results are accessible for all to see, it’s easy to determine when objectives have been met. Public accountability is a powerful motivator.
McLaughlin: Given that the sales function is essential to the top-line growth of a business, are there some tips that executives can use to boost the performance of a sales team?
Prosen: Absolutely. This is one area in business where keeping things simple really pays off. If you have commissioned sales people working for you, you should always know at a moment’s notice how many are making plan. You might be surprised how many leaders don’t have this information at their fingertips, when in fact this is the most important sales effectiveness indicator.
Profitable revenue is the lifeblood of a company and can solve many challenges. So you must devote significant resources to ensuring that your company develops realistic forecasts and consistently meets its sales plan. It’s much more enjoyable and a lot easier to achieve and sustain profitability by hitting the top line target instead of cutting costs.
The primary expectation of any sales organization is to continually create new, profitable customers who are in solid financial shape and can develop into long-term relationships. It’s important for salespeople to understand that not all customers are good customers. Instead, salespeople must use due diligence to identify the right customers for the company.
McLaughlin: When you manage an organization’s cost structure, how do you know if you’re “lean” enough?
Prosen: A superior leader continues to meet the organization’s financial and operation objectives while maintaining balance in three key areas: Financial performance and shareowner value; customer loyalty; and employee loyalty.
So how is this accomplished? Superior leaders develop the vision and have the courage to make decisions. They must be entrepreneurial, remain focused on the significant few and not the important many, take risks, and encourage others to do the same.
They know how to build a culture based on ownership and accountability while living with ambiguity. They must have fearless determination and perseverance and be passionate about results. And they must put the company first and understand that people are their most important asset.
McLaughlin: What are the most common failings you see in organizations?
Prosen: Leaders struggle with directly tying rewards to results. The key is to encourage hard work but only reward results. Most everyone knows how to take care of the people who make things happen. The challenge is how to handle the people who don’t meet expectations.
The next failing is the lack of clear responsibilities and objectives so that everyone knows their role, what’s expected of them, and how they will be measured. Without this, it’s impossible to do the first with any degree of fairness. Effective measurements make holding people accountable and handling poor performers a lot easier because there is a strong element of fairness involved.
All leaders need to understand their own role when it comes to delivering results. Simply put, the leader’s job is to ensure that every member of the team wins, and winning is defined as meeting the organization’s top objectives.
Throughout my career one of the best ways I’ve found to help people win is to identify what stands in their way and help remove the roadblocks. Try it. I promise you’ll be amazed with the results.
McLaughlin: Some experts say that business people spend too much time planning, and then act without using their plans. Do you agree? How do you know if you’re organization is doing enough planning or too much?
Prosen: Even though it may sound absurd, this scenario plays out frequently. Companies spend enormous amounts of time, energy, and resources on planning. They hire consultants and travel offsite to planning retreats. They bring in experts to come up with brilliant plans, and afterward, everyone feels good for a while.
The problem is that companies too often don’t invest an equal amount of time, energy, and resources on achieving the results the plans target. Instead they go through several quarters before realizing that they’re not achieving the results they’d planned for, and so they say, “Let’s revise the plans again.”
Prosen: Sometimes this can be as much an art as it is a science. Let’s start with this as a premise: it’s always better to run lean, particularly when your company is doing well. That’s the perfect time to increase cash reserves and invest in the future. Get into the habit. The dividends are great.
The first step is to thoroughly understand your company’s cost structure. This provides the foundation for sound business decisions across the entire company.
Without accurate cost information, it’s impossible to set proper prices, forecast performance, isolate areas that negatively impact cash flow, or determine what to stop doing, what to automate, how to allocate funds, or how best to manage budgets. It’s also critical to understand cost drivers in order to
grow a profitable business while investing in areas to improve profitability and results while de-investing in ones that don’t.
When you grow your company, you grow your cost structure. The key is to make sure you’re growing it in the right proportion to revenue by adding cost only in areas where revenue is increasing and where margins and profitability can be maintained or improved.
The trick to running lean is the ability to cause some “noise” in the organization indicating there aren’t quite enough resources to get all of the critical things done. That forces people to prioritize and work efficiently. If there is no noise, you have excess resources.
McLaughlin: Are there some companies you believe do an outstanding job on all aspects of strategy and operations?
Prosen: Yes. Here in Dallas, The Container Store, TDIndustries, and HKS Architects do an outstanding job connecting plans to results.
Of course, there is Fortune’s 100 Best Companies to work for in America. I like this list because to make it in the club, you have to allow a minimum of 400 employees to be surveyed anonymously. They’re asked what it’s like to work for the company and how employees are treated by their bosses.
These are solid indicators of companies that strive to create a balanced culture based on results and work life. The list speaks for itself. Here are some of the winners: Starbucks Coffee, Google, J.M. Smucker, Microsoft, Four Seasons Hotels, CarMax, Nordstrom, and Texas Instruments.
McLaughlin: If you were to give business executives one piece of advice to improve the performance of their businesses, what would it be?
Prosen: The most important aspect of being a superior leader is hiring people smarter than you. But, the difference between good performance and great performance is not just having smart people, but also having the right great people in the right positions.
That’s why top leaders spend more time putting the right team in place to accomplish their objectives than they spend on planning, strategizing, or many other components of their job. My advice to everyone is to never compromise when hiring!
McLaughlin: Thanks for your insights.
Find out more at www.bobprosen.com.