Selling Your Business: A Practical Guide to Getting It Done Right
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Driving Business Value in an Uncertain Economy
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Enhancing Your Business Value...The Climb to the Top
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Selling Your Business the Hard Easy Way
From important points to consider prior to selling along with critical pitfalls to avoid during the process, this is the one guide that businesses owners cannot afford to be without.
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Tuesday, June 29, 2010
Strategies to Improve Back-Office Efficiency
Companies often struggle with back-office productivity challenges. Figuring out the right way to group tasks and enhance customer value can be complicated. Some managers opt to have employees perform several transactions while others choose a specialization strategy. Understanding which strategy yields the best results can help boost back-office efficiency and the company’s bottom line.
Back-Office Inefficiencies
Back office staff faces a variety of struggles when improving operational efficiency. Customers need change, new products are developed and other situations occur which interferes with production cycles. Companies involved in finance, health care, insurance and other service organizations appear to be at highest risk for back-office efficiency challenges.
Seeking to solve this problem, some companies are investing heavily in training all back office employees to handle numerous types of transactions. This training is expensive, but many companies feel it’s worthwhile, providing more flexibility among employees. For example, when times get really busy, employees were cross-trained to handle back office functions that needed the most help. This approach however isn’t always successful. Despite the large investment, efficiency often continues to decline.
Challenges with Production
When executives studied why efficiency was declining, they found several problems. Employees with dozens of tasks to complete, rather then just a few, experienced difficultly meeting customer’s service expectations. It also made it difficult for management to accurately track and measure employee performance.
There were also other problems when front-line employees were generalist instead of specialists in specific tasks. Employees weren’t encountering specific tasks enough to handle them efficiency and correctly.
Executives also found that some employees were manipulating the system. These employees would only choose the easiest tasks, which delayed the more difficult transactions and damaged customer service. Other employees became upset about this practice which negatively affected teamwork. When customers weren’t getting the more complicated problems handled, this created even greater inefficiencies. Employees had more angry customers to deal with which further affected the back-log of work. When this happens, companies spend more money on overtime to catch up which severely affected the bottom line.
Boosting Efficiency
When faced with this problem, executives knew they needed to make changes quickly to boost efficiency. Executives studied all transactions that employees were currently handling. They allocated these transactions into groups, based on level of difficulty. These groups of transactions were distributed to employee “teams” that handled the same types of assignments each day. This made employees more efficient and created specialists in each transaction type. Employee performance was also easier to track and manage with this strategy.
When developing the “groupings” of transactions, executives made sure the tasks were variable enough that employees wouldn’t become bored with their daily tasks. Executives also created a team of “floaters” who assisted teams experiencing higher than normal transaction volume. These employees helped the existing team work though their back-log which prevented burnout and customer service challenges.
According to the McKinsey Quarterly, these solutions helped companies meet service deadlines and reduce frontline staff and management by 25 percent. They also decreased overtime costs by 90 percent.
The Results
According to the McKinsey Quarterly, this strategy to manage back-office efficiency is similar to power companies using “peaker” plants to handle increases in the demand for energy. Managers creating teams of floaters to handle overflow can work the same way. It will make teams more flexible without all of the productivity “waste.” To make these plans work, the company must spend adequate time understanding how their customer demand works. This will help the company design a more efficient plan for assigning and handling overflow work.
A company must select the right tasks for each specific team. For example, executives might discover if a team takes on assignments A, B and C, they’ll be more productive then handling A and D. To accomplish this, senior managers must look at the context of the assignments. Assignments can be assigned based on the customer segment, level of difficulty, regulation issues or other important factors within your company.
There should also be measures in place that encourage career paths for front-line employees to boost job satisfaction. Those who perform well should have opportunities for more complex team assignments and opportunities for advancement. Having an employee assigned to a very specific task also decreases the learning curve for new employees. An employee can train much quicker on five transactions then thirty transactions.
Evaluating front-line activities and creating ways to streamline these tasks can boost your company’s productivity. It also improves employee moral and gives managers better ways to measure front-line performance. Creating these strategies in your own company can boost your bottom line and increase employee satisfaction.
Resources
Dan Devroye and Andy Eichfeld. “Taming Demand Variability in Back-Office Services.” The McKinsey Quarterly, September 2009.
--------------------------------------------------------------------------------
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy”, “Selling Your Business the Hard Easy Way”, “Enhancing Your Business Value…The Climb to the Top” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition” and “Selling Your Business The Practical Guide to Getting It Done Right”. For more information, contact him at 770.399.9512 or by email.
Back-Office Inefficiencies
Back office staff faces a variety of struggles when improving operational efficiency. Customers need change, new products are developed and other situations occur which interferes with production cycles. Companies involved in finance, health care, insurance and other service organizations appear to be at highest risk for back-office efficiency challenges.
Seeking to solve this problem, some companies are investing heavily in training all back office employees to handle numerous types of transactions. This training is expensive, but many companies feel it’s worthwhile, providing more flexibility among employees. For example, when times get really busy, employees were cross-trained to handle back office functions that needed the most help. This approach however isn’t always successful. Despite the large investment, efficiency often continues to decline.
Challenges with Production
When executives studied why efficiency was declining, they found several problems. Employees with dozens of tasks to complete, rather then just a few, experienced difficultly meeting customer’s service expectations. It also made it difficult for management to accurately track and measure employee performance.
There were also other problems when front-line employees were generalist instead of specialists in specific tasks. Employees weren’t encountering specific tasks enough to handle them efficiency and correctly.
Executives also found that some employees were manipulating the system. These employees would only choose the easiest tasks, which delayed the more difficult transactions and damaged customer service. Other employees became upset about this practice which negatively affected teamwork. When customers weren’t getting the more complicated problems handled, this created even greater inefficiencies. Employees had more angry customers to deal with which further affected the back-log of work. When this happens, companies spend more money on overtime to catch up which severely affected the bottom line.
Boosting Efficiency
When faced with this problem, executives knew they needed to make changes quickly to boost efficiency. Executives studied all transactions that employees were currently handling. They allocated these transactions into groups, based on level of difficulty. These groups of transactions were distributed to employee “teams” that handled the same types of assignments each day. This made employees more efficient and created specialists in each transaction type. Employee performance was also easier to track and manage with this strategy.
When developing the “groupings” of transactions, executives made sure the tasks were variable enough that employees wouldn’t become bored with their daily tasks. Executives also created a team of “floaters” who assisted teams experiencing higher than normal transaction volume. These employees helped the existing team work though their back-log which prevented burnout and customer service challenges.
According to the McKinsey Quarterly, these solutions helped companies meet service deadlines and reduce frontline staff and management by 25 percent. They also decreased overtime costs by 90 percent.
The Results
According to the McKinsey Quarterly, this strategy to manage back-office efficiency is similar to power companies using “peaker” plants to handle increases in the demand for energy. Managers creating teams of floaters to handle overflow can work the same way. It will make teams more flexible without all of the productivity “waste.” To make these plans work, the company must spend adequate time understanding how their customer demand works. This will help the company design a more efficient plan for assigning and handling overflow work.
A company must select the right tasks for each specific team. For example, executives might discover if a team takes on assignments A, B and C, they’ll be more productive then handling A and D. To accomplish this, senior managers must look at the context of the assignments. Assignments can be assigned based on the customer segment, level of difficulty, regulation issues or other important factors within your company.
There should also be measures in place that encourage career paths for front-line employees to boost job satisfaction. Those who perform well should have opportunities for more complex team assignments and opportunities for advancement. Having an employee assigned to a very specific task also decreases the learning curve for new employees. An employee can train much quicker on five transactions then thirty transactions.
Evaluating front-line activities and creating ways to streamline these tasks can boost your company’s productivity. It also improves employee moral and gives managers better ways to measure front-line performance. Creating these strategies in your own company can boost your bottom line and increase employee satisfaction.
Resources
Dan Devroye and Andy Eichfeld. “Taming Demand Variability in Back-Office Services.” The McKinsey Quarterly, September 2009.
--------------------------------------------------------------------------------
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy”, “Selling Your Business the Hard Easy Way”, “Enhancing Your Business Value…The Climb to the Top” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition” and “Selling Your Business The Practical Guide to Getting It Done Right”. For more information, contact him at 770.399.9512 or by email.
Developing Talent More Effectively
Most companies know that employees are their most valuable asset. However, developing employee talents and retaining those individuals is a challenge for most employers. As baby boomers reach retirement age, this challenge becomes more important then ever. Trends suggest there will be more competition for talented workers and managers. Creating strategies to develop and retain employees can make a huge difference.
Managerial Challenges
According to the McKinsey Quarterly, there are three major challenges when developing talent, including demographics, rise of the knowledgeable worker and globalization. These challenges are forcing managers to come up with more creative strategies for developing talent.
Developed countries are struggling with a decline in birthrates and increased numbers of people reaching retirement age. However, emerging markets continue to produce a large group of talented young people. Professionals in emerging markets are graduating from universities at twice the rate of developed nations. As this trend continues, managers are looking to emerging markets to recruit new talent.
When tapping into this talent pool, however, companies need to be careful about issues such as English skills, culture issues and the employee’s experience working in a group setting. Weakness is these areas could make it difficult to develop employees to take on leadership roles.
Another group that companies need to consider when evaluating talent is Generation Y. These professionals were born after 1980. They’ve grown up in a generation described as “information overload.” Human Resource professionals explain these professionals desire more job flexibility, freedom, higher rewards and a high level of work life balance. People in this generation are likely to work a few years and switch jobs. This creates a challenge for companies. If they don’t meet this demographic’s needs, they’re faced with very high levels of turnover. As of 2008, this demographic made up 12 percent of the United States workforce.
Generation Y employees are also generally harder to manage then other generations. However, working to meet their needs and develop their talents can make these individuals very valuable to an organization.
Talent Programs
In the past, companies have invested money in expensive programs to develop talent. To the surprise of many executives, these efforts don’t always work well. This is frustrating to managers. Human resources professionals aren’t always heavily involved in these programs, which frustrates these individuals as well.
When evaluating the results of talent development programs, senior managers aren’t sure what went wrong. According to the McKinsey Quarterly, the largest challenge with existing programs is managers perceive the problem as a short-term tactical issue instead of a long-term strategy that requires a large amount of resources.
Collaboration
When looking for ways to improve talent development, companies need to focus more on collaboration between business units. For example, a talented employee might be interested in moving to another business unit. If the company discourages this behavior, the talented employee may look for opportunities outside of the organization. Companies need to put strategies in place for cross-business unit collaboration.
Managers also need to rethink existing talent development strategies. Instead of focusing solely on top performers, they must consider the entire group of employees (each team member’s strengths and abilities). Developing each person, instead of just a select few will make the entire organization stronger. If a person isn’t suited for their existing business unit, perhaps the company can develop their talents in another business unit more suited to their strengths.
Target Each Type of Talent
With a diverse talent pool, it’s important that companies develop a plan that targets each individual talent group. While top performers should continue to be generously rewarded for their achievements, other employees need some attention as well.
These other players are commonly referred to as “B” players because they are capable and consistent performers (yet, not top performers). When given the proper attention, some of these employees have the potential to become top performers. This includes employees that work on the frontline, technical employees and all units of the organization.
Developing Human Resources Teams
Human Resources are an important asset when developing talent. Previously, HR departments were focused on recruiting, training and managing performance. They didn’t have much influence in developing company talent.
HR needs to serve the entire organization in regards to talent recruitment and development instead of just the top tier of management. For example, Proctor and Gamble places aspiring HR managers to work with front-line managers and employees to gain their trust and collaboration. Coca-Cola places top performing managers in human resources positions for a few years to build business skills and forge a partnership.
Senior managers who are struggling with acquiring and retaining talent need to evaluate their strategy. Making changes that focus on retaining talent, recruiting talent and developing all employees within an organization will make the company much stronger.
Resources
Matthew Guthridge, Asmus B. Komm and Emily Lawson. “Making Talent a Strategic Priority.” The McKinsey Quarterly, November 2008.
--------------------------------------------------------------------------------
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy”, “Selling Your Business the Hard Easy Way”, “Enhancing Your Business Value…The Climb to the Top” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition” and “Selling Your Business The Practical Guide to Getting It Done Right”. For more information, contact him at 770.399.9512 or by email.
Managerial Challenges
According to the McKinsey Quarterly, there are three major challenges when developing talent, including demographics, rise of the knowledgeable worker and globalization. These challenges are forcing managers to come up with more creative strategies for developing talent.
Developed countries are struggling with a decline in birthrates and increased numbers of people reaching retirement age. However, emerging markets continue to produce a large group of talented young people. Professionals in emerging markets are graduating from universities at twice the rate of developed nations. As this trend continues, managers are looking to emerging markets to recruit new talent.
When tapping into this talent pool, however, companies need to be careful about issues such as English skills, culture issues and the employee’s experience working in a group setting. Weakness is these areas could make it difficult to develop employees to take on leadership roles.
Another group that companies need to consider when evaluating talent is Generation Y. These professionals were born after 1980. They’ve grown up in a generation described as “information overload.” Human Resource professionals explain these professionals desire more job flexibility, freedom, higher rewards and a high level of work life balance. People in this generation are likely to work a few years and switch jobs. This creates a challenge for companies. If they don’t meet this demographic’s needs, they’re faced with very high levels of turnover. As of 2008, this demographic made up 12 percent of the United States workforce.
Generation Y employees are also generally harder to manage then other generations. However, working to meet their needs and develop their talents can make these individuals very valuable to an organization.
Talent Programs
In the past, companies have invested money in expensive programs to develop talent. To the surprise of many executives, these efforts don’t always work well. This is frustrating to managers. Human resources professionals aren’t always heavily involved in these programs, which frustrates these individuals as well.
When evaluating the results of talent development programs, senior managers aren’t sure what went wrong. According to the McKinsey Quarterly, the largest challenge with existing programs is managers perceive the problem as a short-term tactical issue instead of a long-term strategy that requires a large amount of resources.
Collaboration
When looking for ways to improve talent development, companies need to focus more on collaboration between business units. For example, a talented employee might be interested in moving to another business unit. If the company discourages this behavior, the talented employee may look for opportunities outside of the organization. Companies need to put strategies in place for cross-business unit collaboration.
Managers also need to rethink existing talent development strategies. Instead of focusing solely on top performers, they must consider the entire group of employees (each team member’s strengths and abilities). Developing each person, instead of just a select few will make the entire organization stronger. If a person isn’t suited for their existing business unit, perhaps the company can develop their talents in another business unit more suited to their strengths.
Target Each Type of Talent
With a diverse talent pool, it’s important that companies develop a plan that targets each individual talent group. While top performers should continue to be generously rewarded for their achievements, other employees need some attention as well.
These other players are commonly referred to as “B” players because they are capable and consistent performers (yet, not top performers). When given the proper attention, some of these employees have the potential to become top performers. This includes employees that work on the frontline, technical employees and all units of the organization.
Developing Human Resources Teams
Human Resources are an important asset when developing talent. Previously, HR departments were focused on recruiting, training and managing performance. They didn’t have much influence in developing company talent.
HR needs to serve the entire organization in regards to talent recruitment and development instead of just the top tier of management. For example, Proctor and Gamble places aspiring HR managers to work with front-line managers and employees to gain their trust and collaboration. Coca-Cola places top performing managers in human resources positions for a few years to build business skills and forge a partnership.
Senior managers who are struggling with acquiring and retaining talent need to evaluate their strategy. Making changes that focus on retaining talent, recruiting talent and developing all employees within an organization will make the company much stronger.
Resources
Matthew Guthridge, Asmus B. Komm and Emily Lawson. “Making Talent a Strategic Priority.” The McKinsey Quarterly, November 2008.
--------------------------------------------------------------------------------
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy”, “Selling Your Business the Hard Easy Way”, “Enhancing Your Business Value…The Climb to the Top” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition” and “Selling Your Business The Practical Guide to Getting It Done Right”. For more information, contact him at 770.399.9512 or by email.
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