Business Management Principles

Among the many challenges currently weighs imposing on American society and abroad, the most pressing issue of leadership today is the need for a real practice of integrity instilled in corporate culture and organizational. This essay will discuss how the lack of honesty and transparency to the economy and other areas of life they took disastrous consequences for the practice, who can not a. The discussion begins with a quote from The McKinsey Quarterly onentrepreneurs to win dilemma when attempting to health needs in the long term viability and reputation against short-term profit and personal satisfaction and balance.

In an interview with Daniel Yankelovich, The McKinsey Quarterly staff writer Mendoza and Miller (2007) commented: "As we have seen more and more executives that a company's reputation is an important strategic asset is upon us, many are understandably confused as the many social and policy issues to considernow alongside simple profit as a measure of long-term health of businesses. to resist "(p. 1). Unfortunately, leaders in some of the largest and best known organizations are unable to insert the temptation of personal gain or profit before health long-term success and reputation. In fact, Recent events in (a) companies, (c) financial and (d policy) areas of the United States serve as examples of how the lack of honesty and transparency has led toTermination and the loss of all stakeholders, including the individual, the organization, its employees and society in general. Included in these examples are:

Before The accounting debacle that has led, as large companies, such as (a) Enron (Arthur Anderson) supports, (b) Adelphia, (c), Tyco, and (d) WorldCom, each forced to reorganize or close submission of false financial reports has been to maximize shareholder value. (Wygal, 2004, p. 1).

The second collapseinvestment banks, once powerful as Lehman Brothers, Merrill Lynch and Washington Mutual, and largest U.S. mortgage lender, Countrywide Mortgage to forgive because the system ill-conceived subprime loan. This crisis led to the disintegration of the housing market in the United States' and therefore a sharp downturn in global financial markets. (Duncan 2008, p. 1).

The third exploit Governor Rob Blagojevich of Illinois, who allegedly tried to sell the Senate seatThe president-elect Barak Obama to the highest bidder, and has since been indicted by the state legislature of Illinois. (Bone, J., 2008, p. 1).

In all cases mentioned above, senior executives, is the truth or hidden elements with the authority for wrongful gain. Their actions resulted in an unethical short-term emotions with an ultimate goal the players left and shareholders worse off than if it started. In contrast, in an article in Business Week published in April 2002, Weestresses that maintaining high ethical standard weather allows corporate giant Johnson & Johnson product public relations nightmares related to their short-tainted Tylenol and continue business for the long term. (P. 2). All these examples show that the most urgent needs of the market leaders learn today, such as the withdrawal of the intense pressure for short-term gains and immediate gratification to high ethical standards to ensure sustainable growth infuseand health in the workplace and long-term profitability. This is because potential customers remain loyal to companies you trust.

Trust is an important key to sustainable growth. If customers trust a company always provide superior products and services on the rise, and up to an affordable price, are more frequently, that freedom of establishment. On the other hand, when an operation seems petty and deceitful, is to escape and potential customers and adjust their activitieselsewhere.

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Customer orientation is an important factor in quality management. The company should focus on customer needs, provide for the needs of these customers and completely filled. Customers need to be happy or not coming back for more service or more to buy your product. It 'important to a company must have a clear understanding of what the customer wants, and a detailed plan on how these needs and requirements are met. orientation session includes reviewstheir needs, communication and constant contact, and that good.

Leadership comes from the business, and Have a sound management team quality, you have areas that WHO is someone a good leader position. The leadership can not be trained, but is a quality of some people and not others. Always find a good guide for companies instill an environment of teamwork within your. Leadership includes all correct andefficiently. With the help of human resources in the right areas, where they are strongest, is the ability of a good leader.

The management process is another principle of quality management that must be considered. to ensure the processes must be designed and provided by a project delivery is on time and successfully. Each must include a project to follow certain processes for the production start of a project. Projects can not be started without the processes described. WhenThe processes are not adequately planned, objectives and deadlines are not met.

Continuous improvement is a principle of quality management to ensure services will increase productivity, improve products and society as a whole successful. The department of quality management needs to see every business potential as an improvement of total all relationships inside and outside the company including, quality and planning at every stage ofWay.

An objective approach must be taken into account in decision making. Some managers have taken a bad habit is to go on a road, and then if no problems are caused. When decisions are made, have a total of facts. These facts could the current prices, trends and analysis.

beneficial relationships with suppliers are the last important principle in the direction of Total Quality Management. Having a positive relationship with a supplier which means they couldbe more inclined, cutting deals, working with you on payments, and help you achieve your business goals at work. Each company is based on good suppliers and your company needs to have a good relationship.

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In this day and age business has to change on a regular basis to keep up with new technology, competitors and the changing needs their customers. When change happens it affects everybody within the organisation, from the cleaners to the manufacturers. Most employees will be able to cope and adapt to the change however, there will be others who will find it difficult to cope.

As a manager you will have to monitor the situation and observe which employees are finding it a challenge to adapt to the new processes. Common responses to business change are employee’s resistance to it. It will be your job as a manager to help them through the change process.

The following suggestions will enable you to help your staff cope more effectively with change:

1.Even though you have a busy schedule it is important that you take the time to look after your team. If you notice certain members are having a hard time then, sit down and talk to them. When they see that you care about their situation and their welfare they will feel better about it.

2.When it comes to change communication is very important. When change is being planned do not wait until the process is full flow as this will affect employee morale. Notify your employees as soon as possible when change is being planned. Make them fully understand why change is necessary what the consequences will be. Keep them briefed on a regular basis with updates on the progress being made. By communicating with your staff on a regular basis they will avoid experiencing unpleasant surprises and they will be better prepared when change happens.

3.When change is going to happen and employees have been fully informed of the situation make the point of asking employees to offer their suggestions and ideas to deal with the change in terms of the problems and the opportunities that it could be bring.

4.If the change is going to have a negative impact such as a redundancies then, it is very important that you communicate honestly with your staff about the possible negative outcomes. It is not a good idea to avoid possible negatives as this could backfire on you.

5.Rather than allowing employees to dwell on the situation get them more involved in the planning of the change process. By making them more evolved will help them deal more effectively with the change process.

6.The whole point of change is making things better therefore, make this your main focus when you communicate and work towards it. In this way employees will become less resistant and more accepting of change.

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“To thine own self be true” – William Shakespeare

Last week I wrote about the workshop presented by Professor Gareth Jones, a Fellow of the Centre for Management Development at London Business School. The article has received high attention from readers and a high click-through rate in social media vehicles, so I wanted to follow-up with one more aspect of the Community, Authenticity, Significance, and Excitement (C.A.S.E.) leadership framework.

While the whole model is valuable and synergistic, I found the “Authenticity” portion the most refreshing.

What does a leader look like?

You have an image of that perfect being. Deep inside you’ve been programmed with this stereotype. Admit it to yourself. However, the research Professor Jones and his partner, Dr. Rob Goffe, Professor of Organizational Behavior at London Business School, prove that all models of leadership eventually become extinct – therefore wrong.

Credibility and Trust

Think about the best bosses you’ve had in your career. If you’re like me, these people have a diverse skill set and background. Yet, what they have in common is that they earned my trust. That is no different than what your followers expect from your leadership. Whether you face it or chose to ignore it, YOU ARE A LEADER. The question then becomes how you exert your leadership. If you want to be successful, like those bosses you recalled, then you need to earn the trust of your team.

People only follow people who they trust and believe. Volumes of research validate this. In order for people to believe you, you have to be yourself. Period. The moment you fake your actions your followers will see through you and disengage. This is why in spite of the organizational expectations or pressures you must remain true to yourself.

Professors Jones, in his workshop, provided 3 Principles to remain authentic:

1. Consistency between words and actions – do what you say you’re going to do, all the time.

2. Provide a common thread in your role performance – be consistent in your behavior, weaknesses and strengths.

3. Be comfortable with your origins – remain true to your roots and whole persona.

At first read, these 3 Principles seem extremely simplistic. And they are, but ask yourself “how many leaders do I see living these 3 Principles consistently”? The answer is obvious – the simplistic is rather difficult, especially over time.

WIFM (what’s in it for me)

Beyond the business aspect of being better leaders, following this advice keeps you closer to your core values. I’m dumbfounded by people who say “I’m this way at home and that way work” – to me, with all due respect, it seems hypocritical and burdensome to try to be two different persons. By being yourself at home and at work, you will not only be a more effective leader, you will find yourself happier altogether.

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I recently received a most interesting phone call. When I answered the phone, I immediately recognized the name of the company as one of the most visible distributors in the construction supply industry, headquartered in a city about two hours from my office. The owner described how this seemingly invincible 75-year-old firm had very little to show for all those years except their good name. In fact, over the past five years, their sales had deteriorated by over one third.

The owner cited two major factors that he believed to be the cause: 1. A strong national distributor had opened in his market. 2. A near depression was looming over the community due to the closure of a large military base.

I asked the owner to allow me to interview and test each of his key employees and also interview several customers. The owner also agreed to send me the company’s financial statements from the past five years.

The results should be a warning to every business: management apathy will kill a business.

From the psychological tests we administered, we learned that the organization was not balanced. Inertia had set in. There was no spark, no innovation. No one was initiating change.

The employees were good people with excellent product knowledge and years of experience. The problem was that they were merely going through the same motions year after year, expecting different results.

The financial statements revealed that over the past five years operating expenses had steadily increased while sales and gross margin had slowly declined, producing a lot of red ink.

Employee interviews revealed that not one of them had a clue that the company was in trouble. Management kept profitability a secret unto itself. Everyone was working hard, but no one was doing any long term thinking or planning or keeping score.

The core problem was that for years management had given raises averaging 4% to 5% regardless of performance. Gross profit didn’t keep pace, so the bottom line slowly eroded.

The salespeople had noticed that they had lost a few accounts here and there, but had spent no time on a game plan to replace them.

The operations manager realized that overtime had become a problem, but limits were never set.

The buyer was achieving around five inventory turns and thought that this was a pretty good job for a business doing almost $60 million in sales.

The customer interviews revealed that our client did have a great reputation for quality and service, but most of the customers who weren’t regular customers hadn’t seen one of this company’s sales reps in years. To make a long story short, the sales force was in a rut, calling on the same customers year after year. The sales force could be described as “content.”

Could a similar scenario occur in your company? By putting basic management principles in place now, any company can avoid this kind of catastrophe. Just don’t wait until you are in serious trouble to begin.

The most profitable companies I work with have a leader at the helm. All companies have managers in place, but only the most progressive have placed an emphasis on leadership. While leaders are also managers, they do more than what I call directing traffic. By merely telling their people what to do, the leaders don’t develope the critical thinking skills necessary to determine why their organization is not performing to high standards.

For example, if your sales force has not produced sufficient sales for your company to keep up with the growth in your market; that is, your company is losing market share to the competition, critical thinking skills are necessary to determine why this is the case.

It is often the case that owners and managers are so close to the business that they can no longer observe it objectively. They are so much a part of the “day to day” that they can’t step back and see the business analytically. If this is the case with you as an owner or manager, it would be wise to either retain an industry consultant or invite a fellow owner or manager whom you respect to take a critical look at your business and make proactive recommendations.

Executive success is measured by a leader’s ability to achieve an optimal level of profitability in good times and in times of slower business activity. Don’t allow management apathy to rob you and your business of the success it deserves.

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Are you managing your business to maximize its value?

If you are considering sale or transfer of your business you need to have established your own idea of the value of your business. It essentially means looking at your business as a dispassionate investor or buyer instead of the emotionally committed owner.

The first step is to package your business for sale. Packaging your business for sale helps you to make it a better business that is more valuable to a future owner and also easier for you to manage until transition occurs.

In establishing the value of your business, some basic principles apply:

1. The value to the owner is unique to that individual. Ego may artificially inflate the price, but more importantly the role and relationships established by the owner may change drastically with his/her departure and thereby affect the price.

2. Value is always determined by an evaluation of the future income relative to the uncertainty or risks associated with obtaining the expected returns. Regardless of the valuation method, (P/E multiple, payback period, or discounted cash flow) the forecast future income stream has to be solid and the known risks have to be reduced to get the best possible valuation.

3. Current owners tolerate more risk, uncertainty and “fuzzy” circumstances than new owners/investors. You may be OK with the fact that you are dependent on one key supplier because he is an old high school buddy; or that you have no signed lease but the landlord is your uncle; or that your best sales rep is also your only son and he wants to be president. Prospective buyers will be much less enthusiastic unless those issues are all resolved to their satisfaction in advance of any offer to purchase or invest.

4. Different buyers will accept different prices, terms and conditions. They usually range from the passive investor looking for a reasonable return with reasonable risk; to the active investor who sees the potential to do better than your forecast under his own management; to the strategic investor who sees even greater opportunity in buying a competitor, supplier or customer and merging it with his existing business to increase revenues, eliminate unnecessary overheads, and substantially increase profits. The selling price will increase accordingly.

Several valuation methodologies may be used and it is often a good idea to test different approaches to see what values they yield and then select a “market” price that can be reasonably supported by any method of valuation.

P/E multiple

The price/earnings multiple is a well recognized valuation method and widely reported for public companies. Current price divided by last reported annual earnings per share is a simple concept and a simple calculation. Unfortunately, it is not usually very relevant since the price today is based on the expectation of future earnings, not last year’s.

For example, Google’s price today (Dec. 10,2007) of $718 yields a P/E multiple of 56x based on current earnings of $12.78 per share. But if we use the current analysts’ consensus of $19.51 for the next 12 months the P/E is a more “reasonable” 36.8x. Still high compared to the its major competitor, Microsoft, at 22x.

What is the P/E multiple for your company? Typically, small owner-managed businesses can support a P/E multiple of about 5x. It may be higher if earnings are very secure and not dependent on the current owner/management team and lower if future earnings are risky and very dependent on current relationships with the owner. The buyer will usually look at operating income or EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) to determine profitability before financing, taxes and capital costs. That means an equity value of $500,000 based on your $100,000 per year operating income if you accept a 5x P/E multiple.

Payback period

Some buyers will insist on looking only at net cash flow and payback period to arrive at an acceptable price based on expected earnings. They will consider their net investment, after allowing for financing, taxes, incentives and payment terms to determine how long before they get their investment back and start earning positive cash flow. They will likely have a minimum payback period, depending on risk, of from 3 to 5 years.

Discounted cash flow

Other investors will take the pure financial approach of calculating discounted net present value (NPV) or the Return on Investment (ROI). Again the future net cash flows will be forecast to arrive at a valuation. The buyer will then discount at his required rate of return, typically 15% to 20%, or calculate the expected ROI compared to that required rate of return.

Using these same methods will give you a range of valuations depending on the various forecast scenarios to establish your own best estimate of fair market value.

For more ideas on how to get the maximum value for your business, contact us or visit Business Solutions from DirectTech at http://www.directtech.ca.

Del Chatterson © 2007

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In business, there is a place for risk management and activities which seek to minimize the risks associated with doing business in the industry in which your business exists. These risk management principles are a set of guidelines that you put into practice in your operations on a daily basis.

Risk management can come from making sure that you carry enough insurance to help mitigate losses. And, it might be just making sure that you have enough money to get through a tough time economically. Basically, any task that helps you keep your business moving forward is considered risk management. This applies even to sales activities. That, too, is risk management.

GPS Tracking should be a part of risk management for your business as well. Here are some benefits that can help you understand how this is possible.

Keep track of assets. Running a business is difficult enough without having to constantly check on the whereabouts of your assets. If you have major capital tied up in vehicles or other assets that are outside of the confines of your building, then you need GPS tracking to help you keep up with the location of those assets.

You can know in a minute with the right system where they are, where they are headed and the speed at which they are travelling. Never again will you dread doing inventory of your assets. It is a breeze with GPS tracking.

Control movement of assets. Fleet vehicles that are driven every day by your drivers are using valuable resources (money) that eats away at profits. Now you can know where your vehicles are being driven and the places that they are being taken to. This helps you make sure that there is no excessive driving and use of fuel for personal purposes.

Manage maintenance of assets. Keeping a close eye your assets helps you determine when they need to come in for maintenance. Performing routine maintenance keeps repair bills at a minimum and you get more out of the asset over the life of its use.

Reduce costs of assets. Insurance premiums can be reduced with the addition of GPS tracking devices into each vehicle or asset. If an asset is stolen, it can be recovered quickly. This saves money for both your business and your insurance underwriter.

Reduce your business risk by investing in GPS tracking units for the major assets in your business. You will not regret it.

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The fundamental question is: Where will I be? If you do not know where you're going, any road will get there. If not effective, no matter how efficient they are. Sales Success comes from planning, effective marketing techniques.

To succeed, you need to maintain harmony in all aspects of your business. Through a formal strategic marketing planning, it is working systematically to all pages of your company and your employees involved in theirDistribution.

There are 3 universal strategic objectives:

Before Market share

According to financial reports, including ROI and cash flow strategy

Third personal strategies

Ask yourself:

What should I do first to arrive at the market I want?

Others I need to know who is my client?

b. My inventory fit the profile of my company?

c. How do people know, I'm in the business?

D. What is my strength – quality, service, price?

According What do ITo do to achieve my financial goals?

R. I have a tight control of costs?

b. Do I have my price of goods is correct?

c. I know what my gross profit?

d. Do I have to compare a system every day and share this year, sales last year?

e. You can increase the average sale per customer?

Third How do I change the organization to our Human Resources Department aims to achieve?

Others included in the valuation of people, three criteria:

i. Character

ii. Capacity

iii. Commitment

Theelements necessary for a viable strategic plan are:

Before Creating Mission

According Identifying competitive strategies

Third Analyse your income and expenses for each business

Fourth Creating a Marketing Plan

Fifth Creating a plan for human resources

Sixth Create an infrastructure plan

Create a seventh plane of Customer Service

8th Please provide your financial

Plan your work and your plan!
Success is in the planning!

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Are basic standards of behavior that we expect from procurement professionals when working with colleagues inside their organization and with suppliers from whom they buy. These principles must be consistent with the overall vision for the organization and the department when you deliver better value.

Principles do not tell people exactly how to accomplish a task, but to emphasize what is important to do thisBusiness>. The "how" is included in a policy statement. For example, if you have a value of "openness" may be a principle of "People will be transparency in dealing with suppliers, if the show does not exclude providers or categories of suppliers for tendering." The policy of how to do it (eg through the publication of all notices of demand on the company's website) gives guidance on exactly what to do to demonstrate the principle.

There are four steps to create aStandard.

Step 1: Identify the benefits that the results of procurement staff and the people in it. Links to these results, the company's objectives and results to know, so you can understand that the achievement of results, help your procurement organization to drive on are;

Step 2: Identify all the rules, policies and procedures that you currently have that is not consistent with the achievement of these results and overcome;

Step # 3: Principles of design,in relation to these results. You can do so in writing a series of statements not in form "People are (insert value) if (insert an action)." The highest priority will be assessed and those of your most important principles and

Step # 4: Write each of these principles and policies of beds for them in their working practices (for example, writing a policy manual).

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The rate of organizational change has not slowed in recent years, and may even be increasing. In spite of the importance and permanence of change, most change initiatives fail to deliver the expected organizational benefits. It is little wonder then that the fear of managing change and its impacts is a leading cause of anxiety in managers.

To lend assistance, there are now available many guides to help change agents drive and manage change. These serve a very valuable purpose. Nonetheless, guidebooks can only assist so far. Every organization is different; different structures and processes, different environment and different culture, just to begin with. No guide, no matter how comprehensive, is able to offer prescriptions to suit every company’s particular circumstances and objectives.

Add to this the fact that bringing about change in today’s organizations is fundamentally about changing people’s behavior in certain desired ways. Implementing the new accounting system hardware and software and distributing the new procedures is only the start. Managers, supervisors and operators need to be engaged enough to use the new system effectively. Much of the change process is about developing and nurturing relationships. An approach that displays integrity and engenders openness and trust with all employees is a necessary ingredient of success. This goes to the heart of what change agents, sponsors and implementers are as opposed to what rulebook they follow.

A principled approach to initiating and managing change will fill in the gaps left by the guidebooks and bring to life the human dimension of change. There are five principles that generally underlie successful change programs. These principles are supported by a wealth of research and experience and are summarized below. Adopting these principles in both spirit and practice will enhance significantly your program’s chance of realizing its proposed benefits. Let us look at each of these principles in turn.

1. Sponsorship

The change program has the visible support of key decision-makers throughout the organization and resources are committed to the program.

How this principle can be applied:

A senior executive is nominated as Program Sponsor.

2. Planning

Planning is conducted methodically before program implementation and committed to writing. Plans are agreed with major stakeholders and objectives, resources, roles and risks are clarified.

How this principle can be applied:

A Business Case is written and approved prior to implementation.

3. Measurement

Program objectives are stated in measurable terms and program progress is monitored and communicated to major stakeholders.

How this principle can be applied:

Program milestones are defined.

4. Engagement

Stakeholders are engaged in genuine two-way dialogue in an atmosphere of openness, mutual respect and trust.

How this principle can be applied:

Employee representatives sit on the program steering committee.

5. Support structures

Program implementers and change recipients are given the resources and supporting systems they require during and after change implementation.

How this principle can be applied:

New procedures are documented.

The social, legislative and business environment is changing constantly. This permanent state of flux is placing increasing demands on our managers to proactively drive change and on our employees to be ever adaptable. Rulebooks and guides can only go so far in providing assistance. The recognition and adoption of certain change principles will fill in the gaps and provide the necessary human dimension to any change initiative.

Such principles will need to center on the importance of executive sponsorship, methodical planning, goal setting and progress reporting. In addition, the human dimension of change will need to be embodied in such principles as the value of engaging the various stakeholders and providing initial and ongoing support to the change implementers and recipients.

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