How Do We Measure Success?

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How Do We Measure Success?

Today we are pleased to introduce to you a valued colleague. Ed Wallace. Ed will share his insights with us from time to time. You will see in his bio that he is an author. I would strongly advise those of you who read and gain new perspectives from books that Ed provides clear and easy to read advice which you can translate into your work and your personal life.

Ed Wallace, President, AchieveNEXT Human Capital.

Ed consults with and speaks for corporations and associations across the globe with a client list that is a Who’s Who of Fortune 500 companies. He is the author of Fares to Friends, Creating Relational Capital, Business Relationships That Last, and his most recent the #1 best seller, The Relationship Engine.  In addition, Ed is currently on the Executive Education faculty of Drexel’s LeBow College of Business and Villanova University’s Human Resources Master’s program. https://www.linkedin.com/in/relcapgroup/

How Do We Measure Success?

Hint: It comes through the experiences we create for others

While many leaders prioritize new products and services and hard assets that can be plugged into spreadsheets, research reveals that core business relationships are the true catalyst for driving high performance. At the same time business relationships are unpredictable and hard to measure. They’re rarely captured on organization charts or strategic plans. Most leaders, in fact, leave business relationships to chance, and simply hope that cross-generational conflicts, organizational complexity, diversity, and other organizational barriers will just go away because, ‘we’re hiring great people.’

We see today’s leaders winning by investing in ‘Relational Capital’ with their colleagues, teams, and across their enterprises. Relational Capital is defined as the ‘distinctive value created by people in a business relationship.’ It forms where the qualities of credibility, integrity and authenticity converge when working with each other. So how do ‘relational leaders’ hit the relational mark?

My experience through many years of research into business relationships and training over 30,000 business professionals has revealed five identifiable principles that lead to effective relationship development and, not surprisingly, superior performance. These principles don’t exist only in the business world but are at the heart of most successful people’s lives. Through my experiences and research, I know they can be learned, practiced and improved, bringing a surprising level of precision to relationships in organization.

The Five Principles of the Relational Leader

  1. Display Worthy Intent
  2. Care About People’s Goals, Passions, and Struggles (GPS)
  3. Make Every Interaction Matter
  4. Value People Before Processes
  5. Connect Performance to a Purpose

(Wallace, The Relationship Engine, Harper 2016)

These principles form a system of beliefs for high performers that Relational Leaders follow and apply intentionally. The result is what I call ‘relational agility’ that can bridge the generational and cultural gaps that exist in today’s organizations and harness the collective talents, thoughts, and efforts of people. As Ron Slee, who heads up Learning Without Scars, suggests, ‘the biggest differences that I see are that millennials are impatient. Today a lot of older management view that as a negative quality. I view that as a positive. If these younger employees are not learning and growing their potential, as employees, they do not want to stay around. I really admire that quality. They have a need, if not a thirst to learn. They want to continuously improve. They want up-skilling.’

Understanding this element of the Relational GPS of younger employees will allow for management to understand ways to support and foster the development of younger team members.

We will visit again soon.

Thoughts from an Industry Leader

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Thoughts from an Industry Leader.

Today’s post is a from a guest blogger, Steve Day. Each Friday, you will see a new post here from our guest blogger. He will be offering his thoughts and ideas for four weeks. We are thrilled to have his reflections here.

Experience is invaluable. The Thoughts of a Respected Leader in the Industry.

Four years ago, I decided that I would officially retire on January 1, 2020.  I immediately began my planning for a successful transition to my successor.  That went quite well.  My successor is definitely an upgrade and that is how it should be.  I also started planning for a fun and exciting first year of retirement in 2020 which would include quite a bit of travel.  As the Yiddish saying goes, “Man plans, God laughs”.

My good friend, Ron Slee, has become worried that my brain will turn to mush in the time of Covid-19. Unless, of course, I keep active, and so he has asked me to write an article for his blog.  It’s really for my own good. Hopefully my experience will be invaluable to you.

I thought that I might write about something important that I did not focus on enough until way too late in my career.  Training is at, or near, the top of my list of things I knew were important but did not focus on early enough.  Some of the things I am going to talk about in the coming weeks are probably obvious and some of them require effort and assets that we are often unwilling to allocate.  I think training is a particularly appropriate topic right now because it might be getting ignored a bit now during the time of Covid-19 budgeting.

This brief post serves to introduce you all to Steve Day. Please look for his wisdom every Friday.

For more information about training, please visit our website at learningwithoutscars.org

A Guest Blog from Ed Gordon

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“Ignoring America’s Talent Desert Won’t Solve the Problem!”

 

Reports of talent shortages continue to proliferate:

  • The National Association of Manufacturers reported an all-time record high of over 500,000 vacant positions (September 2019).
  • A National Association of Home Builders Survey found that over half of contractors had shortages in 12 of the 16 categories of construction work.
  • An October 2019 member survey conducted by the National Federation of Independent Businesses (NFIB) reported that 53 percent of small business owners had great difficulty finding qualified workers (88 percent of those hiring), This year finding qualified workers has consistently been the top business problem in the monthly NFIB survey.

William Dunkelberg, NFIB Chief Economist warned, “If the widely discussed showdown occurs, a significant contributor will be the unavailability of labor — hard to call that a ‘recession’ when job openings still exceeds job searchers.” This quote is based on official Bureau of Labor Statistics (BLS) reports: the 5.9 million Americans classified as unemployed (11/1/19) and the 7 million job openings reported in the Jobs Openings and Labor Turnover Survey issued on November 5. The BLS also reported that the number of U.S. vacant jobs has exceeded the number of unemployed for the past 17 months (August 2019).

 

The official BLS estimate of unemployment (3.6% in the 11/1/19 report) is based on an extremely narrow definition: only those who actively sought a jobs in the past month are classified as being unemployed. We believe that this measure of unemployment is very misleading. The BLS also currently estimates that about 95.2 million Americans over the age of 16 are “not in the workforce.” This is an remarkably high number that has persisted since the 2008 recession.

 

Our analysis of the probably characteristics of this group of 95.2 million Americans is:

  • Approximately 55 million people over age 55 have retired.
  • What about the other 40+ million people not in the workforce? The latest official BLS survey of this group finds that nearly 4.4 million respond that they want a job. About 1.2 million report that family responsibilities, schooling, medical issues, or transportation or childcare difficulties are keeping them out of the workforce. The significant growth of the populist vote in this nation indicates that a large number of people who lost their jobs in the wake of the 2008 recession have been unable to find full-time employment due to such factors as skill deficits, age discrimination, or inability to move to areas with relevant job opportunities. A variety of sociological data provide evidence that a sizable proportion of unemployed Americans are poorly educated and have few of the job skills businesses now demand. But we estimate that as many as 27 million Americans who are willing to work are educationally qualified but lack some skills needed for currently available jobs.

 

Including the 5.9 million Americans who the BLS officially reports as unemployed, these 27 million Americans could potentially help fill the 10.5 million jobs we currently estimate are vacant across the United States provided that they receive training from employers to update their skills. Based on these figures, the actual unemployment rate is over 16 percent!

 

A September Rand Research Report warned that the education-to-employment pipeline has changed little from previous decades despite technological advances, globalization, and demographic shifts. This has resulted in major shortfalls of workers due to: (a) inadequate general elementary and high school education, (b) limited enrollment in and completion of  post-secondary education programs, and (c) lack of access to lifelong learning and training supported by employers. We believe that a staged transformation into a suitable 21st-century education system should occur at the regional level involving the leadership of major community sectors. These programs are already underway in many communities. We have coined the term Regional Talent Innovation Network (RETAIN) for such undertakings. They, however, have not gained enough traction to have an impact on the overall unemployment situation.

 

In 1970 the United States had the world’s best educated and trained workforce. Today America is a spreading talent desert with too many poorly educated workers who do not have the knowledge and skills to fill the new jobs of the 4th Industrial Revolution.

 

We are now on an unsustainable labor economic course. A Deloitte and Manufacturing Institute 2018 Skills Gap study projected that 2.4 million manufacturing jobs would not be filled between 2018 and 2028 due to skills shortages with a potential loss of $2.5 trillion in economic output over that time period. We believe that other sectors of the U.S. economy will also experience significant economic losses because of the encroaching talent desert.

 

The time as arrived for regional public-private collaboration rather than empty political and business rhetoric. It is better to rebuild quality workforces at local levels rather than passively accepting continued skills declines and government programs that are ineffective or underfunded due to political divisiveness at the federal and state levels.

 

Edward E. Gordon is president and founder of Imperial Consulting Corporation

It’s All About the People

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It’s All About the People

Recently I came across this in Material Handling Wholesaler. It is well worth reading and talks to elements of the management job that we feel are critical for successful businesses.

7 Steps to Turn Employee Potential into Performance

Imagine on Monday, you discover that your meticulous, rule-following accountant and creative, eccentric marketing person have switched positions. How’s this likely to work out? In truth, some variation of this misalignment is common in most organizations.

The Waybeloe Potential Corporation was operating at the break-even point for the past five years. The CEO, Harvey Waybeloe was frustrated. Another CEO told him about an employee-alignment process that was delivering amazing results for other companies. Out of desperation he decided to try it. Within two years, profits increased from break-even to $3.2 mm! The fix? Putting the right people in the right seats!

Most business leaders say that 80% of the work is done by only 20% of the workforce. This 20% are the top performers. They usually produce 3-4 times more than the others. The main reason is due to job alignment rather than attitude or drive. Here’s evidence: It’s common for top performers to be moved or promoted and then become poor performers. Likewise, many poor performers become top performers when moved to appropriate roles. Bottom line: everyone can be a top or poor performer depending on how well the work aligns with their innate characteristics.

How do you deliberately create an organization where people’s work is aligned with their innate characteristics (abilities)? Here’s an overview of a proven process that was used above.

1. Shift your mindset from focusing on skills, experience, and education to innate characteristics first

It’s common for people who are “great on paper” to get hired and become poor performers. In that same vein, many top performers started off lacking in the “required” skills experience and education. When people’s work aligns with their innate characteristics, they can utilize their natural abilities and unleash their passion for their work. Also, the best training and management will not turn poorly aligned employees into top performers.

2. Select the right assessment tool

Many organizations use personality assessments in the hope of gaining more objective information about people to set them up for success. However, the results are usually disappointing due to four inherent pitfalls:
• What you think of as personality is mostly surface-level, observable behaviors; not what’s underneath, driving these behaviors. The drivers of behavior are more accurate, predictive, and stable.
• Assessment-takers usually provide different answers based on which of the following they consider: how they actually see themselves, how they believe others see them, and how they want to see themselves.
• Assessment-takers use a specific context or situation to answer the questions. For example, answers to questions related to “extroversion” (sociability and talkativeness) may vary depending on context differences: small vs. large groups, familiar vs. unfamiliar people, level of interest in the topic of conversation, etc.
• If an assessment is used for a job application, the applicant often has an opinion on what traits the employer is looking for and skews the answers accordingly.
• What’s a better option? Select an assessment that delves beneath the personality into what is more core or innate with people. This eliminates the biases of personality assessments and provides more valid and reliable data.

3. Establish trust with the employees

Inform the employees about the company’s commitment to align their work with their natural gifts. Don’t hide things or surprise people. People want to do work they’re good at and enjoy.

4. Develop an understanding of the innate characteristics being measured

Before you can align people’s innate characteristics with their work, it’s essential to understand what these characteristics mean. In other words, how each one impacts the way people think and behave. Now you have the basis to identify which characteristics are needed for different types of positions within your organization

5. Develop clarity on the job duty break-down

It’s important to know what people will do on a day to day basis in each job. The hiring team (direct manager and others with a major stake in position success) meets to gain clarity on the percentage of time spent performing each job responsibility. Group together duties that are very similar in nature (family of duties). Estimate the percentage of time spent working on each job duty family.

6. Determine which innate characteristics are critical and where they need to measure

The hiring team determines which innate characteristic is critical for each job duty family. They also agree on the desired range for each characteristic. For example, on a 1-10 scale the range for creative thinking should be between 7-9. Now you can develop an optimal range for each critical characteristic.

7. Administer assessment & align employees with job functions

Assess both current employees and potential new hires and compare to the desired ranges. Take the appropriate action based on how strong the level of alignment is. Top performers almost always fit into desired ranges for each critical innate characteristic. If this is not the case, you need to adjust your desired ranges based on the data. Here’s more information on aligning employees:

• When current employees don’t align with their jobs evaluate other positions within the company that do align well.
• Openly discuss available options with employees who are misaligned. Develop a plan to shift roles or tweak job descriptions when this is feasible. Frequently, there are other employees who’d be thrilled to trade positions or some duties that better match with their own innate characteristics.
• For applicants applying to open positions, only interview the people who align well with the desired innate characteristics. When you interview people who don’t align, you may be tempted to discount the assessment results. This rarely ends well.

In the end, the most important job of management is to maximize the ROI of its workforce. Peter Drucker said “The task of a manager is to make people’s strengths effective and their weaknesses irrelevant. The most important thing you can ever do as a leader is to put people in a position to excel rather than get by or fail. How are you doing in your most important task?

About the Author:

Brad Wolff specializes in workforce and personal optimization. He’s a speaker and author of, People Problems? How to Create People Solutions for a Competitive Advantage. As the managing partner for Atlanta-based PeopleMax, Brad specializes in helping companies maximize the potential and results of their people to make more money with less stress. His passion is empowering people to create the business success they desire, in a deep and lasting way. For more information on Brad Wolff, please visit:

www.PeopleMaximizers.com.

 

The time is now.

Ed Gordon on Apprenticeships

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Each month, I receive a report from Edward E. Gordon at Imperial Consulting Corporation.  These reports are timely and well worth the read for those of us in the realm of business education.  Lifelong learning is a key to every aspect of success.  In this month’s report, which I have included below, Edward focuses upon the apprenticeship model of teaching and training.

I hope this sparks your interest.

 

KNOWLEDGE SHOCK Series Part 3: Apprenticeships & Other Gateways to Good Jobs
Apprenticeship through the Ages
In the 1920s my father, Earl G. Gordon, attended Bowen High School on Chicago’s south side. He was a great athlete and a member of the school’s football team that won the Illinois state championship in 1929. His dream to study at Michigan State University to become a coach was crushed by the Great Depression.
Apprenticeship in a carpenter’s union, however, provided his lifeline in those difficult economic times. In 1937 after passing his final test by designing and building a spiral staircase, he became a union carpenter. Fifty years later he received his union’s Gold Card. Until he retired at age 80 from a profession he loved, my father spent a lifetime building homes and doing custom remodeling.
Today in the Austin neighborhood on Chicago’s troubled west side, poverty is rife, and many students entering high school test as low as the 4th-grade-level in reading and math. Alex was a typical student. He didn’t attend class very often. When he did go, he spent most of his time selling drugs or making trouble. Alex didn’t see any point in attending class because, “They weren’t teaching anything I needed to know and I needed to know how to make some money.” A teacher convinced him to take a few classes at the newly opened Austin Polytechnical Academy. “Man I really took to working with the machines,” Alex recalled. He earned industry certifications that prepared him to work as a skilled machinist. After graduation, Alex was hired by a local manufacturer. He not only is considered a model employee, but he also is pursuing further training to upgrade his skills. When asked what his family thinks of him now, he speaks with pride, “I have two cars, I’m taking care of my daughter, and I make around $70,000.” He choked up when he said, “My mom is real proud.” (Philanthropy Journal News, January 3, 2017)
The Current Status of Apprenticeship & Allied Initiatives
As these two accounts show, apprenticeship and high school career academies can be keys to satisfying and gainful employment. Today about 500,000 individuals are enrolled in U.S. apprenticeship programs, about half sponsored by unions and half by businesses. But this number is not nearly enough as there are growing shortages of skilled workers in many business sectors.
Across the nation over 200,000 construction jobs are unfilled. “Contractors would hire more workers if enough qualified applicants were available,” said Stephen E. Sandherr, chief executive officer of the Associated General Contractors of America. Their recent survey of 1,600 members showed that 70 percent are having difficulty filling hourly craft jobs.
Regional initiatives to increase apprenticeship numbers are gaining momentum. They include an outreach program that provides high school students in southwestern Pennsylvania with information on apprenticeship opportunities. The Builders Guild of Western Pennsylvania that represents 16 building trade unions and 6 contractor associations forecasts that to keep up with demand the region’s training centers will need to double or triple the number of apprentices entering their program. The Chicago Regional Council of Carpenters has participated in a television series, now in its fourth season, titled “Built to Last” that is designed to showcase “the positive impact a skilled union labor force has on people’s day-to-day lives.” In a recent full-page Chicago Tribune advertisement, the council both promoted this series and also encouraged readers to learn about its apprenticeship program.
Manufacturing is another business sector reporting difficulty in finding qualified applicants. A July 2017 Society for Human Resource Management survey reported that 43.3 percent of respondents in the manufacturing sector reported increased recruiting difficulty. Only 20 percent of U.S. apprenticeships registered with the U.S. Department of Labor are in the manufacturing sector (Wall Street Journal, 6/17/2017) . The Manufacturing Institute forecasts that within ten years U.S. manufacturers will face a shortfall of 2 million qualified workers. In the Greater Chicago Metropolitan area there are over 30,000 vacant jobs in high-end manufacturing. There are another 19,000 vacancies in the rest of Illinois.
One notable initiative in the Chicago Area to address the skills-jobs gap is Manufacturing Renaissance, a non-profit organization, that was recruited by Arne Duncan, then the Superintendent of the Chicago Public Schools, to offer a pre-engineering program for high-end manufacturing careers in a Chicago public high school. The result was Austin Polytechnical Academy of which Alex earlier profiled in this report was a graduate. It has now evolved into the Manufacturing Connect program at Austin College and Career Academy. Since 2007 the Manufacturing Connect program has had over 100 manufacturers as partners. In the last 7 years, its accomplishments include: 420 work experiences including job shadows, paid internships, and summer jobs in manufacturing; 421 nationally recognized industry credentials earned by 215 students; 73 graduates earning between $20,000 and $70,000 per year plus benefits in full-time manufacturing jobs; and initiating the only current Chicago Public School dual-credit manufacturing technology class in which students earn college credits as well as industry credentials. The pre-engineering program begun at Austin College and Career Academy is being expanded to two additional Chicago public high schools, Prosser Career Academy and Bowen High School.
Manufacturing Renaissance is an excellent example of a Regional Talent Innovation Network (RETAIN) that is cooperating in a variety of programs to increase advanced manufacturing skills. It raised the private funding needed to establish the WaterSaver Faucet Manufacturing Technology Center, the only accredited machining training facility on Chicago’s west side and in Chicago Public Schools. Manufacturing Renaissance began an adult manufacturing training program that has assisted adult trainees to secure jobs or earn promotion at their current employment. This program is now being operated by the Jane Addams Resource Corporation. It is the model used by the SAFER Foundation in their very successful training program for formerly incarcerated individuals. In addition, Manufacturing Renaissance has recently been awarded funding from the Illinois Department of Commerce and Economic Opportunity to expand youth pre-apprenticeship educational opportunities.
Manufacturing Renaissance is expanding its reach in Cook County and showing the way for other RETAINs to begin similar efforts. It illustrates that for a RETAIN to be successful there must be strong cooperation among educational entities, the business community, unions, government agencies, and non-profit partners.
Focus on Vacant Jobs
The August unemployment rate reported by the Bureau of Labor Statistics was 4.4 percent. However the average duration of unemployment was 24.4 weeks, which is higher than any level since 1982.
Wage levels are still not rising in most occupational areas. One factor is that 20 percent of new jobs during the past year were in the restaurant sector, one of the lowest paying fields. The Department of Labor’s August JOLTS survey reported that job openings increased 8 percent to 6.2 million, the highest on record since 2000.  Finding workers with the requisite education and skills levels remains a big problem for an increasing number of businesses of all sizes. Many now rate finding and retaining skilled workers as their most important challenge. The August Federal Reserve Beige Book reports that a shortage of workers is stifling employment growth in many industries.  The Minneapolis, Atlanta, and St. Louis Federal Reserve Districts reported that firms have turned away business due to a lack of skilled workers. The Dallas and San Francisco Districts saw wages rising because of labor shortages.
Yet over 39 million prime-age workers (aged 16 to 55) have given up looking for work. Although their labor force participation rate has improved somewhat, at 62.9 percent it remains far below the participation level of the 1990s. If these American were added to the unemployment calculation, the unemployment rate would be a more accurate 18.5 percent.
Until more U.S. businesses increase their job training programs to help fill job vacancies, the skills-jobs gap will continue to retard economic growth across most of America. From 1995 to 2016, the proportion of U.S. businesses providing training fell from 35 percent to only 20 percent. Unless U.S. business get more skin in the game including support for cross-sector education and training programs, we can expect job vacancies to continue their dramatic rise. Without significant initiatives to upgrade training and education-to-employment systems, it is possible that 14 million jobs may be unfilled in the United States by 2022 driven both by massive baby-boomer retirements and the continued mismatch of worker skills and job requirements.

Friday Filosophy – A Special from D.K.

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A list of sayings to enjoy from a very talented friend and colleague.

 

A Farmer’s Advice

 

  1. Always drink upstream from the herd.
  2. Your fences need to be horse-high, pig-tight and bull-strong.
  3. Always keep skunks, bankers and lawyers at a distance.
  4. Life is simpler when you plow around the stump.
  5. A bumble bee is considerably faster than a John Deere tractor.
  6. Words that soak into your ears are whispered…not yelled.
  7. Meanness don’t just happen overnight.
  8. Forgive your enemies. It messes up their heads.
  9. Never corner something that you suspect could be meaner than you.
  10. It don’t take a very big person to carry a grudge.
  11. You cannot unsay a cruel word.
  12. Every path has a few puddles.
  13. When you wallow with pigs, expect to get dirty.
  14. The best sermons are lived, not preached.
  15. Most of the stuff people worry about ain’t never gonna happen anyway.
  16. Never judge folks by their relatives.
  17. Remember that silence is sometimes the best answer.
  18. Live a good, honorable life. Then when you get older and think back, you’ll enjoy it a second time.
  19. Don’t interfere with something that isn’t bothering you.
  20. Timing has a lot to do with the outcome of a rain dance.
  21. If you find yourself in a hole, the first thing to do is stop digging.
  22. Sometimes you get, and sometimes you get got.
  23. The biggest troublemaker you will ever have to deal with watches you from the mirror every morning.
  24. Good decisions come from experience, and a lot of experience comes from bad judgment.
  25. Letting the cat out of the bag is a whole lot easier than putting’ it back in.
  26. If you get to thinkin’ you’re a person of some influence, try orderin’ somebody else’s dog around.
  27. Live simply. Love generously. Care deeply. Speak kindly. Leave the rest to God.

Confessions of a Service Manager ~ Bill Pyles

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We are introducing a new area for our blog. We are asking experienced Industry professionals to write on a subject that they think would be of interest to our followers.

Today, I am introducing Bill Pyles. Bill has 40 plus years in the OEM product support arena.

He worked for Caterpillar, Komatsu and John Deere dealers in various locations across the USA.

He has worked most, if not all, positions in Product Support from technician to Executive.

He still is actively engaged in the business and still thoroughly enjoys being a part of the equipment industry and looks forward to every new day.

Bill has been married for 42 years to his wife, Diana, and has two sons that are currently working in the OEM dealer world, one with a Cat dealer and one with a Deere dealer.  He is also fortunate enough to have five grandchildren.

Bill is also a U.S. Marine Corps veteran. Semper Fi.

I hope you enjoy, as I do, reading Bill’s thinking on a wide range of subjects over the weeks and months ahead. Welcome, Bill.

The Time is Now…

Confessions of a Service Manager

I’ve been working in Product Support most of my life.  Most of those 30 years have been primarily focused on service department product support.  I spent time as a shop mechanic, field mechanic, shop foreman and service manager.  I learned a lot during those years.  I learned:

  • How to move labor and material around on a work order to make the times look good.
  • How to avoid any lost time by charging time to sales, rentals, and used equipment.
  • How to handle warranties by sending a less-than-qualified mechanic because “it’s warranty” and it would be “good” training: and what the hell, the manufacturer is paying for it.
  • That if the boss’s hot button was “reduce training” or “reduce expenses,” you simply moved that time to building maintenance or repair of shop tools.  If expenses were high, you shifted them to cost of sales.
  • The importance of taking care of my customers first by letting the sales department wait and wait and wait.
  • That a two-week backlog was good: hey, three weeks was better.  Keeping this backlog ensured I would make my numbers for the month.  The customer would wait.
  • That you never sent work to another branch or even asked if another shop was slow.
  • That if I had a big job, I never called another store for help to take care of other jobs.  Remember the “backlog.”
  • There was never enough time in the day, so when vendors delivered oxygen and acetylene bottles, bolts, nuts, shop supplies there was no need to check the delivery before signing the delivery ticket.  Nothing ever “falls off the back of the truck.”
  • That sales, rental or used equipment never received any warranty on shop or field repairs.  Remember the “budget.”
  • How to sandbag monthly sales.  If we meet budget this month, hold off any more billing until next month.  I have a budget to make then, too.
  • Never to call a customer for additional work a machine needed, while the machine was down.  He’d yell at me if I suggested additional work needed to be done.  It was always easier to say nothing and if the machine failed after it left the shop, he’d call me.
  • If a machine was coming in for a final drive repair, I’d order ever nut, bolt and gear and air freight them in.  I might need them and if I don’t, the parts department will just put them back on the shelf.  No big deal.

During those times, life was good.  My numbers looked good.  I had a backlog, and the boss was off my back.

Then I became a Manager.

Then I became a General Service Manager and was included in management meetings I never knew existed.  I discovered there were other departments challenged to be efficient and profitable – just like me – and unless all departments worked together, it would not happen.

  • It took a little while, but I began to realize why the sales manager was not always so willing to let me have a loaner for a service job I screwed up.  Those labor hours I was writing off to sales, rental and used were actually showing up on his P&L!
  • Those new, used and rental machines were expensive assets that I kept putting to the back of the schedule so I could take care of my customers.  I didn’t know the company was missing opportunities and thousands of dollars because we had no machines to rent or sell.
  • I learned warranty training was expensive.  Those dollars actually came back in the form of warranty expense.  You mean the manufacturer didn’t pay for 10 hours of labor to replace a fuel filter?
  • I discovered the time I invested swapping labor and material around did nothing for the actual bottom line.  What?  I spent hours doing that!
  • I learned a backlog was good but a satisfied customer was better.  I’d visit customers and ask why he sent a machine to another company.  Usually the answer was “Bill, you guys do good work and I don’t mind even paying a little more for good work, but I can’t wait three or four weeks every time my machine goes into the shop.”
  • So I learned to work the overtime when required.  I learned to ask other shops for help and sometimes I even suggested the customer send the machine to another branch that could get him in and out the quickest.  SOmetimes I even offered to pay the additional hauling to get him there!
  • I learned things do “fall off the back of a truck.”  Have you ever been offered a deal too good to be true?  Hey, it fell off the back of a truck.  I went through an audit after the company decided to change oxygen and acetylene vendors.  The vendor came in and did an audit on all the bottles we rented over the years.  We could not come up with $6,500 worth of rented bottles.  They must be lying all over America’s highways.
  • I learned if I didn’t contact a customer for needed additional work, the machine would leave the shop (“Hey, I did what he asked!”) and would fail soon after – on the job.  The first thing I’d hear would be, “It just left your %#@*&% SHOP!” – and I should have called him and fixed it then.
  • I learned that the boatload of parts I ordered for the final drive repair and returned to parts created a lot of expense.  No one told me there were shipping and emergency charges, and we didn’t stock the part because there was no demand.  I learned those expenses were showing up on the parts manager’s P&L.
  • I found out someone had to take the time to do the parts entry, place the order, receive it into inventory, carry it to the shop, pick it up after I returned it and create another return ticket.  They they’d create a location in the warehouse (remember, we did not stock it), and let it sit until the next authorized parts return when the company might get 50 cents on the dollar!  Wow, no wonder when I asked for help on a disputed service invoice, I’d get a cold stare from the parts manager.

The Old and the New

My point (yes, there is a point to all of this) is there are two types of service management – the old and the new.  The old type will not survive at today’s distributorship.  Managers who think like that are being replaced with managers who are concerned with the entire company’s health, not just the service department.

The new service managers are discovering that working together – sales, parts and service – makes a much more enjoyable job.  Time spent hiding expenses rather than addressing the issue is a complete waste of time.  The real cause of the expense is never removed or identified and swapping time becomes routine and a drain on your time.

Direct and constructive communication with other department managers is key to making our company successful, profitable and raising customer satisfaction.  Believe it or not, it starts with the service department!

You can connect with Bill on LinkedIn at  www.linkedin.com/pub/bill-pyles/12/a24/7ab