Following on from the ongoing sucessful REV business group I chair in Horsham I will soon be starting a new monthly business owners roundtable made up of business owners  from Stawell and Ararat.

In Horsham eleven owners of successful Wimmera businesses meet in a confidential forum for half a day each month to share issues, business ideas, and to improve their own business performance. This group has developed into a network built on trust and a willingness to help each other. They are now  looking to help others in the regional business community.

The new group will alternate between meetimngs between Stawell and Ararat and we are looking for nominations to join the group.

The cost is $2000 per year each member and any surpus after operating expenses are used to fund field trips to successful businesses in Melbourne or send a local up and coming entrepreneur to a business development program.

 The funds are managed by the Wimmera Development Association in Horsham

Contact Bill Winter on 0411536424    email:  www.billwinter@bigpond.com.au

I am being asked by directors in private and family owned companies about any consequences rolling down to small compnaies as a result of the recent High Court ruling on the directors of James Hardie.

My attitude is that directors of private companies should take careful note of the issues. As a director you have responsibilities and accountablilities under the Corporations Act and, although some of the high profile court cases involve directors of listed entities, every director  has common responsibilities no matter your size.  Just because your board room might be the kitchen or the lounge room table it does not excuse you from the Act.

It just makes common sense that you should run your business on a professional basis and that you comply with any laws impacting on your company. If your objective is to best the best at what you do then it should start at the top and that is by running effective board meetings. You cannot claim ignorance as you have a statutory duty as a director.

Thre are a number of common law and statutory duties of directors such as :

• Duty to act in good faith in the best interest of the company
• Duty to act with care and diligence
• Duty to aviod a conflict in the position of a director
• As a director you owe a fudiciary duty to the company

How many directors of private companies can say they pass the test on this limited list ?

It seems that director's lack of due diligence in private companies only gets found out when there is a financial crisis and the company is wound up. My advice is to bring an external board advisor or a non-executive director who understands compliance and risk managemnet and who can ask the hard questions at the board table.

You don't have to be a James Hardie to implement formal and professional disciplines at the most senior level of your business.

 

In recent times I have been exposed to a number of companies in various market segments and they all are questioning the future of business, the economy, the lack of trust and confusion from Canberra and inability to predict the short term business climate.

There is so much negativity in the press, not helped by journalist looking for senational stories and writing without really understanding the facts or the sniping between rival media giants.

There is no doubt in my mind that, for business to survive, you must have a focus on some essential strategies such as a culture for innovation, low cost manufacturing, staff who are engaged and who understand what the vision is that everyone is striving to achieve. And, a product or service that fills a need in the community

The real key is the Vision. Once you can clearly articulate a Vision that is achievable and believable then it is strong and effective leadership that will guide business success.

A leader in any situation who cannot win the hearts and minds is bound to fail. An effective leader has to influence behaviours and, according to some, there are two ways to influence human behaviour: you can manipulate it or you can inspire it.

A great leader commands and not demands respect. The successful  companies I come across in my work are those who understand the value of vision driven by leadership throughout the organisation. I often refer people back to the work of Kouzes and Posner who wrote their Ten Commitments of Leadership nearly twenty years ago and holds true today. The key practices as mentioned them  are well worth repeating as the attributes of  practices of exemplary leadership.

Challenge the process:

Insiring a shared vision

Enabling others to act

Modelling the way

Encouarge the heart

There is no room for egos or silos within a successful business. It's 2012 not the 1960s. There is no more damaging leader than one who will not take advice or accept that they have to keep learning themsleves.

 

According to an article in today's Australian Financial Review by Fiona Smith, high-performing workplace are 12 percent more productive and up to three times more profitable than their low-performing competitors.

There is plenty of research to back this claim and my own experience, working in and with small to medium sized companies, is that most private business owners do not understand the importance of understanding  reward for effort when it comes to winning the hearts and minds of employees.

The large coporations measure their employee engagement and are able to benchmark against some reliable numbers that have been established over many years. The lowest score I come up aggainst was in 2008 when I became the interim contract COO of  subsidiary of a well known listed entity. The parent company had set a target of 65-70 as the engagement score of this business unit recorded a score of 28 %. Productivity was in the pits and I calculated they were invoicing less than fifty percent of the direct time on the shop floor.

Over two years, with the help of a great support team of five key managers, we achieved an engagment score of 62 percent and, just as important, we turned the financial result around. There were a number of initiatives that were implemented, the most important being that people had targets and  we engaged them in what we were trying to achieve. We created a whole new focus on leadership that recognised those who wanted to be involved and understood the end goal.

We had the dream-stealers and the those who wished that nothing would change as it was easier before the changes. We made the changes in spite of them and worked around them. We set about changing behaviours and allowing employees to have pride in their work. We created a whole new OHS environment and started to implement a lean culture with the initial implementation of 5S. Initially we did this with one hand tied behind our back from  head office personnel who were from a past culture.  Fortunately we had new champion appointed at head office who encouraged and backed our ideas and passion to improve behaviours and workplace culture.

Employee particpation and involvement were critical. Can you say that in your workplace ?

 

 

This has been another week where the press is covered in stories about companies putting staff off.

So, it was refreshing to attend a breakfast briefing this morning put on by Matthews Steer, Chartered accountants and hear a successful private business owner tell his story. This family business, is in high-tech engineering and surface coatings.

They survived the impact of the last four years without having to put one person off and, in fact, employed some new staff. They had a typical successful family business attitude that their staff come before higher profits. The family believes that persistance is the key ingredient to their success and decided to just work harder to get through tougher times.

They understand the value of innovation, partnering with institutions such as universities and the CSIRO and seeking outside assistance where they have identified a weakness.

Finally, judging by the presentation I heard this morning, they understand the vital leadership attribute of humility.

 

Embracing Social Media will  grow your business. So, why do so few SME's have an effective web site or web based sales and marketing strategy?

 In the USA  over 70% of customers go online before making a decision. In Australia it is over 50%.

Does your sales strategy have a hole in the bottom ?

I suggest you contact Fergal Coleman at www.symphony3.com.au .

If you are a small to medium business owner you must move to understand the new personal securities act which will come into being shortly.

The act will apply to any company that supplies goods subject to retention of title provisions. In other words, its your ability to recover goods that have not been paid for. If your goods are not recorded on a register under the act then you will not have a vaild claim over you goods if your customer becomes insolvent or enters into administration.

You will be surprised how far reaching this act is and what needs to be covered by it.You must get reliable legal advice to ensure your business is covered and to make the necessary changes before the act starts.

Here are a couple of common commercial transactions which will require registration under the new Act.

• A photocopy machine on lease
• Hire equipment
• Any transaction where you want ownership until the goods are fully paid for

I have experienced some situations in the past where thousands of dollars of equipment was on site of a customer to enable the use of other product supplied and the client went under and the equipment was sold before the supplier could recover same.

Please  do not rely on my statements but seek legal advice for your own business circumstances.

The principals of Lean organisations are proving to be the most powerful and effective way to build and maintain a continuously improving business for  both large and smal entities.

If the term Lean is unfamiliar, you should get on the internet or buy a book such as Lean for dummies and find out more about the concept.

Lean is a philosophy and a proven long term approach that enables you to apply a program of continuous improvement in your business that enables will deliver increase customer value. More importantly it works by aligning people and systems and results in reducing  waste and deficiences in all processes. It first appeared within Toyota and is a great business process that comes from what is known as The Toyota Production System (TPS). It is an approach that engages front-line workers in improving their work.

Now is can be applied across all types of business.

My experience in private companies where I have been involved in a lean program is that those who adopt a Lean culture will see great improvement. I offer a word of warning in that you need to implement Lean in stages and be aware that it has to be also driven from the leader down.Lean must be for the long term and involves a change of culture by everyone in the business.
However the real benefit comes when you realise that the ongoing process is effective when the change and ideas come from the bottom of the hierachy.

To get started, read about 5S and see if you think you could start there. It's the "how you eat an elephant question" take it one bite at a time. Lean is a process , not a destination. You live lean everyday, it will become a pervasive activity in your business and you need to take the tortoise approach.

Don't use Lean to cut heads.

Why should you consider Lean ?  Because it works.

On Friday last forty company directors in Geelong attended a briefing session with the AICD on the Boards Role  in OH&S. Most of the attendees were from private companies, professional firms and NFPs.

It is important that directors of companies are up to date with the new Act and Regulations to comence  1 January 2012 with the national uniformity of OHS legislative framework.

The presentation by Sue Bottrell of Piper Alderman and Simple OHS Solutions certainly made the attendees refocus their attention on the need to understand the issues and the possible consequences for directors and officers of companies. 

The Act applies to Persons conducting a business or undertaking.

It is worthwhile answering the question of what is an officer . I quote from the presentation here.

"Officer" of a corporation means:

• a director or secretary of the corporation :or
• a person:
  •  who makes , or participates in making , decisions that affect teh whole, or a substantial part, of teh business of the corporation ; or
  • who has the capacity to affect significantly the corporation's financial standing; or
  • in accordance with those instructions or wishes the directors of the corportaion are accustomed to act

Directors should expect the following to generally be officers:

• CEO
• CFO
• CIO
• General Managers
• other could include;
  • Financial controllers
  • HR managers
  • OHS managers

As a company director you must take steps to:

• To acquire and keep up to date knowledge of OHS matters in relation to the workplace
• Gain an understanding of the operations and hazards
• Ensure appropriate resources, inlcuding advice, and processes to identify risks and then minimise and eliminate those risks

To sum up Ignorance is no excuse

I keep coming across business situations where business owners or the CEO are trying to make changes to their business to bring about a higher level of performnace only to hear the words It's not happening they just will not learn or change from what they have been doing for years.

To take a hard nosed attitude, sometimes you just have to ignore them and focus on those who will embrace change as highlighted  at Toyota, Principle 10. Train exceptional individuals and teams to work within the business philosophy to achieve exceptional results. work very hard to reinforce the culture you want.

How can you expect people to change if you don't train them ?

Implement a program of continuous improvement that includes upgrading skills. For example, in Victoria, the State Government has a free program called Skills for Growth where a specilaist will visit you, develop a traing plan and find suitable programs for your staff. Your investment is paying for the courses they attend and, if they are upgrading skills that can be subsidised. ( Contact me if you require any information )

It is important to sell the dream or the vision and let them see that without a change of attitude and being flexible and/or able to do more than one thing competently the end goal will never be achieved.

Use training to show them how. I recommend that you make training a key KPI in their job description and a key part of any performance review.

Beware the dream stealers and the ludites