Recently, I have become more embedded than ever in helping organizations come up with a strategy.   Now, we all know that the term strategy is really a code word used by most organizations to say, “We know something is wrong with our business, but we can’t pinpoint an exact reason.”  Invariably, these organizations will, at the expense of the obvious, embark on a time-consuming and expensive process to develop a new strategy. 

Now, there are a wide variety of approaches used by organizations to get that strategy built.  The larger ones with more money to spare will hire a large, well-known consulting firm staffed with expensive experts to come in and give them the answer.  I often refer to this as the “Mongol hoard” approach.  The organization is invaded by a small army of consultants who set up shop for weeks or months and charge you for every phone call, lunch break and late night meeting.  In the end, they deliver a master’s thesis to you and your executive team in a spectacular PowerPoint presentation that everyone hails as just what was needed.

Some organizations take a different approach.  In recognition that spending huge sums of money might now be the best approach, the sometimes turn to internal teams comprised of people with business and strategy backgrounds.  In some cases, there are actual departments where this function resides.  In others, it’s merely a group of people cobbled together for a special project that is levied on them in addition to their daily work.  Results here usually take longer and are far less spectacular.  Usually, there is a small presentation to the sponsor who then carries it forward to a group of executives who, in turn, use this as a way to support certain decisions and spending justifications.

Smaller organizations sometimes hire people like me to come in and help out with certain projects that evolve into an evaluation of their business gaps in hopes of gaining backing into a strategic plan.  Sometimes it is a useful exercise and can point out some very quick changes that could help the organization. 

Regardless of the approach to developing a strategy, I find there are always certain common threads that really are the core of the issues facing an organization.  These are by no means a universal truth, but seem surface at the end of these projects.

• What’s Next? – Regardless of the manner in which it was developed, most organizations will struggle to implement a strategy and follow it through to a successful conclusion.  Simply put, strategy implementation will always take a back seat to the crisis of the day.  Operational concerns and the need to keep customers happily generating revenue is the priority for any organization.  There is simply not enough bandwidth to focus on both in most organizations.

• Who’s In Charge? – You can create any strategy you want and everyone can agree that it is the right thing for the organization, but it will invariability fail without a dedicated, empowered champion with the will and authority to drive it through to conclusion.  Often, there is an initial struggle inside an organization as to who “owns” the strategy.  The winner often starts out strong, but is unable to overcome the political roadblocks thrown up by the losers.  This spells certain doom for any strategy project.

• When Are We Done? – Impatience is the enemy of strategy.  By definition, strategy is a long term, focused approach that requires attention and adjustment as it is implemented.  Usually, strategies focus on a series of events and large-scale changes over a period of years to achieve the desired results.  That allows for the changes in the market, business climate, regulatory environment and customer desires, just to name a few factors.  More often than not, strategic plans are never given the time, resources and attention they need to be successful.

• How Much Will This Cost? – The statement “you have to spend money to make money” applies very directly to a strategic plan.  It’s an investment in your organizations future.  Most organizations will spend more money to develop the plan than they will to fund its implementation. 

 Each of these issues should be considered carefully prior to any strategy development effort.  The practical reality here is that developing a strategy is not an event.  It should be an embedded part of the organizations ongoing growth and development.  It cannot be decoupled from the daily operations or the road to success.

Monday, February 22, 2010

By John G. Stockman, CISA, PMP, CBCP, MSIS

It has been many months since I last felt compelled to write and post an article on this blog.  Truly we are living in strange times and my experience has been no different.  Work and life are competing for my attention now more than ever.

But, after the recent “double-blizzard” event here in the Washington D.C. metropolitan area, I was so absolutely amazed by what I transpired, there was no way I could let the opportunity pass by to post my thoughts.  This is the first of a series of articles detailing my observations of these  weather events.

Sitting here today, almost two weeks after the second blizzard finally blew itself out of the mid-Atlantic states, Washington DC and the surrounding suburbs are still far from recovered.  Suffice to say that while the roads are now mostly clear, the scale of economic, infrastructure and social destruction are only starting to emerge.  The coming weeks will be filled with stories of physical damage to buildings, homes, parks and highways.  I have been personally amazed by the number of destroyed trees and shrubs in Northern Virginia.

For the first part of February, the region was completely paralyzed by these storms. The Metro transit system (DC and suburbs subway) was down for days (not hours).  Grocery stores are still trying to restock shelves that were literally stripped bare in the panic up to and between storms.  School systems are still requesting that parents (yes, parents) grab snow shovels and come help clear sidewalks around schools because they still aren’t cleaned off.  The list goes on.  I arrived at the inescapable conclusion that this region is dangerously ill-prepared to anticipate and respond to disasters of this magnitude. But, that’s a topic for another article.

What was truly fascinating to me was the response friends, co-workers and businesses had during this storm.  There was an almost neurotic compulsion by most people to try to get to work through more than 24 inches of snow.  Even though elected and emergency officials begged people to stay off the roads unless travel was absolutely necessary, there were truly phenomenal numbers of people out during the height of these storms that were determined to get to work.  During my conversations with them or watching them as they were interviewed, these people usually had no business being on the road.  They ranged from baristas at Starbucks to the average office worker.  Most said they had no choice because they would get fired if they didn’t show up for work.  Worse, I was appalled by the number of companies that I polled that had neither “official” inclement weather policies nor a contingency for essential and non-essential personnel.

Let’s be clear.  This was truly a disaster scenario. Thousands of homes were without power or heat.  Emergency services were overburdened and there was not anything resembling a normal response time to a 911 call if necessary.

So, why were all of these people going work and literally endangering their lives? 

The main reason seems to be the self-imposed concern over being classified as “non-essential personnel”  Let’s face it, we all want to fell necessary and valued in our jobs, especially in these times of high unemployment and economic uncertainty.  When I told people they were literally risking their lives even though they were “non-essential”, they responded by saying that was why they were going to work.  They wanted to be able to say they were there while everyone else was afraid to come out.  I even had one person say to me she didn’t want to be perceived as a “snow wimp” because that would weaken peoples’ perception of her as a leader.

Now, I could understand if it was 3, 4 or 5 inches of snow.  But the region was buried by snow, in some cases, 30 inches coming down in 24 hours.  I, personally, found this an amazing opportunity to observe and report on a disaster as it happened.  I was both fascinated and horrified by the mentality of the average person in putting their personal insecurities ahead of the needs of the community and adding to the dangers for emergency response personnel.

So, let me summarize my thoughts by saying:

• Employers in the Washington D.C. metro region did a fair job of keeping their people safe.  However, quite a number of them (malls, office, etc.) clearly did not have a plan in place to deal with this scenario.
• Employees, for the most part, used reasonable judgment in any decision to venture out of their homes under the weather conditions that endured for days.  But, there was clearly a large contingent that did not see any reason to stay home.

In both instances, the results created a further danger to public safety and hampered the efforts of emergency response and government officials to clear the roads and handle true emergencies.

So what can be done?

• Companies in the region need to take this experience and use it as an opportunity to assess their organizations response to this weather-disaster, update their business continuity plans and spend time educating their employees that being “non-essential” personnel does not mean expendable.
• Every organization needs to have a better command and communication system set up to let their employees know when it is unnecessary to risk their lives to get to work and that being sensible doesn’t make them week.
• Individuals need to prepare themselves better for these types of events.  We were told by our respective state leaderships to prepare to “shelter in place” for 3-4 days.  Yet, there was near panic as groceries, firewood and gasoline disappeared.  There is no better time than now to think about this experience and stock up on essential items for a 3-4 day survival period.  These listed are readily available on the Internet.

To put it mildly, we were lucky this time.  But, we need to do a much better job if we want to handle greater natural or man-made disasters without significant consequences to human life.

By John G. Stockman, CISA, PMP, CBCP, MSIS

At the risk of dating me, it seems that the concept of truly rewarding top performers in the workplace has shifted quite dramatically.  This became apparent to me in discussions with several Human Resources professionals whom I count as friends and clients. 

My early days in the professional workforce seem to me to be much different in tone and potential than those faced by professionals in the beginning of their careers now.  How big that difference really is has only become starkly apparent to me enough to write about now. 

Perhaps my case was unique, but in the first five years of my professional career, as a top performer in the Information Technology profession (I was a programmer), my annual merit increase was routinely between 9% and 10% of my salary.  And that was at a not-for-profit hospital system!  My friends and associates in the private sector were getting merit increases and bonuses that exceeded me by far.  There were several years where I got my merit increase plus a raise as part of a promotion to another position.  One year, my salary literally went up 20% overnight!

Now, make no mistake, this has not always been the case.  But, in the late 80’s and early 90’s, I was doing quite well as a salaried employee.  In the mid-90’s, I jumped out to private consulting before forming my first company, but still did quite well and managed to increase my income nearly every year.  When I formed my first company, our employees received those types of salaries and raises as well.  Needless to say, the staff was usually fairly happy with this structure.

Being somewhat of an introverted person in my early days, I usually would shy away from social events surrounding my work.  Over the years, that approach developed into a philosophy about the concept of “forced socialization” in the workplace.  When I was the President of my own company, there was no such thing as company picnics, recognition events or other “rewards” that were not tangible to my employees.  No matter where I was, be that an employee of someone or an owner, the message to me was loud and clear.  “Reward” for top performers in the form of cash was always the number one preference.  There was never an exception. 

I was always amused when companies (at the urging of some Human Resources professional) would offer “rewards” to their best people.  Some of my favorites –

• Lunch with the Owner/President – One of my all-time favorites.  I can’t help but wonder how this is a reward.  I’m sure the conversation would be pleasant and polite for a short period of time and the company picks up the lunch.  Beyond that, what’s the reward?  A new friend?  A glimpse at how the other half lives? It’s a $50 lunch and an hour of my life I won’t get back.  I would routinely offer them $100 to let me out of the lunch!
• Membership on “Leadership Committee” – Another stroke of brilliance.  So, I work hard to get a 2% merit increase and my extra “reward” is more uncompensated work to help figure out ways to motivate the non-performers.  Here’s the short answer to that problem, FIRE THEM and hire better people!  Better yet, promote me to be their supervisor and let me fire them.  Nothing motivates a staff of non-performers more than a little insecurity.
• Certificates and Trinkets – Another cheap way out.  I have no desire for another monogrammed coffee cup, baseball cap with a company logo or a piece of paper with my name on it.  The only reward in this is insight into how cheap your company really is and where your professional growth potential leads with the organization.  Let’s face it, a certificate or trinket for working hard all year sends a very clear message…  Find a better company!

While I’m attempting to be funny here, it is also very much to the point of this article.  I’ve found myself recently in the role of articulating to my friends and colleagues in Human Resources (or Professional Development) that reward is a simple concept.  Reward to an employee is defined as something that benefits them at a personal and individual level when they are away from the workplace.  The two best rewards I’ve found are the most simple:

• Cash – Very simple, very blatant and the most effective reward I’ve ever given any staff member.  To reward them with money above and beyond a merit increase and in a substantial enough way to have a meaningful, if only temporary, positive effect on their lives away from work.  It helps them, their family or their quality of life.  The message is clear that the effort has a value and it incents those that did not receive that reward to try harder.
• Time Off – A second very simple way to do it.  If they work hard enough, give them a little extra time away so that they can recharge.  It is a no-cost option to your organization in the end.  Don’t make it just a day.  To really reward someone, make it several days or a free week.  Trust me, that message is loud and clear.  You get all of the benefits of cash plus a recharged, refreshed performer that is going to really want to stay in that reward zone.

To close it out, I want to be clear that there are people who will strongly disagree with me.  And, to be fair, there are people out there that truly value other types of rewards.  So, this is by no means a universal assumption.  But, from my experience in more than 20 years, nothing works better as a reward than just plain, simple money.

By John G. Stockman

Summary

The collapse of the residential real estate market in the United States, which began more than 18 months ago, has lead to an economic crisis unprecedented in modern history.   The economy of the United States, now inextricably linked through globalization and free trade legislation, has precipitated a collapse of economies on a planetary scale.  This collapse has plunged the world into a recession that now threatens to rage out of control despite the best efforts of governments, businesses and economists.

This proposal, while ambitious, does not propose an all-encompassing solution to the crisis.  It does suggest a series of actions, programs and supporting legislation meant to address the root cause of the crisis while simultaneously setting the foundation for the future real estate development standards (both commercial and residential) throughout the United States.

Simply put, at the time of this proposal, there is a 9.5 month supply of unsold homes throughout the United States.  A healthy economy consistently maintains a 3 to 4 month supply of unsold homes.  Massive tracts of residential developments in states like California, Nevada and Florida stand abandoned and repossessed by mortgage companies and banks now on the verge of collapse.  Commercial real estate, while not in this situation yet, is soon forecast to feel the effect of this “economic tsunami”.  

At a practical level, real estate speculation coupled with lax standards for financing, have created a situation where these assets will continue to be devalued with little hope of ever being occupied or sold.   This proposal details a five-part plan that will lead to a massive reduction in this inventory while simultaneously creating coveted “green jobs” and establishing a program of materials reclamation that will be used to incent insurers, builders and citizens to reuse building materials, reclaim open spaces and save on insurance premiums.

How Will This Program Work?

This five-part program will, if enacted and managed properly, establish a Federal program designed to systematically reduce commercial and residential real estate inventories while reclaiming usable resources used to build these now-abandoned or devalued properties.  It will need to be administered and monitored at the Federal level through a series of agencies within the Department of Interior, Department of Energy and the Department of Labor.  Other agencies that may be involved include the Department of Commerce and the Department of Homeland Security.

At its most basic level, the Federal government will establish a program that, coupled with current plans within the Administration to buy up toxic assets (“Bad Bank Option”), acquire and disassemble residential communities and commercial properties that are deemed no longer viable.

Under this program, toxic assets that are acquired by the Federal government will be evaluated and ranked to determine their future viability. If the property or community is deemed not viable due to the constraints established under the program, these assets will be targeted for “Inventory Reduction”. 

Once targeted for reduction, a property or community will be scheduled for deconstruction by authorized Federal contractors that must have or acquire a valid Federal contracting schedule.  These properties will not simply be torn down and the materials sent to a landfill.  These properties will be disassembled with all possible materials being reclaimed. This will extend, where possible, to materials in the ground itself including sewage systems and electrical distribution systems.

Reclaimed materials will be inventoried, categorized and sent to newly established Federal Reclamation Warehouses throughout the country.  These warehouses will store the materials for future use.  Under the a proposed Federal Materials Recovery and Reuse Program (detailed further below), both private and governmental resources will be required to use a percentage of these reclaimed materials in any future construction in the United States.  In addition, insurance companies, builders and citizens will receive significant tax breaks for the use of these materials above and beyond the required mandates.

Land that is reclaimed from disassembled properties will become the property of the United States Federal Government.  It will then be auctioned off via a bidding process to be established.  Guidelines will be established for the future use of reclaimed land before the auction in cooperation with State and Local authorities charged with maintain zoning and usage standards within the affected community.  Simultaneously, new Federal standards will be adopted to minimize the expansion of communities away from population centers (i.e. “urban sprawl”) and incent the construction of high density communities near transit systems.

Collectively, this program will:

• Systematically reduce unused commercial and residential real estate over a predictable, controlled period.
• Spur construction companies to hire thousands of workers to disassemble targeted assets.
• Preserve resources for reuse in the construction of new homes and offices or in the reconstruction of areas destroyed by man-made or natural disasters like Hurricane Katrina.
• Reclaim green space throughout the United States and potentially help slow the pace of global warming.
• Create tax breaks and incentives for citizens, developers and companies to reuse materials that could lead to a “cultural shift” in how we think about our resources.

The sections that follow will provide greater detail regarding the specifics of this proposal.

I.       Real Estate Assets Inventory Reduction Program

According to the latest statistics from RealtyTrac.com, “A total of 3,157,806 foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 2,330,483 U.S. properties during 2008, an 81 percent increase in total properties from 2007 and a 225 percent increase in total properties from 2006”.   Last October, it was reported that 58% of all homes for sale in Las Vegas were vacant.  That is nearly six in ten homes.  The numbers are not encouraging elsewhere in the country.  Commercial real estate vacancy rates are high and projected to increase exponentially as companies close operations and delay or cancel plans to relocate to new buildings.

To put it bluntly, the United States is awash in available developed real estate.  With credit tight, massive job losses and consumer spending virtually paralyzed, there is no easy path to revitalizing these properties.  This massive over-supply has a doubly-disastrous effect.  First, it depresses the value of occupied properties.  The higher the over-supply in any one community, the lower prices fall.  The second effect is that it decreases the appetite for further risk in development and drives down future demand for properties along with the goods and services this activity spurs.  The net effect is a cascade of canceled contracts and layoffs all the way down the supply chain directly back to the consumer, be it a company or a family.

This cycle must be broken to effectively reduce the inventory of homes and offices currently vacant.  Since market forces are unlikely to reduce this inventory in time to prevent or reverse significant negative economic consequences, a more proactive approach can and should be taken. 

Under a Real Estate Asset Inventory Reduction Program, the United States government (through legislative mandates passed by the United States Congress) will systematically acquire, assess, classify and deconstruct these properties over a period of three to five years.  The goal is to bring down the current inventory of vacant properties (especially residential) to a level that is more in line with the 3 to 4 month supply of a healthy economy.

This program will be structured to create jobs in trade and professional sectors.  Workers that have previously been hired to build homes and communities will be put to work systematically and carefully taking them down.  A new computer inventory and tracking system will need to be developed and maintained to support the Recovered Materials Program (explained in the next section).  This will put technology and logistics personnel back to work at the Federal, State, Local and civilian level.  Land will need to be reclaimed and this will provide jobs to the emerging “green” sector.  The list goes on.

This program can be rolled out nation-wide in less than six months with resources and techniques currently available.  The next section describes the Recovered Materials Program that will create a repository of recycled building products and raw materials that can be repurposed for our current and future needs.

 II.    Materials Recovery Program

The Materials Recovery Program is a critical component of the effort to reduce the quantity of vacant and unviable residential and commercial properties throughout the United States.  This program will simultaneously address xx problems:

1. Put people to work in good paying jobs that require skills readily available in our workforce.
2. Recover usable materials for times of national disaster and/or future expansion.
3. Incentivize a greater push toward “green” strategies while greatly reducing impact on landfills.
4. Recover land for other uses and reduce urban/suburban blight zones.

At its core, the Materials Recovery Program will employ potentially tens of thousands of people in the government and private sectors in an effort to systematically reduce vacant properties and, thus, drive down the supply available on the market.  The net effect of this effort will be an increase in employment across the nation and a stabilization of real estate prices as the supply drops.

Simply put, we are “un-building”.  The Materials Recovery Program will receive lists of properties throughout the country that are targeted for reduction from the previously detailed Real Estate Asset Inventory Reduction Program.  Ideally, areas that are suffering the most with an oversupply of abandoned properties will be targeted first.  Areas of California, Nevada and Florida are ideally suited for this phase.   

However, the program can be extended even to decaying and blighted urban areas that are deemed no longer viable due to population shifts or geo-demographic economics. 

Recovered materials are inventoried and sent to a series of staging warehouses (Federal Reclamation Warehouses) where they will enter the reuse/redistribution cycle.   The government should incent major home supply chains, such as Lowe’s and Home Depot, to establish Recovered Products sections of their stores where bulk supplies can be viewed and purchased.  The chains could charge a small mark-up to cover inventory and overhead costs (capped at 5%), but would get a corporate tax break based on actual sales volume for recovered materials that would make the program financially beneficial to them.

Other recovered materials and products would be available for direct purchase from the United States Federal government for via GSA schedules and auction-style events at the individual Federal Reclamation Warehouses. 

Legislation in the form of usage mandates, insurance rebates and incentive programs can further boost the reuse of these materials throughout the United States to assist in recovery from natural and man-made disasters such as hurricanes, earthquakes and general fire scenarios.  These options are detailed in the section entitled (Disaster Recovery Reuse Incentives in Section IV).

 III. Land Reclamation and Rezoning

The question of what to do with land that has been recovered after deconstruction of assets and recovery of materials presents a series of opportunities for Federal, State and Municipal authorities to “rethink” land usage.

Since these recovered lands have become the property of the United States Federal Government, they should be auctioned off as a first option.  However, prior to any auction of land, it should be reviewed and possibly rezoned under a new framework to be legislated by the United States Congress governing land usage and population distribution standards.  This framework should include guidelines to encourage rezoning to achieve:

• A higher concentration of residential density within a specified zone of a major population center.
• Ability to recover land adjacent to natural areas, protected habitats and national parks.
• Ability to reduce/eliminate transportation and infrastructure from land to help save money on maintaining unused infrastructure.
• Additional expansion of farmlands.
• Concentration of commercial services development closer to urban areas and combat “sprawl”.

These are some suggested guidelines for rezoning mandates that must be passed prior to deconstruction and recovery.

Wherever possible, citizens need to be encouraged and incented to leave areas that cost more to support than they produce.  This will conserve financial, energy and human resources. 

Once property has been rezoned (which must meet a Federal approval), it can be auctioned for use to private citizens or companies for development and reuse.  It may also be absorbed into the National Park system if it is deemed a viable option.

All “reuse” land is subject to a timeline for usability and owners will receive a one-time tax break for meeting the deadline to help incent redevelopment.

 IV.  Disaster Recovery Reuse Incentive

Finally, a series of legislative mandates, incentives, tax breaks and rebates should be put in place to encourage reuse of recovered materials in the construction/reconstruction of commercial and residential properties after a natural or man-made disaster.

Every year, the United States incurs billions of dollars in damage from natural disasters such as tornadoes, earthquakes, forest fires, flooding and hurricanes.  Federal and State governments declare these areas disasters based on evaluation by inspection that clears them for low-cost loans and grants to recover.

Under this program, the “disaster-area” declaration and funds made available should require a minimum 10% recovered materials mandate in the reconstruction.  This will reduce our dependency on new materials and save time and money during reconstruction.  Obviously, if there were insufficient recovered materials available, waivers could be applied to allow reconstruction with new materials.

In addition, insurance firms should be given a tax-break for achieving certain milestones when their customers use recovered materials after a casualty loss.  For example, if an insurance company hits a 20% threshold for customers using recovered materials, they could receive up to a 5% tax break on their returns for that tax year.  This is just one example, but would encourage insurance companies to offer discounts and incentives to their customers to use recovered materials.

Finally, citizens that build renovate or rebuild a home should be eligible for a one-time rebate based on the type of recovered materials that are used and what valuation the property achieves after completion.  This program would encourage a cultural shift in thinking about reused and recovered materials in both commercial and residential construction.

 V.     Legislation and Oversight

Beyond the obvious needs for legislative mandates for the deconstruction, recovery, rezoning and reuse programs, a broader series of legislative changes may be needed at the Federal, State and Local levels to ensure a consistent application of standards for evaluation of areas and specific structures targeted for deconstruction.  Shrinking suburban areas and reducing unused infrastructures will take years and require consistent oversight.

Some suggested legislation includes the creation of an oversight function within the Federal government that is part of the Department of the Interior or the Department of Commerce.  The Environmental Protection Agency should be involved in the oversight of land assets and recovered materials as it advises on pollution risks.

Overall, the program will be broad and will represent a potential financial benefit on multiple levels across the United States.

VI.  Summary And Recommended Follow-Up Actions

In conclusion, this proposal is designed to provide an approach to the current challenges facing the real estate and construction sectors that can survive beyond the current financial and economic downturn and be used as a model for future development of land and material assets within the United States.

By John G. Stockman, CISA, PMP, CBCP, MSIS

Several weeks ago, I wrote a piece about the logic in updating your Business Continuity plans to accommodate the ongoing economic stress we are seeing around the globe.  I held off on writing this next piece to see if there were any signs that things would start to bottom out and turn around in the near term.   In other words, I was looking for signs of life in the economy.  Well, it’s now about two weeks later and there are no signs to point to that indicate a tilt toward recovery.  Governments are spending trillions of dollars in an attempt to kick-start a turnaround, or at least stop the fall.  I could quote source after source that backs up these assumptions, but we all know the story by now.

So, what now?  While we all work to keep our organizations viable and survive to the inevitable turn-around, we now need to take stock of our organizations and check out how “shock-proof” they are as it relates to a business continuity plan.

Most business continuity plans, if done correctly, account for both natural and man-made disasters.  Their complexity vary by the nature of the organization, including size, economic scale, number of employees and supply chain dependencies to name a few.  So, if you have a business continuity plan, I suggest the following key areas to review:

• Review Personnel Dependencies – Every plan depends on knowledgeable, responsible members of your organization if it is to be executed correctly. However, if you have had layoffs or departures from your team, make sure that those people did not have responsibilities in your continuity plan. If they did, you need to find a replacement, update the plan and educate that replacement as to their new responsibilities. Ideally, this will be as part of a business continuity exercise for the entire plan. If you are responsible for only part of a larger plan, make sure you communicate these changes to the plan owner.

• Review Vendor Dependencies - If any part of your plan depends on outside vendors for support and/or execution, now is the time to check their viability. Many companies are going out of business or suspending operations. Each vendor needs to be contacted and, ideally, met with to ensure they have not experienced conditions that affect their ability to support your plan. If there is a formal contract in place, review it with the vendor to ensure all clauses and services are still valid. This is also the time to discuss any additional concerns or gaps brought about by the economic situation that may not have been valid when the agreement was originally signed.

• Plan for Financial Disruptions – Most plans do not specifically account for potential income/revenue disruptions. Clearly the banking situation is unstable. The best advice here is to diversify your financial dependencies if at all possible. If you use a payroll service, make sure they have at least considered the impact of a financial institution failure. While most deposits are insured, there could be at least some interruption in availability of funds to pay employees, creditors and vendors.

• Assume a Minimalist Survival Attitude – When reviewing your Business Continuity plan, approach it with the assumption that your business could be severely impacted by economic disruptions and plan for scenarios where you will have minimal resources to keep the doors open, or at least prevent the doors from permanently closing. Ask yourself what would have to be done to recover from a one, two or three week suspension of your business. Do you pay employees full salaries? Do you tap credit lines? Do you delay shipments? These are serious questions that need to be reassessed in the light of current conditions.

The recommendations I have made are not the only ones you should consider.  I do believe, however, that they are some of the most important.  Remember, there are always options and ways to make sure that your organization continues to function.

I have approached a number of my customers about this line of thinking and they have all been extremely interested in a “crisis review” of their business continuity plans.  So many of them were concerned about just the natural disaster and terrorism aspect of continuity, they hadn’t truly considered using their plans as a bulwark against potential challenges from our current deep recession.

So clearly, this is a good time to consider this exercise.  Remember, recessions always end, so don’t assume a doom and gloom attitude.  Run through the plausible scenarios that may affect your organization and plan accordingly.

By John G. Stockman

It is easy for all of us to give in to despair given the circumstances we face.  As the economy here and around the world continues to decline, the tension and fear is evident in everyone I talk to these days.  I’ll admit that I too am finding each day a challenge. 

Even in the relatively robust Northern Virginia/DC Metro area, business is slow and people are tightening their belts.  Every time I scan a website, open a magazine or read a blog entry, the negativity and virtual despair sucks you in and threatens to drag you down.

So what do we do now?  How do we move forward when each day becomes a struggle to just meet our basic business goals?  Both personally and professionally, it’s time to step back and take stock.   Just a few months ago, I wrote articles on business survivability (Strategy in a Slow Economy – September 17, 2008).  It was a four part series on how to position yourself to endure the downturn and be ready for the recovery.  At the time I wrote those pieces, I had no idea how bad things could or would get over the coming months.  Suffice to say, we know things are much worse now and any recovery looks to be far off.

As a business leader and consultant, the key to success is always being ready to adjust and survive.   The ability to recognize trends and respond appropriately is crucial.

So, here are some of my recommendations to my clients now in light of where the economy stands:

• Assume This Is A Long-Term Economic Struggle – Despite the efforts of government to halt the slide, conventional wisdom and quite a bit of data indicate things will get worse.  How much worse is largely a matter of speculation at this point.  However, as a leader and business person, you must assume that credit will remain extremely tight, business demand will be low and work will be hard to come by at least for the rest of this year. 
• Stay Current And Connected - I am currently devouring all the data I can get about pending legislation, national, state and local economic reports and business data.  Try to stay on top of things and you will be surprised at your ability to anticipate trends and emerging opportunities to improve your situation. Double down on your contact with customers and your personal and professional network. 
• Eliminate Unnecessary Expenditures and Conserve Capital - If you have any fat in your budget, get rid of it if possible.  Get rid of unnecessary items like additional cell phone lines and subscriptions you never read.  If you own multiple web domain names, take off the auto-renew function unless it is your primary way of doing business.  Make a list of the minimum things you can do business on.
• Update/Dust Of Your Business Continuity Plans - I’ll bet “economic calamity” is not a scenario in your Business Continuity plan, even if you have one.  As a Certified Business Continuity Planner, I have developed and/or reviewed dozens of plans from clients.    I don’t recall any of the analysis or response models including a provision for the potential of economic chaos.  Now would be a good time to go through that exercise.  In my next piece, I will detail how that analysis should be performed and what it should do for your organization.

Like many people, I come from a very poor background.   My parents were Depression-era children and clearly are seeing the similarities between their youth and today.  Coupled with the onslaught of bad data and continuing downward trend on almost every indicator, the likelihood of some sort of upheaval is now far greater than before.

But, we know this cycle will end.  Historically, the deeper the recessionary cycle is, the bigger the rebound.  Some of the greatest economic expansions have come after severe turbulence.  From the Great Depression through World Wars and uncounted crisis, we have demonstrated our ability to respond and recover.  I believe this cycle, as well, will result in a far better future and way of life for us all.

Next week, I will get specific on the analysis and approach for people that have a Business Continuity Plan as well as people that do not.

Jan. 29, 2009

(Read article here: http://www.msnbc.msn.com/id/28916936/)

Anyone who knows me understands my feelings on using bonuses as part of one’s salary – it’s stupid. Harsh words, perhaps. For those of you who remember the tech bubble at its prime – companies gave bonuses and stock options as part of an incentive package and more importantly handed them out like candy as an enticement.

In theory a good idea, in practice, not so much, people tend to rely on the bonus structure as an entitlement. It’s not, bonuses are like fishing lures – they attract people until they are caught in the net and times go bad and people see a third of their income gone for a particular year. The entitlement has become an anchor instead of a lure.

When bonuses are thought of as always being there and then suddenly goes away, everyone gets angry, depressed, or something less than positive – there is a fundamental change in the organization dynamic. Traditionally, when times are bad, the executives will say, “We can’t give out bonuses because we need to restructure and reinvigorate our company. Hang in there, your bonuses will come back.” They seldom come back to where they once were and most people feel cheated because they included bonus as salary.

Companies who use bonuses as “dangling carrots” (I love that phrase) continuously to attract employees are now caught in a trap – if the bonuses are not given – their employees might vote with their feet and leave. Even though the economy is bleeding jobs, talented people may start shopping for hire salaries without bonuses.

When reading the news story regarding Wall Street giving the bonuses (in the tune of 18.4 billion – that’s with a ‘b’), I was shocked at first, but started to realize that Wall Street is doing what they know. What they know is to add bonuses as incentives, in their mind, Wall Street did nothing wrong. In hindsight, the government should have had some restrictive oversight on where the bailout money was spent. Unfortunately, that was never part of the bailout package to Wall Street. Wall Street had Cart Blanche to do what they thought was best for the country and more importantly for their business.

In my mind, this is a WTF moment with a ‘B’. What can be done? Not much, in essence we created the mess and need to step back from what we know and try to create something less offensive. I am not sure what or how to fix it but it seems like we are creating the same mess with taxpayers’ money. For those of you out of a job, my advice is to negotiate a higher salary and leave the bonuses as a ‘nice to have’ – bonuses should never be considered as part of your hiring package.

During that time, my wife Kristen turned me on to a podcast. My first reaction is, “What the heck is a podcast?” Suddenly I being the techno-geek in the house learned something new. A podcast is a series of audio or video digital media files, which is distributed over the Internet by syndicated download, through Web feeds, to portable media players and personal computers. Kristen was listening to a podcast called the Hip Tranquil Chick, a podcast on a woman who weaves her practice of yoga and love of all things fabulous into a hip and tranquil lifestyle. (Quote from the Hip Tranquil Chicks’ website.) Needless to say I was intrigued and an idea was forming, why not develop a business podcast telling stories about business. Of course, I hinted at the idea to Lorraine and we started bouncing those same ideas around and low and behold – KANDL was born.

Over the next few months, I will document my journey into the podcast, social networking, and eye-opening misadventures of creating, starting, and developing a business podcast. I hope everyone enjoys the webisodic events of starting a new business venture from a simple idea. The story is interesting and I hope helpful as well as enlightening for those who continue to read this article.<-->

By John G. Stockman

The “Keepers of the Mediocrity”

You know them.  They exist in every organization.  They permeate every level from the storeroom to the board room.  They are the Keepers of the Mediocrity.  Just being able to identify them, understand their motivations and minimizing their impact on your leadership can vastly increase your chances for success.

First, I want to say that this express is not meant to denigrate anyone.  This is meant as an expression of an organizational phenomenon that challenges every leader.  Simply put, a “keeper of the mediocrity” is the person or persons in your organization who have a vested interest in ensuring changes are thwarted.  The scale of the change doesn’t matter.  These people have found ways to slow down, divert or simply halt even the most obvious and beneficial changes to an organization.

Why people engage in this type of behavior is often debated.  Mostly, I’ve discovered it’s a matter of personal need and fear of change.  These people are often in roles that have not substantially changed in a long time and they are comfortable with the way things are in the present.  Change, whether it is a new process, a change to a computer application or even a new manager, are viewed as a threat or an attempt to get rid of them.

It’s interesting that when I finally identify and talk to these people, they are most concerned about their own personal security and not what is best for the organization.  Often times, they view any suggested change as being uniformed or doomed to failure.  Moreover, they routinely say that they could have helped make the changes necessary if only someone would have asked for help.

The question is asked, “How do they get away with it?”  My answer is always the same.  Never underestimate the creativity and depths people will go to simply to ensure their own needs are met.  It really boils down to their own personal and individual motivations. 

We all have our own motivations for the work we do and the roles we take.  From keeping a roof over your head, making a lot of money or just trying to improve the world, everyone gets up each day and pursues their own interests.  That is the way of things. 

But, the people that I view as the keepers of the mediocrity are an obstacle that every leader must overcome.  There are a number of ways to do it.  I’ve tried a few methods.

Each of these approaches has their benefits and risks.  They should be used in relationship to the organizational culture and your relative authority and longevity in your role.

• Isolation/Quarantine – This approach is probably the one I’ve used the most often. It is best employed in situations where you are new to a leadership role and the organization has a “soft” culture. This is most common in not-for-profits and healthcare organizations. Once you identify a “keeper” embedded in your team that you know you cannot simply move out, take steps to limit their potential influence. Rewrite their job description to keep them within certain, very narrow and necessary functions. Do not involve them in committees or new projects. Take every opportunity to minimize their role. Often, this will frustrate them out over time.
• Negotiation/Reform – Sometimes you find a “keeper” that is really just a frustrated, yet capable, person. When you find one, and it’s rare, there is an opportunity for negotiation and reform to bring this person into the fold. These type of people are usually found in places where reorganizations, mergers or acquisitions have taken place. They’ve been passed over for various reasons and do their jobs, but limit their contribution to the bare minimum. When you have a chance to reform a person like this, it is worth the effort. I have found they are the most productive and proactive champions of your leadership. Gradually increase their responsibilities, mentor them and set a path for them of development and promotion as warranted.
• Brute Force/Show of Power – This is the most dangerous and infrequently used. However, it does have its benefits. This option is dismissal of a high profile “keeper”. Very dangerous to you as a leader, but incredibly effective as a warning and paradigm-shifter to any other “keepers” on your team and in the organization. By getting rid of someone in this way, you send the message that change has arrived and people seeking to forestall or derail it will be dealt with swiftly. It clearly sets you, as a leader, up as an agent of change. It also can draw out your critics into the open, especially those who are “secret keepers of the mediocrity.”

For all of these options, make sure you have a great and open working relationship with your Human Resources department.  Make sure they understand what you are trying to accomplish.  Make HR your ally and you can develop an effective strategy to minimize the mediocrity in your organization.

That’s it for this series.  I hope you have found it helpful.  May all of you have a safe and happy holiday season and best wishes for a happy, healthy and prosperous 2009!

By John G. Stockman

Your Responsibility to Grow People

I have never forgotten a lesson learned during what I consider my first “professional” position.  As a recent college graduate, I had obtained an entry-level position as a systems analyst at a prestigious children’s hospital.  From the beginning, I had a love/hate relationship with my supervisor.  As a twenty-something with a degree, I was sure that I could do every job better than the people that were there, including my supervisors.  To her credit, she recognized my strengths and weaknesses.  She also coupled her patience with some blunt assessments of my personality.  Finally, during a one-on-one discussion in her office, she told me she thought I should consider looking for another position.  I was stunned.  I couldn’t believe my ears.  When I asked her if I was being fired, she said “no”.  But, she went on to tell me I lacked maturity, patience and the willingness to let others instruct me.  I was bringing discord to her team.  It was the most difficult conversation of my life (at that time).  Finally, she asked me what kind of job I wanted and what I thought I could do well.  I looked at her and told her I wanted her job.  She didn’t laugh or dismiss it.  She looked at me and said that she would teach me.  But, that meant I had to do everything she asked.  I had to stick to her like glue and work hard to change my attitude, gain experience, increase my knowledge and develop a respect for others.  I agreed in a heartbeat.

That conversation was THE pivotal point of my professional life.  It was the bucket of ice water on my head that I needed to make me realize I had a long way to grow.  To this day, I credit that person with changing my life.  Needless to say, over the years, it was a prosperous relationship resulting in me gaining that director title and being prepared for the role by one of the best mentors anyone could ever want.  The success of that role propelled me forward to leadership roles in many organizations, including my own successful companies.

The key to this story is that my supervisor knew it was her responsibility not to just dismiss me.  She could have, at any point, simply fired me.  But, she often told the story later of how she saw it as a failure on her part if she didn’t try to help me.  She took her role as director seriously and recognized my abilities, even buried as they were at that time.

In my roles, I have attempted to emulate that experience and model.  Even as a consultant and mentor to executives throughout the country, I take every opportunity to remind leaders that they have an inherent responsibility to professionally grow the people they supervise.  No matter what level, as a leader, you must make sure that you make that effort.

Its part of the awareness you must have to be a successful leader.  Your goal should always be to push people forward.  Help them be successful.  Help them recognize their own abilities.  Even more important, establish a relationship with these people based on frankness and an open communication style.

In every organization, people are looking for that mentor to help them better navigate the hazards of professional life.  You, as a leader, should be that person. 

Some simple rules for developing your staff:

• Don’t view people as a threat because they aspire to your job. To be sure, there are always going to be those seeking advancement through less than positive actions. Those people can largely be dismissed. Focus on the people that you know possess the talent, determination and insight needed to move forward.
• Never get comfortable in your role as a leader. You always need to be seeking the next opportunity. That’s what made you a leader to begin with and should be the trait you see in those you mentor.
• Always be on the lookout for someone you would want to replace you. I make sure I try to identify someone to fill my chair in every organization I lead. It takes time and some judicious vetting. However, I have created a number of very successful leaders over the years. I first learned this as the “hit by the bus rule”.

Again, I will reiterate you cannot do this for everyone on your team.  But, I’ll wager that you can do it with several at a time if you have a strong personality, self-confidence and a clear insight into your goals as a leader.

Next week, I will wind up my series on “Being a Leader” with my favorite topic, the Keepers of the Mediocrity.  This is the must-read article in the series.