How to Build a Management Team – Part 2 of a Series

Subtitle: The Chief Financial Officer

The role of a chief financial officer has changed significantly the past ten years. What use to be a glorified bookkeeping or scorekeeper position has evolved into a strategic position of importance since the enactment of Sarbanes-Oxley in July 2002. It is not unusual for the CFO to become extremely close with the CEO … maybe even serving as partner … definitely as an officer with fiduciary responsibility. Today the CFO helps to manage the business toward its goals, achieve buy-in from key investors, and assesses the wisdom of pursuing new business ventures. Once your startup business starts growing at a rapid pace you will know you need a good CFO. This normally would be when you start looking at outside financing or careful cash management, need to start doing a formal audit, when your payroll reaches the 30+-employee level, or when you are contemplating a complex transaction such as an acquisition or merger … or maybe an IPO.

Seek Integrity and Excellence

So how do you go about finding an excellent CFO? Some companies use a quality CPA firm as a backup or help to their initial bookkeeper and then attempt to hire away one of the CPA firm’s employees whom they have observed and feel will be a good fit for them. Or they may go the traditional route of referrals or a retained recruiter with experience finding CFO type executives. Whichever route you choose to take, I always advise that you look for work ethic as the number one ingredient. Someone with work ethic is a worker, a doer, a fixer, and a thinker who is always scheming how to do better with a commitment for excellence and teambuilding. Furthermore, this person needs to be a good fit with your personality because you are going to be working together closely for many hours and, hopefully, years. In addition you want someone with the highest integrity and who has an excellent grasp and understanding of economics and how the markets work … globally.

What are your ideas or experiences in deciding when a startup has reached the CFO point?

Next: Part 3 – Top Marketing Person

© Phil Hoffman 2012. All rights reserved

How to Build Your Management Team – Part 1 of a Series

Subtitle: Senior Sales Executive Position

This is the first of a multi-part blog series on How to Build Your Management Team once you have a startup company up and going. I will address the following areas in this series:

• Top Sales Person
• Chief Financial Person
• Top Marketing Person
• Top HR Person
• Chief Technology Person
• CEO
• Additional Resources

Today’s blog is on the Senior Sales Executive position.

In the case of a startup company, growing to the point of adding a sales manager is a significant benchmark moment in a growing company’s life. There are studies that show many, if not most, businesses don’t grow because the owners have usually carried the responsibility for sales. While the desire not to give up something they enjoy and have worked at hard is one reason for not giving up the duties to a focused senior sales executive, another reason is that many entrepreneurs avoid or delay bringing in sales help simply because hiring a sales executive can be expensive. The minimum rule of thumb is that for each $1-million you intend to add to the top line, you should budget at least $100,000 in additional sales compensation costs. Then there’s the challenge of deciding what kind of sales manager you want. A common mistake is to promote a successful salesperson into a management role for which s/he is unqualified or under-qualified.

What is your goal

Before you begin recruiting a sales manager, it is important to determine …

1. Am I hiring someone to bring in large accounts
2. Someone to manage the accounts we already have
3. Someone to manage a team of people who will manage my accounts
4. Someone to bring in new business
5. Someone to add and develop a sales team through focused sales efforts and growth

If the third option is your answer, consider looking for a candidate who has a record of accomplishment for building and managing teams, rather than a salesperson who has beat every sales quota s/he has ever seen. You need someone who can grasp the big picture and understand the company’s recent successes and long-term goals and objectives for growth through sales. If your goal is to bring in large accounts, you need to go with a connected results oriented closer. If your plan is to grow through adding a sales team over time as sales grow, then you need to look for someone with actual sales experience but also a knack for working with people and building teams with a vision in mind.

As in all my hiring ventures, I always look for work ethic as the number one ingredient. Someone with work ethic is a worker, a doer, a fixer, and a thinker who is always scheming how to do better with a commitment for excellence and teambuilding. Don’t settle for anything less, ever.

What are your ideas on growing the sales side of a startup company?

Next: Part 2: Top Financial Person

© Phil Hoffman 2012. All rights reserved

My Top Three Books on Leadership

I recently read an article in HBR (Harvard Business Review) titled “For Those Who Want to Lead, Read” and reflected on the books I’ve read recently that were good leadership books. It seems to me there aren’t as many good leadership examples as there were in the late 90’s and early 2000’s. For a while we had Jack Welch, Larry Bossidy, Tom Peters, John Maxwell, Steven Covey, and Jim Collins who really gave us some excellent management leadership insights and ideas. And we still have Jim Collins’ excellent researched books, but the other leadership books seemed to have gone to a set formula and conciseness that isn’t as meaty or as believable as before.

I try to read at least one leadership inspired book every month, but have had a difficult time finding what feeds the depth of my interest. Not that there isn’t a plethora of business books being promoted and published regularly, but I’m looking for some real depth and examples of true-grit leadership. When I review the list of the last ten books I’ve read and attempt to pick the top three books I have no problem picking the top three. Those three books provided real life leadership examples and I must admit that most readers probably wouldn’t consider them “leadership” worthy. But I believe they are actually packed full of great examples of good and bad leadership. Here they are in no particular order:

My Top Three of Last Ten

Steve Jobs by Walter Isaacson – this book is a treasure chest of good and bad leadership examples … has grit and detail of innovation, implementation, strategy, execution, wooing leaders from other companies, addressing competition, sticking with your beliefs when others don’t agree, etc. etc. A great book that puts you in the room with many current day personalities in their prime.

In My Time – A Personal and Political Memoir by Dick Cheney with Liz Cheney – Dick Cheney takes us through history starting in 1969 when starting out in Representative Bill Steiger’s office and all the way through Chaney’s vice presidency. Talk about some inside insights on good and bad leadership examples. This book is jam-packed with great insights on networking, positioning, winning, losing, confrontation, standing up for your direct reports, etc. etc. etc. Another book that puts you in the room with people you know about and lets you know what was happening inside the walls of history in many instances.

Eyewitness to Power – The Essence of Leadership, Nixon to Clinton by David Gergen – here’s a book written by a writer and reporter (Gergen) seeing the history of Watergate unfold before his eyes … before, during, and after Watergate. The surprises, accomplishments, and cover-ups of the Nixon years. Then he takes you behind the scenes with Presidents Ford, Reagan, and Clinton. Then he concludes the book with Seven Lessons of Leadership. Again great examples of good and bad leadership … and in some cases pure lack of leadership … or the inability to make a decision. You see the inner workings of networks, power, and steely untruths. You see reporters from a reporter’s perspective. An inside report on action or inaction under pressure that has affected us all.

Conclusion

In closing I would like to say I do like a lot of today’s business writers and leaders … Michael Hyatt, Seth Godin, Dave Ramsey, Mark Sanford, and many others. This was just my personal attempt to list my top three books on leadership of the last ten I have read.

Leaders Read and Readers Lead.

Well that’s my list. Let me know if you have some leadership books you would like to recommend that have been especially helpful to you.

© Phil Hoffman 2012. All rights reserved

Are You Teambuilding or Having Committee Meetings?

I read recently that team building is an overused term … it is overrated and one of the most misunderstood dynamics in the business world. I also noted an article that stated that most teambuilding is poorly done and that the good effects of team building seldom last long … and that people’s expectations of teams are seldom met.

Wow … now that is pretty tough. Personally, I believe that team building is very important. Furthermore, I consider myself a good team builder.

So I decided to do more research and found some interesting perspectives. It seems that many of today’s organizations have been convinced that to build a team they have to go on a retreat for two or more days …have some “fascinator” organize competitive activities such as climbing a 30-foot high pole, stand on it, and jump to a trapeze (ala Tony Robbins) … or have a competition building sand castles … or rappel off the side of a mountain … and they expect a finely tuned team as a result of these soul searching activities. As one sage put it, “just because you catch me when I’m told to fall backwards doesn’t mean you’ll support me on my job.” It simply means you don’t want to seem like a fool in front of the boss … who’s probably standing there uncomfortably saying, who did I let talk me into this anyway.

After much review and consideration, I have concluded that today most companies have very few true teams. What they do have is an abundance of committees.

Typical committees are the company’s executive committee, executive council, operations committee, customer response committee, and so on.

Typical teams are focused on a result … such as a new product development team or a customer response team.

Think about it for a minute. In your organizational experience, are most groups of people working together as a team or a committee? Are they evaluated as a team or as a committee? It seems to me that today the preponderance of groups are committees, which is why they don’t always work together well (e.g. share resources and information) and why you can’t engage in team building.

Substance Test: Coming out of meetings, are people talking about how best to support each other and provide resources, including people, to others? If so, that indicates a team. Or are they talking about how to protect their resources, others being incompetent, and how to resist certain elements in the group? If so, that’s a committee for sure.

Here are the features and needs of Teams from my perspective:

• Teams are self-directed. They set their own rules of engagement and determine their own system for making decisions.
• They have an end in mind … they don’t exist ad infinitum.
• They expect to be held accountable and responsible for delivering results for the team’s success.
• Team members report through the team to one person. (If they come together while reporting to different superiors not on the team, they are a committee.)
• They determine their work habits, hours, interactions, etc.
• The team reports to a specific superior responsible for the team, but the members are self-evaluated and team-evaluated.
• Productive teams often use external facilitation, skills building, coaching and other elements that an objective external advisor can bring to the table.

Don’t be coerced into thinking so-called group experiences constitute team building. Groups are seldom true teams, and the experiences are seldom relevant to the workplace. As one astute consultant put it, “the last time I checked, no one walks on hot coals to go down the hall, or rappels down the side of the building to go to lunch, or gives themselves a motivational pep talk before a client meeting.”

What is your perspective on committee meetings and teambuilding?

Have you experienced the “team building” retreats? Thoughts …

What are “Black Collar Workers”

Last week I learned a new term I was not familiar with … Black Collar Workers. I learned this while reading the blog of the “Retrospective Saunter,” which is published by local educator/teacher/administrator/learner Philip Cummings … who happens to be one heck of a good guy … and a good blogger.

My initial thought was that a Black Collar worker was probably someone who dealt in black market goods … or possibly worked in the coal industry. But no …

Philip noted in his blog:

Black-collar workers are easy to find. They crowd coffee houses with their laptops. They create prototypes of their inventions on 3-D printers at San Francisco’s TechShop, raise money for their projects on Kickstarter, and share their creations at Maker Faire events around the country. They are the work force of the future, powering change in the present.

Black-collar workers are after purpose, not pensions. They’re not seeking lifetime employment; they’re seeking lifetime learning. They don’t have secretaries or bosses; they have teammates. They don’t punch in at 9, and they don’t time out at 5. They connect, create, contribute, and collaborate whenever and wherever it makes sense. They try to minimize their spending in order to maximize their flexibility.

Now I’m not trying to put Philip Cummings on the spot as an expert on Black Collar workers … and I doubt if he professes to be one … but it certainly awakens my interest especially when you see the “creative-types” or intellectuals or educators or social media types, etc at Starbucks, Panera Bread, or other socializing wholesome and comfortable coffeehouses. This to me indicates another ebb in the changing of the workforce in America.

Just sayin …

What are your thoughts on Black-collar workers?

What are your thoughts on the changing of the workforce in America?

© Phil Hoffman 2012. All rights reserved

It’s the 2nd Half of the Fiscal Year (an election year) … what should we be watching

I try to avoid blogging about the stock market and politics, but these are interesting times that require that responsible people take notice of what affects us. Or as Adam Hamilton recently noted, “Our democracy rises or falls based upon the willingness of thoughtful people of moral courage and conviction to participate in the political process.”

Not Normal Times

These are not normal times. I tell my friends that we are in a “historical global economic crisis” that is going to be impactful on the rest of our lives … and our children’s lives. Even in normal times, the stock market forecast lacks precision. And I believe we have all learned we can’t trust the projections of politicians. Right now, we have the Euro-economy at risk of breaking apart, the U S economy is wobbling on the edge of the fiscal cliff, and the Republicans and Democrats are locked in an election year feud about how to address or stimulate the U S economy.

 Six Things to Watch

We are in the last half of this fiscal year … an election year … and while it is impossible to predict the markets, there are certain things we can watch to see how they play out and how they may affect us. Here are six factors I think are noteworthy:

1.  Fed… will the Federal Reserve provide more stimulus (or stimuli)?

Will Chairman Bernanke decide to ride in on his white horse and attempt to rescue the markets again by injecting money into the market to stimulate the financial system? I notice where Sam Stovall said, “The Fed has one bullet left, and they want to wait as long as possible.” Is the Fed becoming our real life Barney Fife? The Fed’s next meeting is Sept 12 – 13 … if it doesn’t announce new stimulus will the markets be disappointed?

2.  It’s an Election Year: Romney or Obama?

Just before a presidential election is always a time of uncertainty … and investment advisors are stymied as to which policies might be put into effect until the winner is determined. It is obvious that the economy is affected by fiscal, monetary, and regulatory policies … and these are normally determined by who wins the election. For example, which trade policies and banking regulations are manipulated or influenced by who wins the election. Since World War II, stocks have suffered losses only three times in election years (according to LPL Financial). Rallies tend to get stronger as Election Day nears and policy clarity improves.

This year’s election is very important … lawmakers need to come up with a solution for the huge debt load … at risk is another credit downgrading … plus Congress must act to avoid the U S falling over the “fiscal cliff” … battling growth-stopping higher taxes and spending cuts. A real dilemma that must eventually be addressed.

3.  The Fiscal  Cliff… will we go over the edge or a close call?

The budget for Jan 1, 2013 has many problems … the Bush tax cut issues … temporary payroll tax cuts will expire … and least we forget that the Congress voted in nearly $100-billion in automatic government spending cuts that are also scheduled to kick-in. As Bill Stone with PNC put it, “The approaching fiscal cliff is big, scary, and yet avoidable.” And we know that it must be avoided if the economy and markets are to avoid falling into a recession the first half of 2013. Bets are a deal will be struck … but most likely not until after the election.

4.  Europe … after the Olympics will they break up or make up?

Who really knows how their debt crisis will end? Will the PIGS* fall like dominos? Do you really think a bad outcome in Europe is priced into the market? This has a bigger impact on the U S economy than most people realize. (*PIGS = Portugal, Ireland, Greece, and Spain)

5. Policy has to be made … “right” decisions are a must!

To quote Ewen Cameron Watt, chief investment strategist for BlackRock Investments, “The fate of markets for the remainder of the year will be dominated by three factors: policy, policy, and policy.”

The USA faces key decisions on taxes and ways to boost growth while trimming the ballooning budget deficit … any of which are a negative impact on the market. The European situation has to be addressed eventually, and China’s challenge of dealing with an economy that is not booming like it once was. All these factors impact each other and all of us.

The U S needs to come up with a tax policy that promotes economic growth and reduces uncertainty for businesses … a long-term solution that will give businesses the confidence to invest and hire workers. Simply put, a business can’t operate within a government that operates quarter-to-quarter when businesses require confidence to go forward with a new plant that will take three years to build and startup.

6.  China … can’t be ignored

China is the world’s second largest economy. And it has tried reinvigorating its economy with two interest rate cuts that appear to be working. They are currently projecting to grow at 8.5% in 2013,  up from 8% for 2012. They clearly state that they will do what is necessary to keep its economy strong. We are in a situation where if Europe goes flat line we can possibly survive, but if China falls into recession our hopes for a recovery are most likely over. Hard to believe we are at this juncture in history.

Thoughtful … moral courage and conviction

It will be interesting to see where things evolve over the next several months. As one analyst put it, “the odds are that not every worst-case scenario will come to fruition.” But we must keep up with what is going on that is affecting us during these difficult times. Or as Adam Hamilton recently noted, “Our democracy rises or falls based upon the willingness of thoughtful people of moral courage and conviction to participate in the political process.”  My suggestion … go vote with courage and conviction in your rights.

What’s your take on the markets … the economy?

© Phil Hoffman 2012. All rights reserved

Three Simple Suggestions for Getting Healthy

It has become obvious our society is becoming more health conscious … and more anti-aging conscious. Part of it is due to the aging baby boomers, part is due to upward spiraling costs of healthcare, and part is because we’re more intelligent and realize we need to be healthy to have a quality lifestyle. Today we are bombarded with as many TV ads on dieting and medicines as there are for car dealers. The simple fact is we have some habits that are just hard to break in regards to our health. I know that at one time I drank five or more cokes a day and would not eat a meal if it didn’t include beef, potatoes, bread, and dessert … plus I had to have a sweet snack every afternoon. Now I have red meat twice a month … seldom drink any carbonated drinks … and limit my sweets to once or twice a week.

Three Key Factors

My daily personal goal is to focus on three things … Nutrition, Exercise, and Rest.

I make myself consciously think of these three things many times throughout the day. At first it was hard, but after awhile it became second nature and as I began feeling better – both physically and mentally – I found it easy to do. I make these my primary focus before anything else because I know that if I’m not healthy and feeling good nothing works as well as it could or should.

Here’s my simple three-step program:

1. Nutrition – I start each day with a high quality nutrition drink. This has the right combination of ingredients to wash my molecules and cells with needed nutriments including vitamins, minerals, etc. I also take a pharmaceutical grade multi vitamin. I’ve found the ones purchased at Walgreens, Walmart, etc. don’t contain the quality of nutriments I am looking for.

Then I have a light lunch … no fried foods, or gravy, and only fresh ingredients.

For dinner, I focus on fruits or vegetables with about 3 – 4 ounces of protein. (Never canned fruits or vegetables; either fresh or fresh-frozen). I try to avoid desserts, but may on occasion have a small serving to address a craving.

2. Exercise – Sometime during the day, I include 40 – 50 minutes of good cardio exercise … walking, jogging, biking, etc. Just start and keep going at a good pace and stay with it. Don’t make it too hard, uncomfortable, or complicated. Start slow and build up so you don’t get discouraged. I do these six days a week (I suggest minimum of 3x per week). Three days a week I do hand-weights … I do 8 – 10 different exercises 12 – 15 reps each … just enough to keep me toned.

The key is exercising consistently. You don’t have to be a great athlete … just be healthy. Only you can do it for you.

3. Rest – Last, but most important, is getting good rest. Go to bed at a regular time … get up at a regular time. Rest at least six or seven hours but try for eight. You are worth this. Saying, “I’ll rest when I’m dead” is simply not healthy and is not doing what is best for you or your family. Think it through … this is not difficult … just staying busy or being active to be active is not worth good health. No one who is sleep-deprived is healthy. No one can sleep for you. It is up to you.

That’s my simple three-step formula. It has worked miracles for me. The simple mantra to this is… What are the ten 2-letter words that tell you how you can be successful? (A: If it is to be it is up to me)

What is your health regiment?

Do you feel healthy and alert … both physically and mentally?

© Phil Hoffman 2012. All rights reserved