Decreased profit margins can be a game changer

Posted: May 21, 2012 | Categories: Management

Last night I was at a social event with some old friends.  My friend Bob started talking about his job and the company he worked for.  He was frustrated. He is the sales manager for a contracting firm.  It is a family company that has now entered their third generation of leadership.  Bob described his situation to me:

Being a contractor, they bid for work.  Like most contractors today, they are finding they must compete against many other bidders rather than just 2 or 3 like before the economic crunch.  Current conditions dictate that they must fight harder for a “bigger piece of a smaller pie” This means smaller profit margins, and with rising fixed costs and pricing pressure, the focus turns to building a more productive team.  To get a more productive team, leadership, teamwork, and communication must be strong.  Bob saw a gap here.  Rather than listen to him complain, I threw it back to him and said, “So what needs to be done?”  In his answer, he “nailed it”. Here are the steps he outlined:

Build a business plan:  They need a business plan…I mean a real business plan that details specific goals and well-crafted strategies that clearly map how to reach your objectives.

Define roles:  There is a lack of clarity and that is creating confusion.  This results in gaps, overlaps, things slipping through the cracks, misinformation, finger-pointing, blame, etc.  Imagine major league baseball if roles were not defined.  You would have people colliding with one another and no one covering for a player who was drawn off base or out of position.

Compensation plan:  Bob did not have a compensation plan.  Strong companies take the time and care to personalize compensation plans that help direct people towards desired goals.

Create team synergy:  Get the whole team involved in problem solving.  Create an environment of idea fluency, problem solving, and positive action.

Summing it up, to keep healthy profit margins, keep your people happy and engaged by:

1.  Building a business plan with clearly defined goals
2. Create a team environment that is open and knows how to solve problems.
3. Build quality compensation plans that are personalized and designed to motivate.

Most important to remember:  Strive to keep your team happy, engaged, and at the lowest possible level of frustration.  When we are frustrated, we are not focused.  When we are focused, we are positioned to be most productive.  When we are productive…up go profits!