As the Covid-19 pandemic continues to evolve, here’s my current stream of consciousness to help you think differently about your team, business and leadership during these interesting times:
A Silver Lining?
• Many, many businesses are facing financial hardships right now. Others are doing pretty well. I have Vistage members and individual clients in both camps. What’s the silver lining in this dark cloud for your company? Easy to ask, harder to answer. Really give it some thought. This kind of thinking comes easier to some than others. If it’s difficult, collaborate with your best people.
KPIs During a Crisis
• As a follow-up to last week’s comment on KPIs, I was asked what KPIs are appropriate at this time. The answer is: probably the same ones you had before this crisis, if they are the right ones. Certainly, nothing predicted Covid-19, but there might have been behavior signs that were affecting “what causes sales” in your business back in November and December. Signs that could have been pointing up as well as down.
The best KPIs are ones tied to your best customers: (High volume, high profit). What causes these customers (motivation) to purchase goods or services from you? If you understand why they buy, that becomes a leading indicator for you. There might be more than one.
• All too often, we look to our financial statements for KPIs. We do that because it’s convenient, not because they are good indicators. Really think about what drives business for you. For example, ratios between different measures, customer behavior, vendor activities, etc.
• Millions have filed for unemployment. It’s terrible for everyone involved. If you have to let people go, make certain layoffs are the last resort. Have you assessed the performance and contribution of your people? Or, are you making layoff decisions based primarily on salary or wages? I suggest contribution.
How do you decide? Who are the people you would start your next business with vs. who are so mediocre they should be working for your competitors? If you let people go, make certain they are the “C” players and not the “A” players. Competitors who are flush with cash right now will pick up the “A” players in an instant and when things return to normal and you need strong staff, they’ll be gone. Not to mention the brain drain on helping you get through this. Great places to work are so even when times are bad. Keep morale high, provide opportunities to drive purpose and enthusiasm even when you can’t see the light at the end of the tunnel. There will be pent up demand as this abates. Will you be ready for it?
Communicate, Communicate, Communicate
• Don’t be afraid to speak too often to your people; it’s never enough. Just don’t ramble when you do. If you were one of your workers, what would you want to know about? What would be the most important things to you? Know your employees and what’s important to them as much as you know and understand your customers.
Cash is King
• Use measuring tools such as Trailing Twelve Month charts to gain insight into your real cash position and trigger different perspectives as to the options you have. TTM charts measure trends not just data points. You should manage the trend, even if it’s abrupt.
What Being a CEO is All About
• Everybody’s searching for answers. No one knows what the future holds. Business is about making the right decisions without having all the information at hand. While the circumstance is different, the game is the same. This is your test as a leader. Be bold, look for opportunities and don’t become myopic on the chaos while at the same time demonstrating sensitivity to your employees and customers. These are the times when great leaders are experts at balancing competing priorities.
• Finally, set up a separate line item on your financials to separate all the expenses you’re accumulating as a result of Covid-19. This will come in handy as time goes on for multiple reasons.