Readers’ Response on How to Motivate High Potential Employees

First, let’s thank Eunice for sending in a very interesting scenario that has brought out some really terrific responses.  The thing that is the most amazing is the wide variety of the ways people would handle this situation.  It’s hard to say what’s right and what’s wrong although many people certainly have their opinions.

I think the main issue here is the separation between employer and friend.  Can an employer be a friend?  Some people say no, however, my personal opinion is yes, an employer can be a friend of an employee with one condition.  That condition is that the employee NEVER puts the employer in a compromising situation, the way Tracy put Eunice in.  It works the other way as well.  An employer should never put an employee in a compromising or embarrassing situation.  Basic management says you never reprimand an employee in public.  What is critically important to understand is that the health of the business comes first.  

By Tracy not coming in when she is expected, it hurts the business.  It is not healthy for the business.  The reason why is ownership cannot depend on her, and her co-workers can feel slighted because you have one employee who is on a pedestal and can do anything they want.  Can’t you hear it now ”that’s not fair” and it hurts the morale of the business.  The owner also loses credibility with the other employees because of poor management practices.  Lastly, the customers become the biggest losers because she is never there when they expect her.  

Having said all of that, I still personally would take the loss of such a talented employee as a personal defeat.  I would look at having to fire her as a sign that I did not manage the situation as best as I could.  The following are excerpts from the responses received from this article.  You can read the complete responses on my blog at ricksegel.com/blog. 

• Wow! That has DEPRESSION written all over it! Sounds to me like Tracy needs real help! It makes perfect sense considering all that has happened to her.  Still he fact that she's such a wonderful employee and quite capable day.  I don't think this is a discipline problem. She seriously needs mental help!” -Donna Erwin
• “You need to sit down with her and confront her.  She will probably  refuse at first, but it must be done.  She needs professional help.
  
  Plan on making arrangements to meet with her at least twice a week. You will need to make her feel grounded and loved again before she can move on with her life and enjoy working at your store.  
  
  It’s not usually the responsibility of an employer to make things right but this could be a worthwhile investment.” -Mehdi
• “Encourage Tracy to attend classes and you may even offer to pay something for them.  Working toward a degree will boost her morale.” -Melissa Bailey
• “Have her champion a cause through the store, one that might be close to her situation, such as a cause for single mothers.  Find a charity that is in alignment with her needs. This will give her more of a sense of purpose and may motivate her to have better attendance.” -Phil Wrzesinski  
• “You may not want to fire her, but allowing her to come as she pleases is only enabling Tracy to continue this behavior. You can't be both her friend and her employer, so you will have to choose which one you would rather be. If you choose to be her employer, than perhaps a 30 day review should be set up, with your expectations clearly stated - including letting her go if those expectations are not met. After 30 days you would need to decide - does she stay or does she go. Sounds like tough love, but Tracy is an adult. The choice is hers.” -K. Wooden
• “Regardless of the reasons, this behavior is not appropriate and establishing boundaries and limitations is up to the employer. This is true whether the employee is a top producer or not, and the employer must not use being a good producer as justification for not confronting the problems.  My recommendation is for the employer to work on her ability to be a more effective manager, specifically in understanding what the correct roles are between she and her employees.” -Philip M. Barcellona
• Yes, she may have lost you one $5,000 sale. But weigh it against the unbelievable sales numbers she garners you. If you didn't have her, how many sales would you lose?  
   
  Can you work around her limitations? For example, don't schedule her to open, only schedule appointments with her in the late afternoon, notify customers if she won't be in that day and reschedule them to another day or another salesperson (whatever works).   
   
  I've had my share of unreliable employees -- and fired them. However, in this situation, firing her may cost you more in the long run than working around her shortcomings.” -Karen
• “I have had employees like this in the past... one minute they are your biggest headache and the next they are blowing you away with brilliance! I have 2 suggestions that I have used in the past.
• Give her more responsibility. She understands that what she is doing affects the business and when shown the errors she makes them right; she genuinely feels bad for her actions. By forcing her to be more responsible she might rise to the challenge.  
• Take away all responsibility. If you don't need to rely on her for anything then you will rarely be disappointed.
  
  Separate your personal feeling for her from the needs of the business so you can make rational decisions.” -Jared Habre
• “Sounds like a drinking or drug problem to me.  I don't care how good of a sales person she is, she is being abusive to Eunice and the other employees.  Eunice needs to learn to sell more herself and learn from Tracy as do the other 14 employees.” -Sharla Bush

It was also suggested that Eunice pay for counseling and 30 days off with pay.  I personally think that may be going overboard because that is a sizable investment, but if it worked it would be worth it.  This was a wonderful thought provoking exercise that I would love to repeat.  So, send in your scenarios and let’s see how we can help you.  Eunice, thanks again, and I hope this helped.

Have a great week!

How to Motivate High Potential Employees

I recently received an email from a jewelry store outside of Los Angeles.

The owner posed an interesting question that she suggested would be a wonderful discussion question for my readers. I agreed that it would be a great question and I would get as many opinions as possible. So here goes:

Dear Rick,

I have an employee who has worked for me for 3 years. I own a smaller jewelry store outside of Los Angeles and employ 14 people who all work part-time. The business was originally started by my husband who passed away 9 years ago. I have been running it alone by myself since then. My children have graduated from college and have no interest in entering the business (one is an accountant, the other is an electrical engineer). Tracy, who is in her early 30’s is one of the most talented employees I have ever had. She outsells everyone in the store, including me, all of the other employees love working with her, and customers call to find out when she will be in.

Tracy is also one of the most honest and trustworthy people I know. So, what could be wrong? She really doesn’t want to work, and I don’t know what I have to do to motivate her. Most people are probably thinking by now that she doesn’t need the money. WRONG! She is a single mom with more debt than you can imagine. In her defense, her husband ran up a bunch of credit cards and took off. She has made payment arrangements with most of the credit card companies but she needs to honor her commitments. She has one 12 year old son.

Having said all of that, maybe you can start to share my frustration when I tell you she calls in sick or has an excuse why she cannot come in more than any other employee I have ever had. I can’t depend on her. We tell customers that she is scheduled to work on a specific day. They come in with pieces to have redesigned and/or buy something new, and Tracy is not there. I am particularly frustrated today because one poor couple have now come in three different times and left because she wasn’t there to take care of them. They will not return. I am guessing now, but it was probably a $5,000 lost sale.

Now to make matters worse. When I confronted Tracy, she felt terrible about her actions, and promised that she will make it up to me. And she did. They day I confronted her with this she felt so bad she made four $3,000 sales; one $12,000 sale, and helped two other people to have sales over $2,500 each.

The irony is the fact that the store wasn’t even busy that day. It’s as if she has the ability to just manufacture sales. She also refused to take her normal commission on $5,000 of those sales because of the sale that was lost.

The next day after she had $24,000 in sales, she felt so bad and apologized that it would never happen again. But she didn’t show up for work until 1:00 when she was scheduled to open at 10:00. At least she did call me to open and said she was running a little late. I have offered her more money, bigger bonuses, a flexible schedule, health insurance, and have even looked into help with her child. Rick, I just don’t know what to do. I really would love to sell her the business, and although I have mentioned it a few times, she has never responded to my suggestions. She is a combination of a daughter, sister, friend, colleague and business partner. I could never dream of firing her because I couldn’t do it.

I know she has a very active social life, but we don’t talk about it while sometimes I think I should. It is not as if she has even setting a bad example to the other employees because she openly admits she is wrong. Rick, what should I do? I am at my wit’s end. PLEASE HELP!

Sincerely,
Eunice K.

Eunice, I feel your frustration. I had a similar situation happen to me many years ago. Unfortunately, this employee left the store, but I always wondered what might have been.

Now here’s the challenge.

Write in at rick@ricksegel.com or coment below and share your opinion with any possible suggestions to make Eunice’s life less stressful and to help Tracy reach her full potential. I will leave you with just one idea, and I will be working on ideas all week long. And that would be to sit down with Tracy and draw up an agreement of do’s and don’ts or some type of contract between the two of them. I look forward to your responses and let’s see if we can help Eunice out.

Have a great week.

Discuss & Dismiss

A way to move on and move forward

Many years ago when my kids were young, we went on the classic American learning vacation. We drove to Washington, DC and visited the national monuments, the great museums, and for the highlight of the trip, watched congress in session. As we sat in the balcony of the House of Representatives the congressmen were involved in a major debate and the argument got rather heated.

My daughter,  ten years old at the time and by far the most sensitive of my kids, walked over to me as the reps argued. She was crying and very upset with what was going on. As the tears were rolling down her cheek said, "Daddy, why are they fighting ? Don't they know we are all Americans?"

Without thinking, I uttered these words. To this day I don't know where they came from. "It's OK to argue -- that's how things get accomplished."

Well, that explanation satisfied her needs at the time although it did trigger more discussion later. The bottom line is the simple fact that discussing, disagreeing, and even arguing are good. It's healthy, it's normal, and it's one of the most misunderstood and under appreciated tools and resources we have in communication today.

YES A TOOL! It's time we recognize it and start harnessing the power disagreements hold for all of us, especially in employer/employee relationships.

There is a point where we could run into a problem and that is we get so passionate about our position then our competitive spirit kicks in and we are now on a mission to WIN. Win at any cost and cost you it will.

Sometimes we forget what we are even arguing about.  That's we start throwing up all of the "stuff" that has bothered us for the last 5 years.  We have all been there and we all have regrets because of it.

The way we handle disagreements has a tremendous price. It costs relationships with families, friends, and it costs business people the potential of great employees or at the least hard working employees with good attitudes.

So what are we doing about one of the most natural elements in communication and leadership? NOTHING absolutely NOTHING! When was the last time you discussed a procedure to follow when disagreements or arguments occur?

I recently had an experience that brought this issue into focus. Actually it turned out to be one of the most unusual situations I have experienced as a speaker. After my program, two people (I later learned that one person was the store owner and the other was his general manager) started arguing about something I said. Or I should say the interpretation of a point I made. What ever it was triggered or uncovered a deeper problem.  So as attendees were walking out of the session these two people started arguing. They weren't loud at first but their voices got louder the more they got into their points of view and as more people left the room.

I wanted to intervene but before I was able to get there this woman who obviously had a lifetime of experience settled the two combatants down with some old fashion logic and a sweet but forceful style.

There were about 10 or so people around me asking questions when this happened. But as the argument intensified the questions stopped and we were all just focused on the side show that was unfolding. 

This amazing woman was captivating. It was like watching her putting her head into a lion's mouth. She started by simply saying calm down and putting her finger to her lips the way a librarian would.  Then she complimented them both for being so passionate about their positions. She said "That's good -- you are not afraid to express your positions. That's healthy and the first step to a strong relationship." 

Then she said, "I don't mean to butt in BUT I learned a tool along time ago that I think you two could use."  They were close enough in an almost empty room so it wasn't out of place  when I asked, "Do you mind if we all listen?" She said " Of course not!" Then she gave me a compliment about my presentation and said that I can take this and share it.  "To think you could make me famous."

She said to all of us that the problem with arguing is that we think we shouldn't argue.  Of course we should but if the argument is going to serve any purpose, we must learn the concept of Discuss and Dismiss.

 Just  follow these simple rules:

1. Accept that lingering disagreements are a cancer to any relationship (just buying into that simple concept is half the battle)
2. Both accept to agree to disagree and choose to resolve the issue
3. Agree to only focus only on the issues pertaining to  the disagreement
4. Then each side gets 7 uninterrupted minutes to present their point of view (knowing you only have 7 minutes really makes you focus)
5. Then each side suggests areas to compromise/ solutions for 3 to 5 minutes
6. Agree to a solution or Agree to Disagree
7. Dismiss and move on

Although the rules seem formal the strength is in its name. Discuss and Dismiss because it gives a vision of a solution.  It accepts that people will disagree and we can overcome it.  It's really important to focus on the moving on part.  When we become stuck in old arguments, never making any progress or resolution, this becomes a fresh source of tension and stress.

It's especially important for us, as managers, to develop the ability to move on.  While it would be wonderful to have employees who agree with every word we say and think we're brilliant at every turn, the truth is we become better when we're challenged, when we're presented with opposing points of view or information we hadn't considered.  It is the height of arrogance to think we're always right - but if we don't create an environment where it is safe to disagree,  our employees will not challenge us.  It's too risky for them. Recognizing that and implementing Discuss and Dismiss may be the most terrifying managerial move you ever make --  no one likes being disagreed with, after all - but it also offers some of the greatest rewards.

I never did get the name of that wise woman who went on to defuse a rather hot situation. So if you are reading this, thank you.   You do truly deserve to be famous for your wisdom!

You are a Better Manager Than you Realize

I don't know about you but many times as an independent retailer I would get impressed and even intimidated by people from big companies or college professors. Just because someone works at Nordstrom's doesn't mean they are any better than the independent merchant. Actually, I would take the good independent over a Fortune 500 company employee. Independents can do many more things than a cog in the wheel at a big company. Yet we are still in awe.

Then we have the distinguished academics that are quick to tell us all of the things that we are doing wrong. The only issue is most, or I will be polite and use the word "many" of them, couldn't run a store in real life if they had to. In theory, they are experts but they are lacking real life experience. The things that always gets my blood boiling is when they are pompous or arrogant about their opinions and ignore or belittle opinions from people that they determine are not as important as themselves.

My father taught me a few very valuable lessons about business and life.

1. You can learn from a fool.  Some of the best ideas are the simplest ideas.  Sometimes a fresh set of eyes that look at things from the customer's point of view is the best advice we can ever get.
2. Let the other person feel important. When we can make someone else feel good about themselves, we will eventually be the big winner.

I bring this up because an old friend (one of 45 years...that's an old friend!) of ours who worked for a very distinguished university with a very prestigious business school made some of the dumbest management /moves I have ever seen a company or learning institution ever make. I am sharing this story because there are so many great learning points and if this doesn't boost your self esteem and your level of confidence nothing will. It's just too bad it is all at the expense of a pompous academic administrator.

Our friend, Marlene, worked at this university for 30 years as a part-time employee. As a part-time employee she was NOT entitled to any paid sick days, paid holiday or any pay for vacation time . If she had been a full time employee she would have been entitled to almost  8 weeks of paid time but due to health issues she could never take advantage of that option.

The other bit of background information that is important to know is that Marlene had a record of every outstanding evaluation. Over 30 years she had compiled reviews that were nothing short of spectacular.

Nine months ago the university offered a voluntary termination offer. The university's attendance was dropping along with falling donations falling due to economic conditions. This university is a private college with very expensive charges for tuition, room and board plus all the extras. The termination deal was 5 months of pay and health insurance for 1 full year. Although our friend is 64 she really had NO intention of retiring because she really likes working her 30 hours, plus the extra income comes in handy. So she had NO intention of ever taking the package until she heard the rumors flying about that if people didn't take the package there would be lay offs with NO packages.

Now after 30 years of distinguished service she really wasn't worried but the talk got stronger. So she set up an appointment with the VP of the university to let him know her intention to stay and ask if she really had anything to worry about. He said he couldn't say anything or advise her in any way.

Are you kidding me?  He couldn't say anything? What kind of strategy was that?  She then went to the director of HR and he asked if she could afford the health insurance if she had to get laid off? Huh?

Marlene was known for her laughter and enthusiasm. They were contagious and her spirit was legendary. You see Marlene was the type of person that people wanted to work with and wanted to be with. Plus the savings were substantial to the university and would have been financially prudent. They should have embraced the part time employee model.

Well she couldn't take a chance and was forced to terminate her employment after 30 years. The separation was only about 4 to 5 years prematurely. So at 64, she is out looking for a job. Do you think this is a morale booster for all of the other employees? How can you trust management when they can't keep one of the most popular, positive-attitude, hard working and economical employee the university employs? Why would anyone want to work there or do any extra? Instead of being treated as a valuable asset, she was treated as an expendable warm body.

The other issue that is a sign of poor management is the fact the new Vice President (he is in his third year at the college) never took the time to ever ask the front line employees their opinion about anything.  That is also a sign of poor leadership skills.  As the great World War II General, George S Patton, used to say, "I don't want to talk to Generals. I want to talk to the men on the front lines because they know what is going on."  But that was never done.

Well, last Friday was Marlene's last day and the outpouring of emotions made the day so bittersweet. There were two big parties for her one at work and one at night at a restaurant. Then the amount of emails, cards, and gifts were nothing short of amazing. Of course the VP was there and hugged her in front of everyone. He performed his best Shakespearian dramatic abilities as he uttered some hollow comments that everyone saw through, because he had the power to stop this but didn't.

The strength of any organization rests with the leadership on top. Great leaders succeed against all odds. Great leaders set the standards high and inspire their people to live up to those standards. Great leaders nurture and develop their people. They don't force good people to leave. Apparently, he didn't approve of part-time employees or was just intimidated with Marlene's experience and first hand observations of past leader's success and failures.

This Vice-President is destined to failure. Great leaders work hard to keep great workers, not destroy them. Using the reference to the song American Pie with the line The Day The Music Died. This VP created a mood and attitude that last Friday became the day that:

The Day That Asset Management Died-Sure didn't protect the human assets

The Day That Good Management Principles Died-Sure was not the way to win The Malcolm Baldridge Award for Management

The Day That Human Decency Died-Even if she was a terrible worker, forcing a 64 year old single Mom out is bad PR and can take years to correct.

The Day That The Spirit Died-Never force the positive winners away. Not the spirited ones. That can help create an attitude.

The sad part about this entire situation is that we would probably still be intimidated by his title, office, and smooth demeanor of the VP, but the world knows that great managers keep great people and valuable assets. So I hope that for the sake of that university they realize there is a problem that needs to be addressed before morale reaches new lows. But this VP probably has no idea because he only talks to Generals.

Have a great week.

It’s time for our annual retail survey!

These are questions that readers have been asking. Your answers are all tabulated electronically and will be available for reviewing next week. I will comment on the results. If you have any comments about any of these questions just leave a message in the section for comment.

The results are to benefit YOU, so the greater the participation the better the sample. We will be posting the percentages only for easier comparisons.

Click here to take our survey »

Follow-up to Star Performer or Troubled Employee

After five years of writing this column plus all the other articles and books I've had published, I have never been so intrigued by the quality, insightfulness, and divergent points of view that my article about a star manager or problem employee brought out. That doesn't even mention the sheer quantity of the responses that the article triggered! I invite anyone who hasn't read last week's column to go to my blog and read it there. It will help you understand this piece. I also want to thank everyone who participated.

Let me give a quick summation of what the article was about. It was about a husband and wife retail ownership team (that sounded better than a mom-and-pop store) that bought another business and made a star employee the manager of the existing store so they could spend time building the business of the newly acquired one. The manager did a spectacular job in every aspect of the retail business. The only flaw in her behavior was that every time the storeowners tried to compliment her with bonuses, perks, or even asking her opinion, she never thanked them or acknowledged their efforts. Again go to the blog for more detail.

One thing that some people picked up on was that I wrote this story as a reporter--I gave no opinions. Trust me, it wasn't easy for me but I wanted to get your opinions before I shared mine. I did not want to corrupt any of your thinking with my point of view. (Many of the comments are posted on the blog but that majority of comments were sent in the form of e-mails specifically to me.)

There seemed to be two ways of looking at this situation. Many of you wrote that you had similar situations of having employees who did not appreciate the things you did for them. Many of you also mentioned the fact that you are looking forward to my response for ideas on how to get your employees to appreciate what you do.

The other and very outspoken interpretation of this is that the storeowners were degrading the employee by pitying her because she was a single mom and they were the wealthy storeowners. What they were really doing was giving charity and wanted the recipient to jump hoops in appreciation.

There are a few clichés that seem to work well here. The first one is "the road to hell is paved with good intentions". Bob and Sue, storeowners, are really wonderful people who just can't do enough for the superstar employee. As difficult as it may be, it's time to take the emotion out of this relationship. They're running a business not running a family party. They should create a formula with a performance bonus clearly stated and understood by all parties and live with it.  
I must agree that putting five $100 bills in a pay envelope is looking for trouble. As someone said there is too much that could be misinterpreted by inserting cash. No, it is not illegal to give cash bonuses, however they must have a paper trail but that's not the reason. Someone pointed out that Amy might wonder if it was from the husband and if the wife was aware of it and what does it mean? Or what's the catch? Is he hitting on her (which by the way is about as far from the truth as you can get but you never know) and is this a little extra and he might want a little extra in return?

However there are some very definite incongruities in this story pertaining to Amy's behavior. Obviously she's a strong salesperson and/or she can motivate her people to sell. Then why is she failing so miserably with some of the very basics of people/selling skills, having an attitude of appreciation?

As one comment said, "Check inventory and cash receipts closely because I'm suspicious of this one. If it's too good to be true it probably isn't."

There was also an issue of pride and charity. Amy is a very proud person and, as it turns out, resents being treated as a charity case. I am able to make that statement because of the follow-up phone call I made to the owners this week. My recommendation was to sit down with Amy and share their feelings. It was interesting that someone wrote in and used the words that Sue finally admitted to. They were being childish. Someone said, "I was raised to say please and thank you and if any member of my family doesn't employ those words I promptly bring it to their attention. But this is a professional situation and although it's nice for the thank you's, they're not required."

There are a couple old another issues that need to be mentioned. Some people don't take compliments well. Trust me, I know. I am the worst at accepting a compliment. I even get embarrassed with standing ovations, which is not a good thing if you're a professional speaker. I have actually been coached on how to accept compliments. I think the problem exists more with retailers than perhaps other industries. It seems as if we have a constant flow of people, be it customers or employees, who are constantly reminding us that we are doing something wrong. In short, as a retailer, we're not allowed to have an ego.

That perhaps answers the incongruity: Amy was a good manager and her people loved her but didn't respond to acts of kindness because she didn't think she was worthy enough, perhaps due to her family situation. I have no idea about the difficulties and social challenges a single mother must go through. But I am sure they look at life different than I do.

The other side issue is why Amy didn't comment on the article. The reason is simple but sad. Amy isn't a reader and hates to sit down to read anything too long. So she skims a lot of stuff but is never quite confident about what she reads.

There is one overriding issue that needs to be reviewed. Just as so many retailers focus only on price, why do these storeowners focus solely on compensation? It's not the number one motivator for keeping employees and having them work for you for less money. That motivator is convenience. The closer that someone lives to work, the more they want to stay regardless of other considerations. Then you couple that with a passion for the product. Amy loves to ride horses and loves the industry but also loves her kids and needs to be close to home for them as well.  You now have two of the three major components for employee retention. Ironically, the third component is being appreciated at work. The only problem here is that you had owners who perhaps tried to hard and mixed personal feelings, emotions, and employee compensation together when they should be clearly separated.

The tool that I have written about in the past that worked effectively in this type of situation is a concept called "involvement from conception". This simply means to ask your employees for a solution and you'll be shocked at how creative and insightful they can be. That was the case here.

My suggestion was to go to Amy the same way they came to me, simply share their feelings, and ask her for a solution or remedy. It worked and now I have to return 3 phone calls thanking me for my advice.  Maybe if they read this article, I won't have to return the calls.

Have a great week.

Star performer or troubled employee?

Last week I spoke at the equestrian show outside of Philadelphia. The attendees sell both English and Western equipment for the professional and recreational horseback rider, often referred to as tack stores. This is a group of very sophisticated retailers and I always enjoyed returning to this industry.

My seminars were both breakfast meetings from 7:30 AM to 9 AM. Because of that schedule, I had plenty of time after my presentations to hang around to answer questions and just talk to retailers. I had one very interesting husband and wife team who had been long time subscribers to my newsletter. This probably made them feel comfortable enough to share an interesting dilemma. They did ask to remain anonymous but thought the situation would be the type that my readers might like to respond to. They were also curious about your reaction and wondered if anyone else had ever experienced what they were going through. Here it is:

They've had an employee, whom I will refer to as Amy, who has worked for them for 15 years. They described her as "perfect in almost every way". Three years ago, they had an opportunity to buy a second store, an existing business that was once a leader in the field. It was now was a declining business only because the owner who was dying of cancer. That owner made them an unbelievable deal that they just couldn't pass up. However they realized the business needed some tender loving care and nurturing.

Amy was a single mom and was always looking for any opportunity to work extra on new projects at home because she needed the money. The owners felt that Amy was more than capable of managing this store and would appreciate the extra income it would bring. Amy was delighted with the challenge and of course the money and proceeded to do nothing short of a sensational job. The store looked better than when the owners were running it. The employees' morale was higher than ever before yet the payroll costs were down a couple of percent. The remarkable thing about it was that store's sales for the 2+ years that Amy was the manager averaged over an 18% increase.

If you think that I'm going to tell you that Amy was caught stealing, you're wrong. On the contrary, shrinkage actually improved. They jokingly said the only problem was Amy was actually a better manager than they were. Amy made them a lot of money and they couldn't do enough for her.

So what could be wrong with this situation? You are probably thinking that Amy was planning to open up her own business and compete with them. Wrong! That is the last thing she would ever want to do. She loved the arrangement. So what could be wrong? The owners, which I will refer to as Bob and Sue, would constantly try to show their appreciation for what Amy had done by buying her and her children gifts. They even put an extra $50 or $100 bill in her paycheck at least once a month.

Amy's husband had left her without much money and never gave any money to support the children. Yes, the courts look at him as a deadbeat dad, but he was nowhere to be found and had no contact with the children for years. It was as if he died without life insurance. So you would think that Amy would really appreciate all the little things Bob and Sue would do for her. And she did appreciate it but she never or rarely ever demonstrated that appreciation. In short, she hardly ever said thank you and never wrote any kind of thank you note. It was as if she just expected it or didn't care about the effort Bob and Sue would make. As they described it, it was weird.

Then to make matters worse, Bob and Sue wanted Amy to be aware of everything that was going on in the store and shared all of the plans they had. But Amy was always nice and polite about it. She never had much to contribute other than the cursory, "nice job" or "that's good".

I know this sounds strange but it all came to a head in January. In December, Amy's store did exceptionally well-- not only saleswise but it was profitable as well. On top of a regular Christmas bonus, in late January, Bob and Sue gave Amy an envelope that had five $100 bills in it with a note that said GREAT JOB! Sue NEVER said a word about it. But she continued to work as if nothing ever happened.

Then they asked Amy her opinion on an article Sue had written in the newsletter. She never responded at all. The story was about Amy and her family and how she was a remarkable woman and what she meant to the business. After a week, they asked her what she thought of the article and she told them that she thought it was very nice. But no thank you.

These storeowners are sadly and deeply hurt but just don't know what to say or do. They don't want to lose a great employee but they just want a little recognition.

Any suggestions? Please let us know. Just click here to send an email with your ideas to me. I will share my opinion next week as well.  Thanks and I look forward to hearing from you!

TAKING the Scare Out of the Business Plan

I don't know about you, but I hate planning. However, the older and wiser that I get, the more I appreciate the good business plan and the execution of that plan. I suppose you could call the appreciation of the business plan an acquired taste. Considering that this is the first article of the year, I think it's appropriate that we talk about business plans. (Actually it will reinforce the webinar I will be doing on Wednesday night about business plans. Plus I write about what is on my mind and that's all I've been thinking about for the past week!)

So the first question is what is a business plan? I like to look at a business plan as your story about your business. Have you ever gotten a stock tip? They tell you the name of the company and the reason why you should buy the stock. They also tell you that the company does this or that, they don't have a lot of competition, they are innovative, and of course the price is always right. That's what a business plan really is and does. The difference is that the business plan goes more in depth into the story. One word of caution. My business plans have a very definite marketing focus. There are plenty of business plans with a financial focus or a production focus.

What the business plan is supposed to do is answer the following questions:

1. Who are you?
2. What do you sell?
3. What's your method of selling it?
4. What makes you different?
5. Who is your customer?
6. How we are going to attract a customer to buy from you?
7. How much will this cost?

Before I answer all of these questions, understand that many people create business plans because it's a requirement by a bank or lending institution. The sad part about it is after they do the business plan, they place it on the shelf and never look at it again. Your business plan should be your Bible or map that your business is going to follow. My advice is create a business plan and then review it, at a minimum, monthly. Let's get started.

Structurally, most business plans will begin with an executive summary which is merely the seven questions I listed above, each answered in a brief sentence and a closing paragraph that sums it all up. That's followed by repeating the same questions and including more detail.

1. The first question is Who are you? In the executive summary you might answer it by saying, "We are a husband and wife team with 15 years experience with corporations and have a desire to run our own (gift) business.

On the more detailed business plan you would describe the actual management experience by company name and responsibility. The size of the company and the sales volume will also be important. This is also the spot that you add your vision, mission statement, and/or positioning statement. The vision statement tells us where you see the potential of the company. The mission statement states who you are and what values are important to you. The positioning statement, or as I sometimes refer to it as the signature line, just narrows the vision and mission statement into a workable slogan to live by.

You can see how the longer business plan basically says the same thing as the executive summary. It just has more detail. Or at least it should say the same thing. I have seen business plans with these wonderful executive summaries written but then when you get into the detailed plan, the business goes off in another direction. Why? The debate goes on-- do you write executive summary first or write the detailed business plan first? My feelings are the detailed report comes first and executive summary later. It tends to avoid mistakes.

Here is the interesting part about the first question, Who are you? In the executive summary, it's easy or it least it should be easy to write and is always short. But in the business plan, the Who are you question is the largest part of the business plan. This is because it also goes into detail about your beliefs--towards employees, service, customers, merchandise, price, and anything else that is important to you. Most business plans also include the SWOT questions in this section: Strengths, Weaknesses, Opportunities.

2. What Do Sell? Is the much easier question to answer. It covers usage, quality level, category, price levels, and looks. Again these are short questions that generate much longer answers.

3. What is your Method of Selling Your Products? Are you going to be selling it at retail, online, what is the business going to look like, what is your business model and who are you emulating? That's a nice way of saying who do you look up to or who are you copying? Instead of copying I like to say what practices are we adopting or adapting.

4. What Makes You Different? What is your special sauce? Why are you different than the rest of your competition? Don't ever just say price. Why would you want to make your customers loyal to price? If someone were five cents cheaper, then the customer will go there. So I automatically throw away business plans that proceed to say that they are the cheapest in the state unless they have other differentiators that make them stand out in a crowded market place.

I want to know what benefit the customer will have in doing business with you. I want to know what ability you have that you are the most proud of? I also want to know why your best customers keep coming back and why new customers are attracted to the business. Answer these two questions in this section:

We enhance customer's lives by _______________________________.

If a newspaper would write a story about you and your business what would it be about?

5. Who is your customer? Know as much about your prospective customer and existing customers as possible. I want to know the demographic information such as age, sex, marital status, income level, homeownership, education and children. I also want to know the lifestyle information, a.k.a. psychographics.

That's a fancy way of saying what type of social activity are they into--such as gardening, home décor, reading, golf, travel, etc. This information is much easier to get than you realize. Just ask your customer what activities they are into and find the corresponding magazine that caters to that audience. Then contact a list broker and purchase contact information for prospective customers in your target area.

6. How we are going to attract a customer to buy from you? Another way of asking this question might be how are you going to market and advertise to your existing and prospective customer? Today there are so many different options from the traditional radio, television, and direct mail. These include billboards, websites, and all of the new social media options available today. Many times the true business differentiator rests in the way the business markets and advertises itself. It is not the best product or the best price that wins, if nobody knows who they are or what they're selling.

In this section it's advisable to list all of the possible advertising options, your choices on each one, and the choices that you have decided to use. I believe it's important to include a Calendar of Events in this section because you want to show as many events as possible. Events are important because you are giving the customer a reason to come into the store. These events do not have to be sale events. They can be classes, workshops, book signings, or any type of activity that brings people for the front door.

It is important that you address how you are going to market to your current customers and what strategies you can to adopt to attract new customers to your store.

7. How much will this cost? Here's the part that's not as much fun-- trying to figure out how much all these initiatives will cost and then putting them into a projected budget format. This is a good spot to employ my 40/55/5 Rule: The Profitability Formula. What that means is that in the average retail business, 40% of every dollar of sales will go to expenses. That is anything except the cost of the merchandise and the principal amount of a loan. It does include the interest charges on a loan and your salary. Then 55% of sales will go toward merchandise. The 5% left over is considered a positive cash flow. Any principal payments you have on loans will come out of the 5%.

Different industries will vary percentagewise, but every industry has a formula for profitability. In the jewelry business the expense percentage jumps up to 43%, but the cost of merchandise drops down to 52%. This is because in most jewelry stores payrolls are higher but the margins are better.

I explained all that because I have seen business plans that are brilliant from the first to the sixth question and then they blow it by having totally unrealistic costs and projections. I recently had a store owner tell me that 90% of every dollar that came into that store went to merchandise. Then she proceeded to tell me that she is very profitable. That is possible but highly unlikely. If I were asked by a bank to render an opinion on whether this business should or should not received a loan, I would have to deny the loan. The bottom line is to make sure your numbers make sense.

Finally end your business plan with a closing statement about how you plan on utilizing this business plan and updating it in a timely manner. It's even advisable to list the dates the plan will be reviewed and updated. Business conditions change quickly these days and business plans cannot be cut in stone. Remember it is a guideline and a map and even the best of maps can't take into account the detours life brings us.

I know that I have given you a lot of information in this article and I will be going over it in more detail in this week's Wednesday night event for The Retailer's Advantage. This program is also available for purchase as a single event for my readers who are not members at the following link:

Have a great week and remember planning does pay off.

Are You Pleasing Everyone?

I had another article that I had been working on all week and I just got an email from someone who changed all of that. This person complained about one of my interviews on The Retailer’s Advantage. This person was very respectful and complimented me on my work but thought that this one interview I did recently just didn’t meet my normal standard. It’s a valid point and he brings up a few lessons we can all learn from. Let me explain.

After I read the comments I smiled and I had flashbacks from being in my store. Why? Because I would work so hard at buying the merchandise for my store and there were times when my customers just didn’t like my choices. I looked at buying as an art form as well as a science. I would shop other stores, I networked with other retailers for ideas, I belonged to prestige buying offices, I EVEN SHOPPED DIFFERENT MARKETS. I would go to Atlanta, Dallas, California, and of course, New York. Then I would be so selective with each vendor and if merchandise ever came in that was different than what I had purchased, I would be on the phone so fast to send it back.

The next step if the merchandise was right was to prepare it for the selling floor, find just the right spot on the selling floor, and then finally display and sign it properly. After all of that, it never failed--a customer would come in and look at this piece of merchandise and say something like, “What were you thinking when you bought that?” or “What has happened to this store? You used to carry such nice merchandise?”

It happens to every retailer, it happens to every business, and yes, it even happens to writers and interviewers.

The interesting part about this interview was that I personally liked it. Understand, I interview a lot of people and I feel I have a pulse on the market but you never know. Just like in buying merchandise; some are going to be winners and some aren’t. I go through the same steps as buying merchandise. I contact someone who comes with either a strong recommendation or someone I respect personally and the interview comes out less than I had expected.

Do you kill it or let the program run? I have killed an interview and then I ran the risk of alienating the guest. But most of the time I feel it’s up to my audience or my customer base to make the decision. A few months ago we aired what I considered to be the worst guest I have ever interviewed. I almost lost it with some of the responses. Yet, the next day I had 5 responses from members telling me that it was the best and most inspirational interview I had ever done. Go figure.

What are the lessons to be learned from this?

1. You just never know exactly what the public is going to like.
2. One comment does NOT mean that everyone hates it
3. However, a negative comment should never be ignored and is a warning sign.
4. It’s good to get some negative comments because many times that can mean you are trying something different. Sometimes new items or change is initially rejected. That doesn’t mean it’s bad--you just might be early with a look or trend.
5. Always remember the people who take the time to write or tell you about a problem or bad piece of merchandise care. THANK THEM (I am sending two books to the person who wrote to me.)
6. Don’t let the negative talk get you down. It’s part of living and doing business. There are some people who like to complain just for the sake of complaining. Don’t worry, those people are easy to recognize because they complain about more than just one thing. After all they are complainers.
7. Lastly, remember my all time favorite quote that works in times like this. “Don’t worry about the mule going blind, just load the wagon.”

Again, thank you to the person who wrote to me. I will let you know what the rest of the comments on the interview are like. The books are on the way.

If You Want It Done, You Have To Do It Yourself!

It’s time to master your management skills!

When we are young and naïve (scratch the young part because I have seen as many older people with similar misconceptions about management!), we believed that we could just hire the right people, tell them what to do, and they would be do it. If they didn’t, we could just fire them and hire someone else who could do the job.

Now does that scenario work? Yes, it does, BUT it’s not that easy!

Great managers seem as if they are hardly working but weak managers are the ones who are putting in the long hours and never seem to get enough done. What do these great managers do?

We all have our own personal examples of great managers. Think about the best bosses you ever had. What did they do? What made them so good? Why are they so memorable? We remember great managers for a lifetime--but we remember the horrible managers as well!

It's amazing how you can remember a manager you had 25, 30, or even 40 years ago and the impact they had on your life. These people are described as tough but fair. You automatically respected them but also liked them. They got more out of you than you could get out of yourself. They knew how to motivate and inspire. Somehow, you never wanted to let these people down. What's the magic formula that they had?

If you want to have some fun with this topic, go up for dinner with 3 to 6 people and ask the question, “Who was the best boss you ever had and why?” When people start to describe the best boss they ever had, their mood seems to change. Sometimes they get euphoric or seem to be in a bit of a trance describing their favorite manager and the profound effect that one person had upon their lives.

Here is my list of things that constitute good management:

1. Good management starts with hiring the right people. The subtle difference that great managers possess is they take the time to determine exactly what the job is and what they expect from a new employee.
2. Great managers know the type of person who would succeed in the job. Every job requires certain unique talents and attitudes. Know them! Use an assessment service to help you identify them.
3. Hire Attitudes, Train the Skills! We can do so much more with people with good attitudes than with problem people.
4. Know what a good job is, a great job and a terrible job. Make sure your employees know it better than you do.
5. Schedule regular one-on-one meetings just to talk. It’s simple but it goes a long way.
6. Catch an employee doing something right and celebrate it.
7. Celebrate Mistakes. Mistakes happen, especially when we are first learning. When we recognize and accept that, the tension leaves everybody. This should be part of your expectations.
8. Never reprimand in public. Always do it behind closed doors. Embarrass the employee and you will create an employee with a bad attitude.
9. Fear Motivation causes more problems. You will make your employees afraid of change and they will start to cover up mistakes. Great managers NEVER employ it.
10. Send Birthday Cards and Anniversary Cards. It’s a little thing that just goes a long way. Sometimes it’s the only card they get.
11. Be up when your employees are down and be down when they are up. This means that sometimes our employees need a little encouragement to get them through tough times but they can’t get too arrogant or sure of themselves either. Great managers maintain that balance.
12. Give them space to perform but be there when they need you. That also means to check on their tasks as well. Great managers are always aware of what their employees are doing.
13. Share information with your staff: Make your employees feel like they belong; they are valuable member of a team.
14. Give lots of little things. It’s the little things that matter in life. Sometimes a fun lollipop can go a long way. Flowers for a holiday, a gift certificate to a restaurant, or any store for that matter, can make you memorable.
15. Have some FUN! Many of our employees don’t work for just the money; they work for the people contact, the camaraderie, and yes, the FUN. Never lose sight of that.

This is just my partial list. If have any other ideas you would like to share, send them along to me at rick@ricksegel.com and I will l publish them in an ebook, giving your idea full credit. If you don’t want your name used, just let me know.