By Ken Kaufman
April 24, 2010
Not too long ago I was asked to review the financial statements for a struggling company. This business had several years of fantastic performance, but the business was out of cash and needed desperately to correct its course. The financial statements depicted a strong, healthy company with plenty of liquidity to handle its obligations and demands. Yet the bank account was empty. Something was not right.
Upon further investigation, the financial statements were not correct. The issue went back for more than 18 months, meaning the company had operated for over a year with an incorrect understanding of its performance and direction. You can imagine the frustration and anger expressed when the owners of this company realized they could have avoided most, if not all, of their current issues if they had received accurate information that helped them identify their problems.
Here are 20 indicators that will let you know if you aren't getting accurate information.
1. Revenue Incorrectly Recognized
If your customer pays you up-front for a product in May, and then you deliver the product in June, you should recognize the revenue in June. Each industry has different criteria for revenue recognition, but it needs to be right so the financial statements are accurate.
2. Missing Matching Principle
If you pay $100 for an item in May and then sell it for $200 in June, you should recognize the $100 expense in June when you earn the revenue.
3. Gross Margin Variability
Any issues a business has with numbers one and two can cause the gross margin of the business to change more than a few percentage points each month. This should never be the case unless your business has undergone a significant change in its business model.
4. Period Cost Timing
Why did you pay $4,000 in rent in January and $0 in February (you didn't move, did you)? Most likely January and February rent payments were both entered in January. This is just one example of period cost timing issues.
5. Discounts Buried
If your business gives discounts, you should be able to see them on your Profit & Loss so that it can be measured. After all, it really is an investment into customers. Don't bury discounts against your revenue; illuminate them to track your return on this investment.
6. Bad Debt Neglected
Don't decrease your revenue when you write off your bad debt. You should expense it. It is a cost of doing business and it should not hurt all the work you are doing to correctly recognize revenue.
7. Divisional Profitability Hidden
Every time I have ever helped a company separate its divisional stand-alone performance, the business owner was shocked to learn which divisions were subsidizing the others. Do you have more than one department, division, or location? If so, you need to break it out.
8. Job Costing Forgotten
Looking at a profit and loss statement by itself will never give you all the information you need to know about your profitability. Use job-costing (or similar approaches for other industries) to find and improve your profit drivers.
9. Balance Sheet Reconciliations Dismissed
Every account should be reconciled every month, not just the bank accounts.
10. Accounts Receivable
Have an answer for why each and every invoice over 60 days past due has not been paid. If any of your answers are not truly legitimate, write it off and send it to collections.
11. Pre-Paid Item Indifference
You pay your general liability insurance every year in February. As a result, February is always one of your worst months because it bears the brunt of all twelve months worth of insurance. Book it as pre-paid and share the "love" through the entire year.
12. Physical Inventory Lost
It does not matter how good you are, how nice you are, or how smart you are. You still need to do a regular physical count of your inventory. If you have inventory, properly managing it will make all the difference to your cash flow.
13. Depreciation Debacle
Just because your tax CPA depreciated your capital expenditures last year does not mean that last year should carry the burden. Keep your depreciation on a straight-line or more appropriate basis and spread it out over a realistic lifetime of each of your assets.
14. Fixed Assets Expensed
There are differing opinions here, but pick a dollar amount, like $1,000, and capitalize anything that costs more than that and will have a life of more than 12 months in your business. Forcing one month or even one year to carry the weight of fixed asset purchases is not accurate — that is why we have depreciation!
15. Payroll Liabilities Overlooked
Reconcile this account to zero every month to make sure you stay on the good side of the IRS, your state, and any other agencies or companies to whom you owe money from payroll.
16. Long-Term and Short-Term Debt Confused
If you buy a new vehicle for your business and you finance it over four years, the portion due in the next 12 months needs to be a short-term liability and the remaining balance is a long-term debt.
17. Principal and Interest Jumbled
The principal and interest portion of each loan payment needs to be properly coded rather than applied to an expense account called "Loan Payment."
18. Retained Earnings Miscarried
The name of this balance sheet account is exactly what it means: The accumulation of all of the losses and profits that have not been distributed from the company. Appropriate journal entries need to be made at the end of every year to make this balance correct.
19. Owner Compensation Confused
Owners receive compensation in one of three ways. Make sure to code each one correctly.
20. Statement of Cash Flow Ignored
Most businesses don't have to worry about the accuracy of their statement of cash flows because they ignore it altogether!
Accurate financial statements are critical to building a successful business. Give heed to these indicators and you will be well on your way to accuracy.
Ken Kaufman, Founder & CEO of CFOwise®, serves as the Chief Financial Officer for a dozen start-up, emerging, and medium-sized businesses. With almost two decades of experience and as an adjunct professor and published author, Ken focuses his professional efforts on helping entrepreneurs maximize cash flow, improve profits, and obtain clarity.
Tuesday, April 27, 2010
Friday, April 16, 2010
How to Survive in an Unhappy Workplace
Lots of people are having to cope with bad working conditions right now. Here are some great tips from Pat Olsen about how to survive - and even thrive.
When you don't like your job, going to work every day can be a challenge. Your problem might be with a bad manager, that you constantly feel stretched to the breaking point, or that you are resentful about taking a pay cut. Or, the whole environment may just feel toxic. You might need to stay in your job because it provides health benefits, or maybe you're only staying while you look for another position. Whatever your reasons for being unhappy, you need to maintain your professionalism and prevent a bad attitude from sabotaging you.
What the Experts Say
Timothy Butler, Senior Fellow and Director of Career Development Programs at Harvard Business School and author of Getting Unstuck: How Dead Ends Become New Paths, believes there's something elemental about the statement 'I'm unhappy at work.'" Butler, whose research focuses on personality structure and work satisfaction, says that to understand your unhappiness, you need to turn towards that feeling of unhappiness, experience it in a deep way, and not try to solve things too quickly. He suggests observing the feelings and not expecting anything. You may just find yourself at a frontier, considering what you're going to do next. "The existential nature of unhappiness is a wake-up call," Butler says. "There's some part of the self that is not being heard, that wants your attention, and that's the issue."
Similarly, Joe Mosca, an associate professor in the Leon Hess Business School at Monmouth University, who specializes in human resources management and organizational behavior, agrees that looking within is the first step. "That may be hard for some people to hear," he suggests, because while it's true that sometimes people just don't match well with their jobs, employees tend to rationalize their job dissatisfaction rather than consider that they may be part of the problem. But if you are part of the problem, you may be part of the solution, too.
Tammy Erickson, a workplace expert and author of Plugged In:The Generation Y Guide to Thriving at Work, advises that if you're unhappy, see if you can upgrade your contribution to the company, or find a way to be more creative about your job. She once performed very dull work in a book bindery but avoided becoming negative about the job by finding a way to make it less boring. Erickson was "interested in the process" and tried completing the tasks in a different order, which made the work quicker, easier, and less monotonous. "No work is uninteresting if you can think how to do it differently," she says.
That's not to say unhappy workers don't have valid complaints. One thing you don't want to do, however, is let your feelings boil over at work.
Signs That You Need to Take Action
Perhaps you've heard of someone who was so unhappy he quit on the spot or blew up at a boss. Losing control at work helps no one and may have repercussions in both your current job and in the future — you never know when you'll work with one of your current colleagues again.
Indications that you need to address your emotions may be physical or behavioral, explains Catherine McCarthy, a clinical psychologist and COO of The Energy Project, an organizational consulting firm. The signs include feeling distracted, sluggish, angry or irritable, not sleeping well or sleeping excessively, relying on alcohol or food to comfort yourself, and withdrawing from friends and activities. All may indicate underlying depression or anxiety, which you shouldn't ignore.
If you feel you have nowhere to turn, are about to burst, or are depressed, one option is to seek out your company's Employee Assistance Program (EAP) if it has one, adds McCarthy. Some EAPs will help you find a counselor, and all are bound by healthcare and workplace laws to keep your request confidential.
There are also things you can try to change in your approach to your job. Consider these solutions for surviving and even thriving in a job that's less than optimal:
1. Face the reality head-on. China Gorman, chief global member engagement officer of the Society for Human Resource Management (SHRM) reminds workers that during a recession or slow recovery, people at all levels experience the pain. Such an economic climate makes it more difficult to leave a job, but it doesn't mean you should feel stuck. Erickson advises that you "Accept that this job is not where you want to be, even if you can't make a change today. But begin taking steps to change things." McCarthy seconds this advice.
"Practice radical acceptance," she says. "Tell yourself, 'This is where I am, this is where I'm going to be for a certain amount of time.' You have more control over how you think than you realize." Understand what you're feeling, and that if you show up to work irritated, it affects your performance.
2. Develop a plan. Be proactive. Brainstorm with trusted friends and family members about your ideas. If there's something you'd like to change, decide whether your boss is approachable and if so, the best tactics to use. If you have suggestions, discuss how they will improve your performance as well as others'. The Human Resources department may also be able to help in some way, suggests Gorman, from helping you find a job within the company you're better suited for, to assisting with work/life balance.
You could also try learning a new skill. At the very least, it may help you prepare for another job. It can also lift your spirits and lead to new possibilities at your current job. If your problem is with your boss, Gorman offers advice from personal experience. She once had a boss who was smart and a strategic thinker, but terribly lacking in people skills. Gorman decided to be the boss she wished she'd had. "I made a list of what not to say, for example, and developed skills I still use today," she says.
Finally, consider looking outside your job for fulfillment. Having an outside interest or two gives you another outlet and an activity to look forward to.
3. Find (or Accentuate) the positive. Make a list of the good points about your job, advises McCarthy. Gorman calls this a benefit log. You may be thankful to have healthcare and other benefits. You may like your coworkers, or the fact that you have a short commute. Maybe there's a great gym on-site, or you enjoy the opportunity for travel or the mentoring you do. Listing what you do like about your job will help shift your perception and keep you from feeling so trapped. If you don't take responsibility, "it will hurt your performance, erode your satisfaction further, and make your time at the job worse," she says.
Principles to Remember
Do:
Elizabeth Roman (not her real name) had been head of marketing at a professional services firm in New York for four years when she fell out of favor with her boss. He had always given her good performance reviews, so she was stunned the day he let her know that he had little respect for her work. After that conversation, Roman "hated going to work every day." She resolved to find a new job, but in the meantime, she wanted to find some ways to make her job bearable. "First, I pushed myself to perform at the highest level possible after that conversation so he'd have no further ammunition against me," she said. Along with that, she came up with a creative project for attracting clients, suggested it to her boss, and threw herself into organizing it with her staff. Roman also contacted a mentor at another firm who served as a sounding board and lifted her spirits. She never betrayed her boss and never let her feelings affect her relationship with her employees. When she finally found another position and resigned, she mustered the grace to thank her boss for all he had taught her.
Case Study #2: Finding Satisfaction Outside of Work
Allen Smith (not his real name) is a technologist at consulting giant Bain who became frustrated with what he saw as a lack of a career path. "I also felt like my manager didn't understand what I needed day to day to do my job," he says. But he liked the people he worked with, so he did some soul-searching, asking himself whether he was unhappy because of someone else or because of his own attitude. He decided it was the latter. Smith had been toying with the idea of starting a business, and he thought if he could do it on the side, it would affect his outlook. He was right. He was given permission to work three days a week, which allowed him to start the part-time property management business he envisioned. "With a reduced work week, regular chats with my manager, and a focus outside of work, I've become much happier about my time here," he says. In turn, working fewer hours helped reduce his department's budget.
by Pat Olsen - HBR Blog
When you don't like your job, going to work every day can be a challenge. Your problem might be with a bad manager, that you constantly feel stretched to the breaking point, or that you are resentful about taking a pay cut. Or, the whole environment may just feel toxic. You might need to stay in your job because it provides health benefits, or maybe you're only staying while you look for another position. Whatever your reasons for being unhappy, you need to maintain your professionalism and prevent a bad attitude from sabotaging you.
What the Experts Say
Timothy Butler, Senior Fellow and Director of Career Development Programs at Harvard Business School and author of Getting Unstuck: How Dead Ends Become New Paths, believes there's something elemental about the statement 'I'm unhappy at work.'" Butler, whose research focuses on personality structure and work satisfaction, says that to understand your unhappiness, you need to turn towards that feeling of unhappiness, experience it in a deep way, and not try to solve things too quickly. He suggests observing the feelings and not expecting anything. You may just find yourself at a frontier, considering what you're going to do next. "The existential nature of unhappiness is a wake-up call," Butler says. "There's some part of the self that is not being heard, that wants your attention, and that's the issue."
Similarly, Joe Mosca, an associate professor in the Leon Hess Business School at Monmouth University, who specializes in human resources management and organizational behavior, agrees that looking within is the first step. "That may be hard for some people to hear," he suggests, because while it's true that sometimes people just don't match well with their jobs, employees tend to rationalize their job dissatisfaction rather than consider that they may be part of the problem. But if you are part of the problem, you may be part of the solution, too.
Tammy Erickson, a workplace expert and author of Plugged In:The Generation Y Guide to Thriving at Work, advises that if you're unhappy, see if you can upgrade your contribution to the company, or find a way to be more creative about your job. She once performed very dull work in a book bindery but avoided becoming negative about the job by finding a way to make it less boring. Erickson was "interested in the process" and tried completing the tasks in a different order, which made the work quicker, easier, and less monotonous. "No work is uninteresting if you can think how to do it differently," she says.
That's not to say unhappy workers don't have valid complaints. One thing you don't want to do, however, is let your feelings boil over at work.
Signs That You Need to Take Action
Perhaps you've heard of someone who was so unhappy he quit on the spot or blew up at a boss. Losing control at work helps no one and may have repercussions in both your current job and in the future — you never know when you'll work with one of your current colleagues again.
Indications that you need to address your emotions may be physical or behavioral, explains Catherine McCarthy, a clinical psychologist and COO of The Energy Project, an organizational consulting firm. The signs include feeling distracted, sluggish, angry or irritable, not sleeping well or sleeping excessively, relying on alcohol or food to comfort yourself, and withdrawing from friends and activities. All may indicate underlying depression or anxiety, which you shouldn't ignore.
If you feel you have nowhere to turn, are about to burst, or are depressed, one option is to seek out your company's Employee Assistance Program (EAP) if it has one, adds McCarthy. Some EAPs will help you find a counselor, and all are bound by healthcare and workplace laws to keep your request confidential.
There are also things you can try to change in your approach to your job. Consider these solutions for surviving and even thriving in a job that's less than optimal:
1. Face the reality head-on. China Gorman, chief global member engagement officer of the Society for Human Resource Management (SHRM) reminds workers that during a recession or slow recovery, people at all levels experience the pain. Such an economic climate makes it more difficult to leave a job, but it doesn't mean you should feel stuck. Erickson advises that you "Accept that this job is not where you want to be, even if you can't make a change today. But begin taking steps to change things." McCarthy seconds this advice.
"Practice radical acceptance," she says. "Tell yourself, 'This is where I am, this is where I'm going to be for a certain amount of time.' You have more control over how you think than you realize." Understand what you're feeling, and that if you show up to work irritated, it affects your performance.
2. Develop a plan. Be proactive. Brainstorm with trusted friends and family members about your ideas. If there's something you'd like to change, decide whether your boss is approachable and if so, the best tactics to use. If you have suggestions, discuss how they will improve your performance as well as others'. The Human Resources department may also be able to help in some way, suggests Gorman, from helping you find a job within the company you're better suited for, to assisting with work/life balance.
You could also try learning a new skill. At the very least, it may help you prepare for another job. It can also lift your spirits and lead to new possibilities at your current job. If your problem is with your boss, Gorman offers advice from personal experience. She once had a boss who was smart and a strategic thinker, but terribly lacking in people skills. Gorman decided to be the boss she wished she'd had. "I made a list of what not to say, for example, and developed skills I still use today," she says.
Finally, consider looking outside your job for fulfillment. Having an outside interest or two gives you another outlet and an activity to look forward to.
3. Find (or Accentuate) the positive. Make a list of the good points about your job, advises McCarthy. Gorman calls this a benefit log. You may be thankful to have healthcare and other benefits. You may like your coworkers, or the fact that you have a short commute. Maybe there's a great gym on-site, or you enjoy the opportunity for travel or the mentoring you do. Listing what you do like about your job will help shift your perception and keep you from feeling so trapped. If you don't take responsibility, "it will hurt your performance, erode your satisfaction further, and make your time at the job worse," she says.
Principles to Remember
Do:
- Differentiate between what you can change and what you can't.
- Take responsibility for making a change.
- Focus on making the best of a bad situation.
- Assume nothing will ever change.
- Allow negative thoughts to rule you.
- Go it alone.
Elizabeth Roman (not her real name) had been head of marketing at a professional services firm in New York for four years when she fell out of favor with her boss. He had always given her good performance reviews, so she was stunned the day he let her know that he had little respect for her work. After that conversation, Roman "hated going to work every day." She resolved to find a new job, but in the meantime, she wanted to find some ways to make her job bearable. "First, I pushed myself to perform at the highest level possible after that conversation so he'd have no further ammunition against me," she said. Along with that, she came up with a creative project for attracting clients, suggested it to her boss, and threw herself into organizing it with her staff. Roman also contacted a mentor at another firm who served as a sounding board and lifted her spirits. She never betrayed her boss and never let her feelings affect her relationship with her employees. When she finally found another position and resigned, she mustered the grace to thank her boss for all he had taught her.
Case Study #2: Finding Satisfaction Outside of Work
Allen Smith (not his real name) is a technologist at consulting giant Bain who became frustrated with what he saw as a lack of a career path. "I also felt like my manager didn't understand what I needed day to day to do my job," he says. But he liked the people he worked with, so he did some soul-searching, asking himself whether he was unhappy because of someone else or because of his own attitude. He decided it was the latter. Smith had been toying with the idea of starting a business, and he thought if he could do it on the side, it would affect his outlook. He was right. He was given permission to work three days a week, which allowed him to start the part-time property management business he envisioned. "With a reduced work week, regular chats with my manager, and a focus outside of work, I've become much happier about my time here," he says. In turn, working fewer hours helped reduce his department's budget.
by Pat Olsen - HBR Blog
Monday, April 12, 2010
Your Employees... You don't need to marry them, but you do need to engage them!
2009 is over and the recession is receding. Having cut expenses and laid off employees, you are now operating with a lean workforce and focusing keenly on building revenue, maximizing profit, and generally improving business outcomes. So as 2010 gets underway, what lies on the road ahead for you?
According to The Conference Board CEO Challenge Top 10 Report, here are the top three challenges and priorities facing business leaders today:
Recent studies by Towers Perrin and the Gallup Organization that compared the financial results of those businesses that had high levels of engagement with those that had low levels of engagement showed significant differences in such measures as net income growth,earnings per share, absenteeism, turnover and customer retention. We also know from countless other studies that engaged employees tend to stay put for longer, are more creative, and play a pivotal role in boosting customer loyalty and retention through providing excellent service and going the extra mile.
The Bureau of Labor Statistics' latest data on workplace disengagement inform us that employees across the nation, across all industries, are disengaged an average of two hours per day (and some estimates more recently go as high as 3.5 hours per day). You can do the math with your organization's own numbers, but if you take a rough cost estimate of $35.00 per employee per hour, and you have 100 employees, that equates to an annual cost of disengagement at $1,680,000!
Putting all this information together, it makes sound business sense to put top priority on engaging your employees. Now more than ever before, your employees are the main driver behind positive business outcomes.
Sounds like a plan, but exactly how is that done? While there is no "one-answer-fits-all" response to the question, here are some things to consider:
Fiona Cattermole is a strategy consultant and performance specialist. Visit her website at www.catt-alyst.com.
According to The Conference Board CEO Challenge Top 10 Report, here are the top three challenges and priorities facing business leaders today:
- Sustained and steady top line growth
- Customer loyalty and retention
- Profit growth
- A real or perceived lack of opportunity for advancement
- Having borne the brunt of keeping companies afloat during the recession, they feel they are not appreciated or valued
- Their compensation is not commensurate with their contribution
- They are unhappy with their managers
Deloitte Consulting predicts that headcount reductions and other cutbacks will give way to the need to retain employees and focus on their development. At a cost of one to three times annual salary to replace each employee, not paying attention to retention could destroy some companies that are already struggling to stay afloat. However, almost one quarter of companies surveyed are doing nothing about it, or are unaware of the impact that retention has or will have on the bottom line.
Recent studies by Towers Perrin and the Gallup Organization that compared the financial results of those businesses that had high levels of engagement with those that had low levels of engagement showed significant differences in such measures as net income growth,earnings per share, absenteeism, turnover and customer retention. We also know from countless other studies that engaged employees tend to stay put for longer, are more creative, and play a pivotal role in boosting customer loyalty and retention through providing excellent service and going the extra mile.
The Bureau of Labor Statistics' latest data on workplace disengagement inform us that employees across the nation, across all industries, are disengaged an average of two hours per day (and some estimates more recently go as high as 3.5 hours per day). You can do the math with your organization's own numbers, but if you take a rough cost estimate of $35.00 per employee per hour, and you have 100 employees, that equates to an annual cost of disengagement at $1,680,000!
Putting all this information together, it makes sound business sense to put top priority on engaging your employees. Now more than ever before, your employees are the main driver behind positive business outcomes.
Sounds like a plan, but exactly how is that done? While there is no "one-answer-fits-all" response to the question, here are some things to consider:
- Run an engagement survey to get the current engagement level in your organization
- Ask your employees what improvements they would suggest that would result in them being more involved with their jobs (bear in mind that outside facilitation may be necessary to ensure confidentiality, trust, and honest responses)
- Find out how you can establish a culture of engagement in your company by customizing an Engagement Model
Fiona Cattermole is a strategy consultant and performance specialist. Visit her website at www.catt-alyst.com.
Monday, April 5, 2010
How to Make your Network Work for You
by Ariana Green
Harvard Business Review Blog
Many people turn to networking when they're looking for a job, but the best time to build your network is before you need something; and the best time to keep that network strong is always. But what is the best way to do that? Simply collecting business cards and attending events may expand your number of contacts, but does not increase the likelihood that those contacts will benefit you in the future. To reap the benefits of networking when you need them, you must know how to make your network work for you, and how you can work for your network.
What the Experts Say
The most universally agreed upon networking tip is this: Offer to help others first, and they will return the favor. "You should always ask new contacts to tell you about a business challenge they are confronting," says Dr. Ivan Misner, PhD, lead author of Networking Like a Pro: Turning Contacts into Connections, and chairman of global networking organization BNI International. "That way, you might know someone who can help, and that's the start of a relationship."
Misner teaches his clients to focus on gaining credibility, which grows, he says, when they keep appointments, act on promises, verify facts, and render services. "Failure to live up to expectations — to keep both explicit and implicit promises — can kill a budding relationship before it breaks through the ground," he warns.
Networking well makes for a brighter future, so Misner advises people to think beyond a current need. "People tend to forget about the importance of long-term credibility because they're so focused on making an immediate sale," Misner says. "But with that approach, you only eat what you kill that day." Focus on becoming known and trusted instead; a long-lasting relationship is more beneficial to both parties.
Lillian Bjorseth, author of Breakthrough Networking: Building Relationships That Last, reminds her clients to share information. "One of my favorite follow-up methods is to send someone a relevant article, photo, anecdote, marketing tip, or other resource via email," she says. Follow-through on seemingly unimportant promises or casual conversations can be just as integral to business success as delivering a reliable product.
Make People Know You
It's not enough to be an expert on something if nobody knows you well enough to think about calling you. Creating an inviting image for yourself can generate business and opportunities. "Our research shows that people are much more likely to call if someone is not just an expert but also has initiated some sort of social exchange to make others comfortable," says Noshir Contractor, professor of behavioral sciences at Northwestern University's Kellogg School of Management, who has done research on social and knowledge networks.
While Facebook, LinkedIn, Twitter, and other online networking sites can become time drains, online networking is useful for strengthening connections. By posting Facebook or Twitter links to relevant articles, you can provide value to your virtual friends and show your engagement with pertinent business issues. Writing original articles or posting commentary keeps you on other people's minds and enables them to see how involved you are in your industry. It is an efficient way to continue a relationship with those you know.
But online communication is not enough, especially for newer contacts. The true benefit is that it often leads to in-person contact because people feel more comfortable initiating a meeting with someone they "know" electronically. It's especially important to seek and accept face-to-face meetings with newer contacts because technology can never match a human connection. In-person check-ins are useful for contacts you already know too, but given people's busy schedules, it is most pressing to push for personal meetings with contacts you haven't spent much time with outside of a group gathering.
Think About How People Feel
Understanding psychology — your own and other people's — should factor into your strategy. "Some people are really busy and harried, or they're not quite as affable," says psychologist James Waldroop, an author and CEO of Career Leader, an internet-based career assessment used by corporations and business programs worldwide. "The point is to read your audience and know to make contact with some people less frequently."
But, Waldroop points out, even the most curmudgeonly contact appreciates genuine offers of help. It's important to make emails and phone calls feel personal. For example, you could send an email saying, "I know your kids are getting out of college soon, so please let me know if I can be of help to them, even remotely." Or else something like, "I was thinking about you and remembering the time that we did such and such, and it made me laugh." Or perhaps, "I've heard through the grapevine that your business is having trouble, and as you know, I've dealt with this before, so please do call me if you want to vent or strategize or anything else." In addition, he suggests that an appropriate level of humor is a great way to emphasize that you are being genuine or to make people feel comfortable.
Waldroop also offers that in certain cases it may be best to call after hours when you know the person won't be in the office to pick up the phone. That way you can leave a message, which is less intrusive, and you won't get interrupted before saying what you need to say.
Grow and Maintain the Network
In building your network, Professor Contractor believes that it's vital to reach out to a diverse pool of people. Those who come from different fields, different socio-economic backgrounds, and different countries can offer creative solutions and contacts that a colleague in the neighboring cubicle cannot.
Contractor has his students engage in the following exercise to assess how well a person maintains her network: Students come up with a list they call their Board of Directors, a roster of people they know whom they can call up on important professional matters. Contractor then prompts his students to write out who introduced the people on the roster to the student. "They will discover that, often, there are just a handful of people who introduced them to the most important people in their lives," he says. "These are people who ought to be cultivated because they are helping to broaden a network. One must make sure to continue to connect with those people."
Some of Contractor's students go through this exercise and find that they have been introducing themselves to their most valuable contacts. "That's not a good sign," Contractor says. "That means you're not using your network well and you're not tapping into the virtuous cycle."
Principles to Remember
Do:
When she was an executive at Allbritton Communications, Mary-Claire Burick, who is now president of her own strategic communications firm, went to a D.C. Chamber of Commerce event and was seated next to the associate publisher of DC Magazine. "I didn't think much would come of it at the time, but I thought I'd keep in touch in the spirit of networking," she recalls. Instead of just talking about superficial topics, she steered the conversation toward specific business issues and scheduled a follow-up meeting. In return, he invited her to company events where they continued to talk. Her strategy was to be generous with her contacts and to get to know the magazine community's interests. A few months later, the publisher and Burick ended up having the idea to create a segment for a show Burick's company was launching. "We were able to brainstorm successfully because we had cultivated our relationship," Burick said. The editor from DC Magazine would appear every Friday on an Allbritton television program, helping Burick fill content spots and giving DC Magazine exposure. Burick's bosses were thrilled that she was able to launch the new show on a short timeline and the editor introduced additional interviews to the show. "The relationship has also helped me in my new business because I've met new clients through magazine events," Burick says. "You just never know who you are going to meet and how you will help each other in the future."
Case Study #2: Job Search Equals Lifelong Network Creation
Meghna Majmudar was distraught when she heard the news that Katzenbach Partners, where she worked as senior associate, could no longer retain her. But a few days later, the managing partner of the firm sent her an email saying that he wanted to meet for an hour to help her strategize about her job search and connect her with the right people. By the end of the meeting, she was given five names of people he would introduce her to in the coming weeks. From there, Majmudar spent the summer honing her networking. If she attended an event, she would make sure to meet the organizer and email feedback and thanks, which at least once led to a dinner with an important person in her field. If she went to a party, instead of asking for job titles, she'd ask people about their experiences to try to figure out if she could help them. "As needed, I shared my professional credentials and tried to find ways to connect on a personal level," she says. "I realized that after a certain point of seniority, when someone likes you but has no open positions, they are really happy to offer career advice and introduce you to others." Majmudar found that by being warm and discussing her passion for her work, she could get the right power players on her side and could make use of high-level leads. "The people introducing me had a lot of cachet on their own, so I was able to draft off their value in my conversations." After three months, Majmudar landed a job she describes as "great," and felt a renewed sense of confidence. "After a summer networking, I have so much more energy and resources to draw upon for future projects," she says.
Harvard Business Review Blog
Many people turn to networking when they're looking for a job, but the best time to build your network is before you need something; and the best time to keep that network strong is always. But what is the best way to do that? Simply collecting business cards and attending events may expand your number of contacts, but does not increase the likelihood that those contacts will benefit you in the future. To reap the benefits of networking when you need them, you must know how to make your network work for you, and how you can work for your network.
What the Experts Say
The most universally agreed upon networking tip is this: Offer to help others first, and they will return the favor. "You should always ask new contacts to tell you about a business challenge they are confronting," says Dr. Ivan Misner, PhD, lead author of Networking Like a Pro: Turning Contacts into Connections, and chairman of global networking organization BNI International. "That way, you might know someone who can help, and that's the start of a relationship."
Misner teaches his clients to focus on gaining credibility, which grows, he says, when they keep appointments, act on promises, verify facts, and render services. "Failure to live up to expectations — to keep both explicit and implicit promises — can kill a budding relationship before it breaks through the ground," he warns.
Networking well makes for a brighter future, so Misner advises people to think beyond a current need. "People tend to forget about the importance of long-term credibility because they're so focused on making an immediate sale," Misner says. "But with that approach, you only eat what you kill that day." Focus on becoming known and trusted instead; a long-lasting relationship is more beneficial to both parties.
Lillian Bjorseth, author of Breakthrough Networking: Building Relationships That Last, reminds her clients to share information. "One of my favorite follow-up methods is to send someone a relevant article, photo, anecdote, marketing tip, or other resource via email," she says. Follow-through on seemingly unimportant promises or casual conversations can be just as integral to business success as delivering a reliable product.
Make People Know You
It's not enough to be an expert on something if nobody knows you well enough to think about calling you. Creating an inviting image for yourself can generate business and opportunities. "Our research shows that people are much more likely to call if someone is not just an expert but also has initiated some sort of social exchange to make others comfortable," says Noshir Contractor, professor of behavioral sciences at Northwestern University's Kellogg School of Management, who has done research on social and knowledge networks.
While Facebook, LinkedIn, Twitter, and other online networking sites can become time drains, online networking is useful for strengthening connections. By posting Facebook or Twitter links to relevant articles, you can provide value to your virtual friends and show your engagement with pertinent business issues. Writing original articles or posting commentary keeps you on other people's minds and enables them to see how involved you are in your industry. It is an efficient way to continue a relationship with those you know.
But online communication is not enough, especially for newer contacts. The true benefit is that it often leads to in-person contact because people feel more comfortable initiating a meeting with someone they "know" electronically. It's especially important to seek and accept face-to-face meetings with newer contacts because technology can never match a human connection. In-person check-ins are useful for contacts you already know too, but given people's busy schedules, it is most pressing to push for personal meetings with contacts you haven't spent much time with outside of a group gathering.
Think About How People Feel
Understanding psychology — your own and other people's — should factor into your strategy. "Some people are really busy and harried, or they're not quite as affable," says psychologist James Waldroop, an author and CEO of Career Leader, an internet-based career assessment used by corporations and business programs worldwide. "The point is to read your audience and know to make contact with some people less frequently."
But, Waldroop points out, even the most curmudgeonly contact appreciates genuine offers of help. It's important to make emails and phone calls feel personal. For example, you could send an email saying, "I know your kids are getting out of college soon, so please let me know if I can be of help to them, even remotely." Or else something like, "I was thinking about you and remembering the time that we did such and such, and it made me laugh." Or perhaps, "I've heard through the grapevine that your business is having trouble, and as you know, I've dealt with this before, so please do call me if you want to vent or strategize or anything else." In addition, he suggests that an appropriate level of humor is a great way to emphasize that you are being genuine or to make people feel comfortable.
Waldroop also offers that in certain cases it may be best to call after hours when you know the person won't be in the office to pick up the phone. That way you can leave a message, which is less intrusive, and you won't get interrupted before saying what you need to say.
Grow and Maintain the Network
In building your network, Professor Contractor believes that it's vital to reach out to a diverse pool of people. Those who come from different fields, different socio-economic backgrounds, and different countries can offer creative solutions and contacts that a colleague in the neighboring cubicle cannot.
Contractor has his students engage in the following exercise to assess how well a person maintains her network: Students come up with a list they call their Board of Directors, a roster of people they know whom they can call up on important professional matters. Contractor then prompts his students to write out who introduced the people on the roster to the student. "They will discover that, often, there are just a handful of people who introduced them to the most important people in their lives," he says. "These are people who ought to be cultivated because they are helping to broaden a network. One must make sure to continue to connect with those people."
Some of Contractor's students go through this exercise and find that they have been introducing themselves to their most valuable contacts. "That's not a good sign," Contractor says. "That means you're not using your network well and you're not tapping into the virtuous cycle."
Principles to Remember
Do:
- Be genuine to gain credibility and keep long-term relations
- Feed the network (via Twitter, Facebook, emails, etc.) to pass on useful information and show you are engaged
- Offer to help using humor and tact
- Focus on getting something from a new contact immediately
- Hide behind technology and avoid face-to-face networking
- Forget to read your audience and provide a personal approach
When she was an executive at Allbritton Communications, Mary-Claire Burick, who is now president of her own strategic communications firm, went to a D.C. Chamber of Commerce event and was seated next to the associate publisher of DC Magazine. "I didn't think much would come of it at the time, but I thought I'd keep in touch in the spirit of networking," she recalls. Instead of just talking about superficial topics, she steered the conversation toward specific business issues and scheduled a follow-up meeting. In return, he invited her to company events where they continued to talk. Her strategy was to be generous with her contacts and to get to know the magazine community's interests. A few months later, the publisher and Burick ended up having the idea to create a segment for a show Burick's company was launching. "We were able to brainstorm successfully because we had cultivated our relationship," Burick said. The editor from DC Magazine would appear every Friday on an Allbritton television program, helping Burick fill content spots and giving DC Magazine exposure. Burick's bosses were thrilled that she was able to launch the new show on a short timeline and the editor introduced additional interviews to the show. "The relationship has also helped me in my new business because I've met new clients through magazine events," Burick says. "You just never know who you are going to meet and how you will help each other in the future."
Case Study #2: Job Search Equals Lifelong Network Creation
Meghna Majmudar was distraught when she heard the news that Katzenbach Partners, where she worked as senior associate, could no longer retain her. But a few days later, the managing partner of the firm sent her an email saying that he wanted to meet for an hour to help her strategize about her job search and connect her with the right people. By the end of the meeting, she was given five names of people he would introduce her to in the coming weeks. From there, Majmudar spent the summer honing her networking. If she attended an event, she would make sure to meet the organizer and email feedback and thanks, which at least once led to a dinner with an important person in her field. If she went to a party, instead of asking for job titles, she'd ask people about their experiences to try to figure out if she could help them. "As needed, I shared my professional credentials and tried to find ways to connect on a personal level," she says. "I realized that after a certain point of seniority, when someone likes you but has no open positions, they are really happy to offer career advice and introduce you to others." Majmudar found that by being warm and discussing her passion for her work, she could get the right power players on her side and could make use of high-level leads. "The people introducing me had a lot of cachet on their own, so I was able to draft off their value in my conversations." After three months, Majmudar landed a job she describes as "great," and felt a renewed sense of confidence. "After a summer networking, I have so much more energy and resources to draw upon for future projects," she says.
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