Travel, Productivity, Cost Savings and Golf

As we continue to look for ways to keep our business’ costs down, one of the first things that get looked at is travel. Travel limitations, restrictions and freezes are all well known approaches to trying to reduce costs. I guess the success of these approaches depends on the goals that you are setting. If the idea is to bring down the hard dollar costs associated with your budget, then a true travel freeze can work, up to a point. However, there are not many businesses that can function properly or continue to grow without some amount of travel.

That leads us to travel limitations, restrictions and of course lowest cost airfare routing. This is where business and job productivity come into the travel and cost savings equation. I am going to use a hypothetical, if somewhat tongue in cheek example to help illustrate my point.

If I live in Dallas and I am asked to attend a meeting in Boston, I have several decisions to make. The first question is; do I need to go? If my boss has asked me to go, then the answer is easy; yes. If somebody else has asked, then I probably need to do a little more work to truly identify the need for my travel. Let’s assume my boss has asked me to go. For those of you that know me, the second question I always ask is; can I play golf there? Boston, March, probably not high on the golfing opportunity list.

Boston is approximately a four hour direct flight from Dallas. However, direct flights are usually more expensive. Most companies now require you to take a less expensive set of flight arrangements if available. I am now faced with the decision of either explaining why I have chosen the more expensive direct flight, or taking the less expensive connecting flight arrangements. Let’s assume that the president of the company is not currently available to authorize my more expensive direct flight travel arrangements, so I take the connecting flights.

This now brings up a couple more important points. The first is that in my 25-plus years of travel, I have never heard of an airline actually successfully keeping a traveler and their golf clubs together on connecting flights. They always get lost. Golf is definitely out in Boston.

Unless I decide to rent clubs.

The second point is that due to airline connecting schedules, what was initially a four hour flight is now a seven-plus hour set of flights. By selecting the connecting flights I have added 3-plus hours of travel time to each direction of my trip. That is the equivalent to adding almost the time of an entire round of golf each way. I have essentially added an entire day (two rounds of golf) to my trip. I will now also have one incremental day worth of meals associated with this trip, as well as potentially depending on connections, another night worth of lodging expenses.

This entire extra day of travel associated with going to this meeting is not spent being productive at my job, or playing golf. It is spent in airplanes and in airports. I am not going to get into the actual loaded hourly rate that is being paid or absorbed by the company while an extra day is spent traveling. What I am going to say is that it is my belief that the productivity value lost to the company by my (or anyone else) not being able to do productive work, as well as the incremental attracted costs (meals and lodging) for an incremental day due to travel are probably greater than the perceived savings difference between the cheaper connecting flights and the more expensive direct flights.

I am sure there will be instances where this lost productivity / airfare analysis will swing the other way and it will not make sense to fly direct. I do believe that in most instances it will be in the company’s best interest to get me or any other employee to our business destination and back home again, as quickly as possible in order to maximize the time where we can be productively working, and not sitting on airplanes and in airports. Besides, it’s hard to work on your putting in the airport. My putter has a tendency to set off the metal detectors, and people in the terminal don’t seem to pay attention and keep kicking my golf ball.

Process, People and Tools

Many companies today continue to look for efficiencies and business improvements by trying to create better processes. The idea seems to be that if the process is perfected, employees will be able to follow it, speed will be increased and mistakes will be eliminated. I understand the concept and the idea, but I don’t know if I agree that improving the process alone will actually deliver all the improvements that are being sought, or promised.

Processes are based on the idea of repeatable events. If functions or events are similar enough, then you can create a process to make sure that similar events are handled in a similar manner. The idea is to assure consistent performance. Manufacturing products, paying bills, inputting orders and the like were some of the first and most successful beneficiaries of good process creation. The concept has also been extended, at higher levels to other business functions such as sales, marketing and service as well.

The issue with process seems to arise when a good general approach is taken too far. If a good high level process works well, shouldn’t it be extended to more specific applications to make them work even better? My view is probably not.

My view is that Simple is Better.

By necessity the more specific you make a process to enable it to handle more and more variations in inputs and desired outputs, the more complex you make it. I have commented in the past that if your Sales compensation plan is longer than one or two pages, that it is most likely too complex and you are probably not inciting the desired focus from your sales force that you are looking for. I think the same can be said of your processes.

There needs to be a relative parity between your processes and your goals. If we can maintain a focus on relatively fewer and simpler goals, then we should also maintain a focus on relatively fewer and simpler processes. The question then becomes do you run the risk of decomposing your business goals and processes into progressively smaller and simpler levels to the point where you lose the ability to manage the overall business with any continuity. It becomes the equivalent of trying to manage the growth of each individual wheat stalk in the field, instead of trying to manage the growth of the wheat field.

There will always be a human factor associated with our business process. People make decisions based on the information they have and the goals that they are pursuing. Instead of trying to reduce the impact of the human factor by trying to create processes that prescribe decisions for them; we might do better to focus on the information and the tools that provide it to them, as well as the actual decision makers that we are asking to act on it.

Pilots spend multiples of hours in simulators facing manifold situations honing their decision skills so that when they are placed in similar real life situations they can follow some relatively simple processes to quickly arrive at the right decisions and take the correct actions. The average business leader does this while on the job. The business leader must base his decisions on situations that he has seen in the past and adapt them with the new information (or lack of new information) to the current situation. Hopefully either the leader’s experience translates well to the new situation, or the information supplied is sufficiently available and accurate to enable a good decision.

The pilot has multiple tools and gauges on his dashboard that immediately provide him the information that he needs as a basis for his decisions. While we have seen significant gains in the tools and gauges area for the business leader, it has been my experience that these capabilities have grown up over time as more of a happen stance instead of a cogent and integrated plan for providing needed gauges for management information.

It takes good people, good tools and simple processes to get good decisions and actions. Focusing on more detailed processes without paying attention to the people or the tools that they are using seems to be an activity that will only provide decreasing relative value returns for the investment. Spending more time on preparing business leaders to be ready and capable of making the types of decisions that they will be asked to make, and investing in the informational tools that will provide the accurate and timely information that they will need to make those decisions will probably provide greater benefits to the business.

Sales, Operations and Support

Sales and Operations. It seems pretty simple to me. One group is responsible for selling the product or service, and the other group is responsible for delivering and implementing it. Again, it seems pretty black and white. Dogs and cats, men and women, etc. etc. If you are not one, then you should be the other.

I have often said that there are two types of people in the world. Those that divide people into two types, and those that don’t. However, I have digressed a little here.

What I am getting at here is that in business, in today’s world, you need to look at your role and understand on which side of the Sales and Operations divide you are on. You need to understand if your focus is on the top line – Sales, or on the bottom line – Operations.

I suppose that this division can be extended into the support functions as well. Financial teams can be keeping score of the sales and the gross margins associated with those sales, or they can be keeping score of the costs of the product, delivery and implementation, and the earnings that are generated. Marketing is primarily a Sales related function since its primary role is to position and enable sales to customers. I think you can look at just about every role within an organization and understand where it sits within the Sales and Operations split.

A major difference between Sales and Operations is that at least part of the Sales team’s compensation is based on how much they sell. This is called commission. (They also usually have a base salary, which will again be dependent on the type products, services and customers they are serving.) The Sales team has sales targets (quotas) and can quantifiably demonstrate how they have performed. Again, it is a step function. They either sold something, or they didn’t. The more they sell, the more commission they get, and the greater their total compensation.

Operations on the other hand are not compensated based on “how much” they deliver or implement. Operations job is to deliver and implement all that Sales sells. This is a given. Operations may have incentives and bonuses based on “how well” they deliver and implement. How well operations delivers is also quantifiable and can be measured in several ways, including time (is it implemented on time or early), financially (is it implemented on or under budget) or the most important metric, was the customer satisfied when the implementation was complete. Again we have some fairly quantifiable metrics here. Time, budgets and customers satisfaction can all be measured.

My purpose in attempting to pre-define in simple terms the Sales and Operations roles is to point out and think about all the other roles that seem to have evolved, or devolved in companies from these two required business functions. It appears that many businesses have created or acquired roles that can best be described as either “Sales Support” of “Operations Support”. That means these roles are associated with either the Sales or Operations functions, but do not have either the responsibility or control to accomplish the tasks of selling or implementing. It also seems that by not having the direct responsibility of the line function, that these groups also do not have the direct risk associated with the defined business performance that is required. When a Sales person does not make quota, or an Operations person does not implement the project on time, which specific support person has responsibility for those failures?

I understand the ideas of team and how people as an organized group are more powerful than that as individuals, but where can the line be drawn here? Personally I look in a couple of specific areas. In Sales I like to look at how many people get compensated or commission for each individual sales success. How many commissions are being paid for each single sale? How many different forecasts and how many different sales reports is it showing up in? If individuals or groups are truly in or associated with the sales function, then their expenses should be associated with the sales function, they should carry quotas (remember, the more people in the sales group, the greater the quota that the group will need to carry in order to sustain the headcount) and their compensation should reflect a commission oriented structure.

In Operations I like to look at how many times each Delivery / Implementation opportunity must be presented for review, and to which audiences. I have been in roles where it was not uncommon to present the same information four to five times including “Dry Run” preparation, so that when you actually did present the information to the policy and decision senior management, it had the proper format and appearance. Operations are about efficiency, accuracy and speed. Do the job once, get it right and move on to the next one. The number of programs for efficiency and process improvement currently in vogue today would lead us to believe that it was amazing that any company was ever profitable or efficient in their operation.

Please do not get me wrong. I am fully in favor of providing any desired support to both Sales and Operations. I believe that the decision for requesting that support, and paying for that support should rest with the Sales and Operations teams. If Sales feels that it needs more sales support, then that support needs to be funded by sales in the form of increased sales targets and quotas. Most sales teams have a Sales per Staff metric. If Sales feels it needs more staff, then they need to generate more sales to support them. If Sales feels it can accomplish its goals with fewer staff, then they should be more richly compensated and commissioned for that as well. Sales is a Risk-Return role. If they are willing to take the risk associated with not attaining their goals, then they should also receive the associated and promised compensation when they achieve them.

On the other side of the divide, if operations feels that it needs more operations support, then that support needs to be funded by operations in the form of increased efficiencies and improved earnings associated with deliveries and implementations. If Operations is looking at an operating profit per staff metric, then more staff would need to generate greater efficiencies that would in turn generate better operating profits. If Operations feels it can accomplish its goals with fewer staff, then they too should be incited and provided bonuses for that as well.

It appears that as time has passed many of these supporting and enabling positions have migrated outside the control of the business function they were created to serve and have taken on lives and purposes of their own. Roles that were once viewed as specific ways to specific means seem to have become a means all unto their own.

It has been said that “When you are a hammer, everything looks like a nail.” I guess the business equivalent is that when you are in support, everything looks like it needs support.

Too many times the “support” decision seems to have been removed from the business line functions of Sales and Operations and put in the hands of some other management function. With this type of structure in place the support team loses its responsibility relationship with the line organization and becomes more of a corporate tax on those line organizations for programs that they may or may not agree with or support. How can the value of the support be quantified when it is no longer within the purview of the line function being supported.

If there is work that needs to be done within the business, but is outside the line functions of Sales and Operations, that is understandable. Don’t try and put it within those structures. Leave it within the management “support” structure where it too can be visible, monitored and hopefully quantified. Leave the support of both Sales and Operations to those functions where they can decide and implement the levels and types of support structures, if any, that they desire or need. By assuring that those functions have clear objectives, financial and otherwise, you can be reasonably assured that any support that they request and fund will be valuable to the business.