Businesses will need to manage the process of cost reduction well to ensure that they do not unwittingly compromise their product quality or service standards. Cost-cutting is a short-term strategy. It is far more important that companies take a long-term view to build and strengthen their organisation and its capabilities now, positioning themselves for the eventual economic recovery.

Over the years, businesses have worked hard to win customers to get to where they are today. To lose their customers now would be tragic indeed. Studies have shown that it costs up to six times more money to acquire a new customer than to retain an existing one. In the slow economy, it would probably cost even more to win a new account.

Businesses must have an unrelenting focus on delivering the best customer experience. There must be the line of sight from the top to the bottom of the organisation. Take care of that and you will enjoy customer loyalty – and revenues and profitability will follow. Many companies find that 20 per cent of their customers provide over 80 per cent of their revenue. Thus, high levels of repeat customers will lead to high levels of profit.

Focus on delivering customer satisfaction to achieve your long-term business goal

To achieve that, companies must remain constantly vigilant about the changing requirements of their customers, understand their business models and the markets they operate in, know what their customers want and deliver these to help their customers succeed.

Achieving excellence

To achieve business excellence, everyone in the organisation needs to focus on delivering customer satisfaction by taking personal responsibility for improving processes and be empowered to make changes.

Departments need to become self-managed teams; cross-functional teams are needed at the company level; and the organisation needs to be flatter and more efficient for faster decision-making and response. When the company finds a problem or an opportunity for improvement outside, they need to collaborate to find the solution.

For that to happen and for that change to be successful and sustainable, a holistically integrated approach to business excellence, which engages all parts and elements of the organisation and its leadership, is required.

Leadership for change

Executives must lead the change process, the thinking about productivity and quality to learning to create a company that consistently delivers high value and customer satisfaction.
They must establish a culture of continuous improvement that seeks to remove bottlenecks, eliminate sources of wastes and customer dissatisfaction, and become more efficient and more effective.

There must be a focus on reducing cycle time, rapidly transferring knowledge and delighting the customer – these help the company to maintain its competitive edge.

Management must also be able to spot changing customer preferences, be aware of the changing competitive landscape, harness advances in technology, seize opportunities and implement new solutions rapidly.

Product and service standards have to stretch from the top to the bottom of the organisation and need to cut across all departmental lines. The organisation’s own learning and development process must be structured, systematic and focused on building on its strength. Critical systems that support hiring, training, recognition, career advancement and information access need to be in place.

Employee engagement

Organisations can reorganise, downsize and streamline their way to efficiency. These approaches are necessary but often not sufficient to catapult organisations into high performance mode because they neglect one essential component of performance – engaging employees in their work.

To mobilise the entire organisation, leaders must ask for employees’ inputs and their involvement, especially in areas that need improvement. Unfortunately, in modern day continuous improvement process this step is often missed which causes communication and ownership problems that hinder success. Employees must be trained and equipped to go from “good to great”.

Total approach needed

For companies to be successful in their business, they need to be responsive to their customers’ needs at every step of the business process involving every function, employee and leader. Anything short of a total approach is unlikely to deliver the desired outcomes.

Organisational transformation is a long-term process requiring a fundamental change in management practices and culture – a paradigm shift.

Finally, the organisational direction that advocates the strategic intent has to be clear about the objectives that needs to be achieved, the type of values and capabilities that are needed and how all this is going to be implemented for successful change to occur.

If you like this article, please subscribe to our blog and get our FREE Report on “10 Secrets to Successful Employee Engagement”.

Written by Robert Chew
Principal Consultant and Corporate Trainer
Website: www.quartonmanagement.com

P.S. Register NOW for his powerful workshop on 29 and 30 June 2009 at ST701 Seminar and Workshop and enjoy early bird discounted fee. Please logon to www.jobs.st701.com. Hurry, limited seats left!

Businesses will need to manage the process of cost reduction well to ensure that they do not unwittingly compromise their product quality or service standards. Cost-cutting is a short-term strategy. It is far more important that companies take a long-term view to build and strengthen their organisation and its capabilities now, positioning themselves for the eventual economic recovery.

Over the years, businesses have worked hard to win customers to get to where they are today. To lose their customers now would be tragic indeed. Studies have shown that it costs up to six times more money to acquire a new customer than to retain an existing one. In the slow economy, it would probably cost even more to win a new account.

Businesses must have an unrelenting focus on delivering the best customer experience. There must be the line of sight from the top to the bottom of the organisation. Take care of that and you will enjoy customer loyalty – and revenues and profitability will follow. Many companies find that 20 per cent of their customers provide over 80 per cent of their revenue. Thus, high levels of repeat customers will lead to high levels of profit.

Focus on delivering customer satisfaction to achieve your long-term business goal

To achieve that, companies must remain constantly vigilant about the changing requirements of their customers, understand their business models and the markets they operate in, know what their customers want and deliver these to help their customers succeed.

Achieving excellence

To achieve business excellence, everyone in the organisation needs to focus on delivering customer satisfaction by taking personal responsibility for improving processes and be empowered to make changes.

Departments need to become self-managed teams; cross-functional teams are needed at the company level; and the organisation needs to be flatter and more efficient for faster decision-making and response. When the company finds a problem or an opportunity for improvement outside, they need to collaborate to find the solution.

For that to happen and for that change to be successful and sustainable, a holistically integrated approach to business excellence, which engages all parts and elements of the organisation and its leadership, is required.

Leadership for change

Executives must lead the change process, the thinking about productivity and quality to learning to create a company that consistently delivers high value and customer satisfaction.
They must establish a culture of continuous improvement that seeks to remove bottlenecks, eliminate sources of wastes and customer dissatisfaction, and become more efficient and more effective.

There must be a focus on reducing cycle time, rapidly transferring knowledge and delighting the customer – these help the company to maintain its competitive edge.

Management must also be able to spot changing customer preferences, be aware of the changing competitive landscape, harness advances in technology, seize opportunities and implement new solutions rapidly.

Product and service standards have to stretch from the top to the bottom of the organisation and need to cut across all departmental lines. The organisation’s own learning and development process must be structured, systematic and focused on building on its strength. Critical systems that support hiring, training, recognition, career advancement and information access need to be in place.

Employee engagement

Organisations can reorganise, downsize and streamline their way to efficiency. These approaches are necessary but often not sufficient to catapult organisations into high performance mode because they neglect one essential component of performance – engaging employees in their work.

To mobilise the entire organisation, leaders must ask for employees’ inputs and their involvement, especially in areas that need improvement. Unfortunately, in modern day continuous improvement process this step is often missed which causes communication and ownership problems that hinder success. Employees must be trained and equipped to go from “good to great”.

Total approach needed

For companies to be successful in their business, they need to be responsive to their customers’ needs at every step of the business process involving every function, employee and leader. Anything short of a total approach is unlikely to deliver the desired outcomes.

Organisational transformation is a long-term process requiring a fundamental change in management practices and culture – a paradigm shift.

Finally, the organisational direction that advocates the strategic intent has to be clear about the objectives that needs to be achieved, the type of values and capabilities that are needed and how all this is going to be implemented for successful change to occur.

If you like this article, please subscribe to our blog and get our FREE Report on “10 Secrets to Successful Employee Engagement”.

Written by Robert Chew
Principal Consultant and Corporate Trainer
Website: www.quartonmanagement.com

P.S. Register NOW for his powerful workshop on 29 and 30 June 2009 at ST701 Seminar and Workshop and enjoy early bird discounted fee. Please logon to www.jobs.st701.com. Hurry, limited seats left!

My article is featured in CATS Recruit Section, page C26, of The Straits Times on 11 June 2009. We have it reproduced here for your reading pleasure.

There are costs involved in manufacturing a product or providing a service. In fact, every activity in an organisation costs money. And prudence would have it that money in any business should be well spent or invested.

Cost is, undoubtedly, a key factor to competitiveness. As organisations face the current global economic challenge, the pressure now is even far greater for them to find ways to reduce their operating costs to remain profitable. But it has also become increasingly difficult to compete on price alone.

For businesses to remain profitable and viable over the longer term, companies will have to continue to satisfy the needs of their customers in more efficient ways, demonstrating value for money.

Prominent American quality consultants Armand Feigenbaum and James Harrington have pointed out that 25 to 40 per cent of operating costs result in waste. Separate studies undertaken by the American Society for Quality (ASQ) have also shown that waste can go as high as 40 per cent of sales.

Waste is any resource-consuming activity that adds no value for the customer. For most organisations, customers are the users or consumers of their products, services or both. Clearly, the focus is on external customers. But identifying waste can and must also be applied to the support activities that serve internal customers.

High Costs

In the past, there was insufficient information about production and service costs. Hence, there was limited scope for comparisons and benchmarking. Organisations, as a result, were able to pass on their high costs of production and services to their customers and continued to do so for a long time.

Nowadays, customers are more well-informed about processes and the service delivery supply chain. They are now able to analyse and compare the cost structure of their supplier organisations to determine where they might be able to derive highest value for the money they pay to acquire goods and services.

Limitations

In traditional accounting, organisations may know their total revenues and costs to the penny. But they have no idea how much they throw away every day on plain simple ineffectiveness, inefficiency and waste.

These are not visible on financial reports because traditional accounting methods do not provide a means of separating value-added activity from wasteful or low-value activity. As such, they do not show the high costs of ineffectiveness and inefficiency within the organisation.

Reducing Waste

Since traditional accounting methods have their limitations, the management of most organisations attempt to control inefficiency and ineffectiveness the best they can without proper tools and metrics – resulting in much wasteful activity.

If your accounting systems are of little help and your management practices lack the knowledge to be lean and productive, then how do you identify waste and unproductive costs?

There are two approaches. The first is a variation of cost accounting and is called activity-based costing, or ABC. It is an excellent system for identifying low-value activity, but it has drawbacks. It is a formal accounting system that parallels existing systems; it depends on considerable input from large numbers of individuals who already are working at their time capacity limits, and it requires a high level of system support.

The second approach is one with assessment and problem-solving capabilities and is called the cost of quality or COQ.

Improve Processes

The biggest opportunity organisations have to boost the bottom line comes from improving their business processes. The survival of many organisations is dependent on these improvements.

In many companies, management can make more profit by cutting unnecessary costs in half than doubling sales. This can be accomplished without hiring one new person, building a new facility, or finding one new customer.

Organisations must therefore identify unnecessary costs in the business processes and take action to improve the company’s bottom line.

Organisations must help their employees recognize wastefulness, maintain a high visibility of what these are, systematically reduce non-value-added activities and reducing costs the smart way.

An organisation that focuses on profit may have maximum profits in the near future. But an organisation that focuses on its reputation of being the highest value provider will provide the best return to its investors in the long haul.

If you like this article, please subscribe to our blog and get our Free Report on “10 Secrets to Successful Employee Engagement”.

Written by Robert Chew

Website: www.quartonmanagement.com

P.S. Register NOW for his powerful workshop on 26 June 2009 at ST701 Seminar and Workshop and enjoy early bird discounted fee. Please logon to jobs.st701.com. Hurry, limited seats left!

Come participate in ST701 Seminar and Workshop on 26 (Friday), 29 (Monday) and 30 June 2009 (Tuesday) at SPH News Centre.

Our member, Robert Chew, principal consultant and corporate trainer of Quarton Management Consultants, has been invited by Singapore Press Holdings to deliver two powerful seminar and workshops.

We look forward to having you with us at these workshops. Please register early to enjoy discounted fees.

To ensure that a good beginning is in placed right from the onset, the following is recommended: 

• 1. Provide coaching for upper level managers
• 2. Have upper level managers and the board of directors go through a seminar on service quality
• 3. Do an upside-down review. Have subordinates rate the managers on quality readiness
• 4. Have upper level managers go through an executive retreat to assess this cultural readiness and work through a plan to change the culture. This is done by defining the desired culture and then doing a gap analysis by surveying employees to see how close the current culture is to the desired outcome. Outside facilitators can be most helpful. 

Leadership training comes in many forms. There are four basic types; feedback, personal growth, skills building, and conceptual. Each has its drawbacks and advantages. The latest trend, however, is to use a value-based approach. 

Value-based leadership maintains that if we share certain values, the bond between us will be stronger than if we follow the same commands. It requires leaders to articulate the company vision and then create an environment where employees can figure out the answers. 

The Japanese went through 20 years of changing a very authoritarian management philosophy into one that involves considerable direction from the top and input and decision making at the bottom. 

Total quality service is both top-down and bottom-up management. For it to succeed, leadership has to be responsive. Work on the leadership first if this is not the case. Unresponsive leadership will only make employees and customers resentful as heightened expectations are dashed against the rocks of arrogance and resistance. Most organizations have a bit of this in place, but ultimately leadership has to walk the talk. 

If you like this article, please subscribe to our blog and get our Free Report on “10 Secrets to Successful Employee Engagement”.  

Written by Robert Chew

Principal Consultant & Corporate Trainer 

Website: www.quartonmanagement.com

Change is not easy. Everyone is for change. The problem is everyone should change except me. Why do I need to change? I have proved that this is the right way to do things. 

Change is not a simple process. It requires a lot of thought, a well developed plan, a sophisticated approach, discipline, emotional intelligence and unfaltering leadership. Different people react differently to change. Expectations would need to be managed realistically. Fear of the unknown, untried, untested way is natural but needs to be overcome. 

Here are 10 rules that should be used to guide your change process: 

• 1. The organization must believe that change is important and valuable to its future.
• 2. There has to be a vision that paints a picture of the desired future state that everyone sees and understands.
• 3. Existing and potential barriers must be identified and removed.
• 4. The total organization must be behind the strategy to achieve the vision.
• 5. The leaders of the organization need to model the process and set an example.
• 6. Training should be provided for the required new skills.
• 7. Measurement systems should be established so that results can be quantified.
• 8. Continuous feedback should be provided to everyone.
• 9. Coaching must be provided to correct undesired behaviour.
• 10. Recognition and reward systems must be established to effectively reinforce desired behaviour. 

Change is crucial for a company’s survival but many companies resist change until it is forced upon them. In a research done by McKinsey & Co., it noted that the leaders of companies in crisis are often in a better position to achieve a true transformation. Why? The survival of the firm is at stake. 

Change is an inevitable part of life and business. Don’t wait till it is too late. Help your people embrace rather than resist it. 

If you like this article, please subscribe to our blog and get our Free Report on “10 Secrets to Successful Employee Engagement”.  

Written by Robert Chew

Principal Consultant & Corporate Trainer 

Website: www.quartonmanagement.com

Our expectations are at an all-time high. We are more demanding than ever with growing affluence. We are spoilt for choice. Ask yourself as a customer, do you bother to take time to tell people exactly what you want? The answer is most probably “No”. You would expect the quality or service you want for whatever it is you’re buying and you expect the other party to know. 

I was with a close buddy recently who wanted steak for dinner. We went to this restaurant in mid town and ordered a rib-eye and sirloin steak complete with soup, salad, red wine, and dessert and coffee to end off. He preferred his steak done medium-well while I like mine well-done as usual. 

When our soup was served, it wasn’t hot. In fact, it tasted like it was mass produced and left on the kitchen stove for some time. The garlic bread that accompanied it was no better. It wasn’t freshly toasted and soaked of melted butter.  Twenty minutes later, our steaks arrived. Mine was almost burned (I could tell even with the brown mushroom sauce over it) while his was clearly rare when he cut it. Meanwhile, the waiters were busily serving other diners. I suggested we have his steak sent back to the kitchen but he said to forget about it. 

Thirty minutes later, we asked for the bill. The restaurant manager presented us the check and enquired if everything was to our satisfaction. My buddy simply replied, “Fine, thanks” and the manager happily moved on. 

“Fine! Why didn’t you tell him your steak was served practically raw fit for the lions? They messed up your steak and you said fine?” I protested. “Oh, I can’t be bothered. I’ll just make sure I don’t come back,” he replied with certainty. 

Here is the scary situation. The manager thinks everybody is happy while the customers are thinking, “We are not ever going to come back here again!” My friend did not even register his dissatisfaction on the customary customer satisfaction form located at each table. 

So how do you know what your customers are thinking about you? Just because they are silent does not necessarily mean they are happy. 

What can you do? 

• 1. Openly and habitually seek feedback from your customers – good or bad.
• 2. Even if your customer should reply that everything is fine, still ask “If there is one thing we can do better, what would it be?”
• 3. In the feedback card, use words like “Please give us your honest comment. We love feedback as it will help us serve you better.”
• 4. Then go to work on improvements based on the feedback received or your customers will know sooner or later that you are insincere about improving. 

And finally, if you do get customers who complain, remember to thank them. They are probably speaking on behalf of many dozen other customers who thought similarly but didn’t tell you. Learn from it and make sure you win them over and keep them coming back. 

If you like this article, please subscribe to our blog and get our Free Report on “10 Secrets to Successful Employee Engagement”.  

Written by Robert Chew

Principal Consultant & Corporate Trainer 

Website: www.quartonmanagement.com