Learn your firm's inside story - executive management

Learn Your Firm's Inside Story Can't be everywhere at once? You can use these methods to keep tabs on how your customers are being treated.

When the legendary Harold Geneen sat at the helm of the sprawling ITT Corp., he insisted that his senior executives abide by a two-word rule: no surprises.

The message was as clear as a pink slip: Executives who wanted to retain their elevated positions would have to keep the boss fully informed of the company's affairs, alerting him to any possible threat on the horizon before it could plunge the company into crisis.

Geneen believed that problems caught early are problems most likely to be solved. But as the CEO of a multinational corporation, he could hardly keep tabs single-handedly on every plant, division, and subsidiary. Instead, he relied on an extensive network of senior managers to serve as his frontline lieutenants.

For the chief executives of small and midsized companies, the purpose is the same: You too want to nip problems in the bud.

But the procedure is different. Without a network of executives to keep tabs on your company, you have to turn to more creative techniques. The best bet is to establish controls that can serve as the boss's eyes and ears.

"If the CEO of a small or midsized company tries to supervise every aspect of his business himself, he will fail at that goal," says Herbert Speiser, a partner with the New York accounting firm of Phillips, Gold. "That's because in a company of any size, there's too much for one person to look after."

How can you build in checks and balances in order to keep your company moving toward greater growth and profitability?

Consider the following strategies:

* Be a customer for a day. Approach your business as an outsider would. Start by placing an anonymous call with the switchboard, noting how the inquiry is handled. Did the operator answer on the second ring or on the 17th? Did the person respond with courtesy or with disdain? Whatever the results, you can bet your customers are receiving the same caliber of service.

* Make a purchase from the sales staff. If there's no way to disguise your identity, have a friend or relative make the purchase for you. See if the service is quick, if the clerk is familiar with the merchandise, and if the customer is made to feel like a patron or a pest. What you learn may shock you.

"Quite often, business owners who are dedicated to customer service assume that their employees share that dedication," says Vickie Henry. She is president of Feedback Plus Inc., a Dallas-based firm that sends undercover shoppers into client companies and reports the findings to management. "But we often find that the employees' attitude is diametrically opposed to that of management. Busy chatting among themselves or talking on the phones, the employees may ignore customers or, worse yet, treat them as a nuisance."

Appearing to store personnel as ordinary consumers, undercover shoppers buy goods, order meals, and open accounts. Then they rate the employees' attitudes, knowledge of the merchandise, and sales abilities. The aims are to identify service problems and to build an awareness that management is monitoring and rating service.

Undercover-shopping services are available from firms across the nation. Charges range from $50 to $100 per store visit. Contact your trade association for names of shopping services experienced in your field.

* Check up on field employees. You can have your customers rate field employees' performance, and you can do it all with a telephone call.

To track the work of his carpet-cleaning crews, the owner of a home-maintenance company calls his customers three days to a week after a service call, asking if the work was performed properly and if anything can be done to improve the service. This uncovers the kind of information that employees themselves would not volunteer.

* Videotape your employees on the job. You should do this not as "Big Brother" spying from hidden cameras--that only builds resentment--but as a concerned manager interested in improving employees' performance.

Employees should be informed in ` advance that videotaping will take place, and they should be told when it is being done.

Through videotaping, you can gauge just how salespeople work with prospects, how the production staff applies quality-control measures, and how managers handle their supervisory duties. When videotaping is done properly, it serves as a learning process, giving managers a bird's-eye view of operations that may escape their attention, and allowing employees to see themselves in action.

"Recognizing that he cannot follow all of his sales reps on the road to check their performance, the president of a casket company uses the videotaping process to gauge their sales techniques and to make helpful recommendations," says Joseph Mancuso, president of the Center for Entrepreneurial Management, a New York City-based nonprofit organization that specializes in entrepreneurial education.

* Conduct surprise inventory counts, even if you're selling items as cumbersome and difficult to conceal as automobile tires.

"All too often, the most attractive products in a store disappear either because shoplifters are walking out with them or because employees are making sales and pocketing the proceeds," says Robert Talmage, president of Marcoin Business Systems.

The company is an Atlanta-based network of franchised consulting firms that help small companies install control systems. "By identifying the most vulnerable type of merchandise and by holding surprise inventory counts daily or weekly," Talmage says, "management can see patterns behind these losses."

Prepare "receivables-aging reports," tracking all sums due the company by customer, dollar amount, due date, and days overdue. This can alert management to growing delays in collections.

"As part of this process, management may want to create an aging-exceptions report," says Les Kirschbaum, president of Mid-Continent Agencies, a commerical collections firm in Glenview, Ill. "This report can identify all accounts that are seriously overdue, perhaps 90 days or more. Management is then alerted to the real problem spots and has fair warning that doing additional business with these troubled accounts can be hazardous. This critical control helps to keep delinquent accounts from mushrooming."

* Establish a customer hot line to the boss. Encourage customers to contact you directly with complaints or suggestions about the company. The Marriott hotel chain does this by leaving evaluation forms in every room, assuring guests that their remarks will reach the man at the top.

"The forms are titled `Will You Let Me Know?' and carry Bill Marriott's picture and his signature," says Ray Stone, Marriott's director of consumer affairs. "Because people are assured that their comments will come to management's attention, they have the incentive to tell us if they are unhappy. We, in turn, have the opportunity to make it up to them. That's critical: We've found that where prompt action is taken, we can get 85 to 90 percent of these people to return to us as customers."

Herbert Speiser of the New York accounting firm says: "Controls give business executives the information they need to run their companies effectively. Without controls, they may own the business, but it's unlikely that they're really managing it." Mark Stevens writes the nationally syndicated column "Small Business" and is the author of Sudden Death: The Rise and Fall of E.F. Hutton.

COPYRIGHT 1989 U.S. Chamber of Commerce
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