CEO's Diary: Admit it: we got this one wrong

Not the way to end a year, or start a new one

February 29 - Year end and we'll get through it.

I can't say that East managed the same with the customer who has complained. The simple fact is that they're right. We have made a mess of this one. East is furious. I think that's with himself in part. The error is glaringly obvious. It's clearly a design fault. Someone has just specified the wrong component. The problem is we've already fitted a fair number, and it's not a straightforward swap.

We have to restore credibility. So the team will start the new financial year with weekend overtime putting this right as fast as we can. Annoying, but we have a customer and their main contractor to keep on side. Best to be honest and get on with it in that case.

I think we'll get away with it. In the circumstances that's the best you can hope for.

* * *

February 28 - One of the odd things about having a 28 February year end is that once every four years, you don't. You have a 29 February year end.

I notice some people are apparently giving the day off to staff on the basis that they don;t pay for it. I can assure you: we're not. It's business as usually as at any year end: stock counts, mad billing, getting the cash right, beginning the accruals process with more rigour than on any normal period end, and planning to go for a drink with all available managers and others who have bust a gut at the end of the day when the auditors have gone home.

Only that's tomorrow. Today isn't any of that. Today is about covering for East who is meeting the customer who is complaining to make sure in turn that we've covered for being a manager short who we need to replace and for whom we have not got a single CV of any quality on the books.

That and simply dealing with all that year end close down stuff, in which I have had to get involved. Which, pleasingly, included settling a large number of small creditor accounts because the cash inflow had been good enough to simply allow us to pay all small balances to reduce year end hassle without threatening my desire to have a good cash position. I like that.

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February 27 - How can it be that two days before the year end we can discover a claim that we've made major mistake on a contract we're doing?

The contract is not too big, but the claim is that the spec we're using is wrong for the premises in question. The team that put the spec together were spread far and wide today and could not between them answer the query, each being sure that the installation was correct, but the customer is adamant that their main contractor on the sites says we have this wrong.

It's probably not a disaster, but if you're going to have a dispute you don't want them at the year end with all the necessary provisions that go with them. It's just hassle for no gain. East was one of those unavailable to resolve the issue, Newc was also out all day, North thought there was no issue, but didn't know the sites.

All I could do was suggest we pulled our people off site straight away and assure the customer we'd have people with them tomorrow. That's East and me, I think. I'm just hoping this isn't another one where what's really going to happen is a claim for a discount. But I bet it is.

* * *

February 26 - Newc's efforts with the public sector look like they're achieving a result. He's bid for a significant chunk of work, all one-off installation, and I think we've got a real chance of winning this. It will be one heck of a boost to the new financial year if we do.

Meantime, the ex-Mrs CEO saga appears to have ended. Her solicitor rang to say she's not taking the matter forward. Decent of him. He could have left me in limbo, but I think realised that after our conversation last week we had as a company done the right thing. Maybe he'd rather work for us than her. I would!

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February 25 - The AM was in this morning with #1. I gather much of the year end cut off and control testing is to happen in 'real time' this year. It sounds like good news to me. Basically, the auditors are testing our controls as they happen. I quite like that: it shows confidence that the system is in place.

Something else that I like have been some of the comments here, and internally on our dilemma on recruiting a replacement manage. I bashed this through with both Newc and East this morning, as both were in. What we asked was whether the strategy I introduced of assuming that our people could both deliver our service and sell it was a success. The decision on whether to look for a more technical person or a sales person to lead the teams is pretty dependent upon this, and given our current lack of success on either score pretty key to where we go next.

The general feeling was that it has worked well. Office, who her ear to the ground on just about everything confirmed that she believed that true when she joined us. She also believed there would be considerable resentment now of a person who could not combine a technical role with running the team. If there was to be a sales person they would have to be a #2. So sales training wil, have to be given if necessary.

That said, I still can't see the east #2 running that team, and nor can anyone else. We resolved to head hunt with more vigour. But it was good to know that we hadn't lost faith in the model even if (like anything) it's not perfect.

And curiously, whilst discussing it both East and I thought of the same person to approach in a competitor company. He's known him longer, and won't be interviewing him. He agreed to arrange a meeting through our trade body. You never know, it might just work. And, we're going to change the advert and try again.

This has to be resolved sometime.

* * *

February 22 - The big push to make sure billing is done before our year end next week is on. I hate WIP, it always causes grief, and I want debt out.

I always say we demand this every month, but I know we don't always make it. But right now, I'm pushing, pushing, pushing. If people don't like it, it's too bad. It's only once a year.

* * *

February 21 - East's #2, currently acting manager of his division is a good people person. At least, I think he can run his people well. And they seem to like him. It's a powerful attribute, and one that to some degree Promo shared, which was exactly why I promoted him. The fact is though, as I'm learning, the ability to motivate people is quite different from the ability to sell, and I've been looking for these skills to be combined in a person.

Pretty much that has been achieved in East, North and by the bucket loads by Newc. There's also clear evidence that many people in our on-site teams that these guys manage can, and do, open leads.

It's closing the sale that is the problem. That's something quite different. The negotiating skill required is not the same, the ability to walk away is needed for a start. With people management that's often the last thing you want, since persistence is needed to get the best out of the most frustrating of situations when you know someone is not performing as they should.

Why do I say this? East's #2 and I had a contract review meeting with a customer today. and I had to do the closing. I know he can't.

But maybe, just maybe I should muse on this in thinking about who I want. If East really does want to do the west (and I'm increasingly thinking he does, and not for negative reasons) then maybe I should really be looking for sales person to do the aast working closely with the existing #2.

This will bee easier to get, I think.

I hope so, anyway. We're all working too hard.

* * *

February 20 - Mrs CEO's solicitor rang me to 'ascertain some facts'.

I spent an hour explaining what had happened to him.

He didn't say he was going to tell his client to stop being stupid. He didn't need to. It was too obvious from his tone.

But that doesn't mean this is over. I note Heather Mills sacked her lawyers. She may have set a precedent.

* * *

February 19 - The pace of life is increasing. Promo did cover work and in his absence there is more to do. Newc is pushed covering the east, East is in the west (and he says he and his wife are working on counselling, which I hope is true), Newc is still covering new work and I'm having to cover all round.

This only focusses my concern on recruiting a new manager. We have no one in our sights yet. The advert has not produced a viable short list. The agency sent through some candidates today. If that's there best I'm going to talk to another agency.

And I'm also telling East, Newc and North to think about poaching. For the right person we'll head hunt. The thinking hats are on. We have to solve this one. It's the number one job of a CEO to have a good team in place. Right now I have an overstretched one.

Thank goodness #1 has at least got her head down, is storming through year end preparation, is working in harmony with most people right now and seems to be recovering everyone's confidence.

More than that: I think some have a sneaking regard for her. She's a bit of a cool cat. I just need another one, but who knows how to keep her social life far removed from work.

Oh, and I'm honest by the way: this job is genuinely open to a woman.

* * *

February 18 - Someone lit the blue touch paper under today and it went off with a bang.

The ex-Mrs CEO says we will be hearing from her solicitor. I sent a polite message back saying I was sure there were better ways to resolve matters, but that I looked forward to hearing in due course. It's always a good start to the working week to know you're in trouble with the bosses.

Then I met the suppliers who are threatening to sue us to seek to resolve this (again) at the suggestion of their lawyers. I laid out the evidence as to why what they delivered was deficient. It not working seems pretty good evidence to me, but they claim that's because we specced it incorrectly. Since the spec was in their catalogue and we sought to use it for a purpose for which they say it can be used we are baffled by this. We have offered to return all the goods for them to re-sell as we have them in quarantine as a way out of this. They are refusing that. So we got nowhere. My PA sat in and is now drafting the note and our case. This is invaluable! She can write.

Then as if to calm things down, an urgent call out for a big problem at a customer meant East disappeared west and I had to cover a meeting for him.

After which I was meant to come back and talk to an agency about our need for a new manager. I was late and horribly apologetic. They must be desperate for the business as they were still here. I just wish the person I met had been better presented. Why am I meant to be impressed by someone who might be trendy but doesn't look as if he's seen a comb for seven years, even if I expect that in truth he spent several hours with a bottle of gel to achieve the resultant wrecked look?

Right now? I need a glass of shiraz. I'm off home to have one.

* * *

February 15 - Mrs ex-CEO phoned and said she'd reconsidered yesterday's decision to pay an additional dividend. She now thought that because of the economic downturn the company might need the money.

She tried to claim that as the specific proposal was not on the agenda, and that only the payment of divided was, insufficient notice had been given.

I pointed out that she was too late. I had already signed all the documentation and the payment had gone last night. In addition, I could see nothing wrong with the decision. She'd even had time for a 'break out' session with her adviser to consider it. No one could accuse anyone else of coercion, and as she'd taken advice we must presume she had properly considered the issue. She'd had the chance to object and had not taken it. I could see no way we could reverse it now.

She was livid. I have no idea of the reason for the original change of heart or its reversal, but I was not willing to reconsider the matter.

The chair agreed. He also agreed to tell the ex-CEO of what had happened.

The chance that she'll talk to me for a while is remote, which doesn't worry me much. The possibility that she'll escalate this does exist though. That would not be good,

Shareholders. Who'd have them?

* * *

February 14 - Well, I survived another board meeting, ably assisted by the Chair.

He's fantastic at these things, simply keeping a cool demeanour, distracting any flak (and there's plenty of that) and reminding people we are present to complete an agenda of work.

The ex-CEO wanted to argue I had the focus of the business for this year wrong and that there will be no downturn facing us. Recent experience, explained in detail, put a stop to that. The downgrade of property values in listed company accounts highlighted the concern, even if not directly related to us. Clear logic and prior thinking solved this one.

Mrs ex-CEO spoke through her tame accountant. He wanted more cost savings and wanted me to justify a PA at this time, for example. Producing the planned submission for pubic sector work on which she had done some slog was an indication that she's here to add value. Again, that round went to me.

They couldn't agree with each other on capital spending. He felt it was terrible that we intended to extend van lives. She didn't. He could see no reason for IT spending, she could. The accountant seemed to have lots of ideas on this. I listened politely and said I might call him (and won't).

You get the picture?

In the resulting trench warfare we actually got nowhere, and so in the end approved the budget, unchanged.

Then came the fun bit. The chair said he felt he had a duty to point out that there was cash available for distribution in the company, and this was an issue on which the shareholders could agree if they wished. He tentatively suggested that an increase in the level of dividend, fixed now for some four years, would be appropriate.

I thought the CEO would wet himself. I thought his ex-spouse would explode. I'm so glad it wasn't me who had to mention this. But we stayed calm and made clear that they were the only people who had not seen their earnings from the company rise at least in line with inflation over this period and it might now be appropriate to put that right with a back dated one-off payment, maybe, and new regular payments henceforth.

And to my amazement, and after an adjournment so that the ex-Mrs CEO could huddle with her accountant, she said yes. I won't go as far as saying her Ex could have kissed her, but he went away a lot happier than I expected and I returned to the reality of running this show, which is something of which those two now have no comprehension. If the term 'cash cow' ever had meaning it explains their relationship with this company very well.

* * *

February 13 - What's harder, a day at home with the children or a day at work. Almost any parent knows the answer to that one! It's good to be back.

Back to reading applicants for the new manager post we're recruiting for, none of which have yet set my heart on fire, if I'm honest.

And back to be sure that tomorrow's board meeting will go OK.

And back to learning that we are definitely losing a contract on price - and Newc's best efforts could do nothing about it.

And back to the inbox, the post, a supplier dispute that is looking like becoming nasty (and we will go to court to defend ourselves because I will not pay for shoddy service that does not deliver) and to the inevitable stream of people who want to see you after days out.

At least I have now persuaded most of them that their problem is not my problem. In other words, they can come to see me with an issue to which they have two or more solutions and ask my advice on which I think best. They can't just come in and seek to dump the issue on my desk. If they do they have learned that I'll send them out with it still being their problem.

It does save a lot of time wasting. But there were still a lot of seemingly trivial issues on which I apparently was indispensable as a fount of wisdom. I guess I should call that flattery, but I suspect it isn't.

* * *

February 8 - Promo left today. We gave him a small send off at lunch. It didn't work out here, but what the heck? It was worth a try and I wish him well. I really don't think his departure for what might be considered a competitor is a threat. They are in a different league, and if they want him in a key role of the sort he has described that suggests they intend to stay down there. That's the way the market is.

And I do know now that I will have a board meeting next week now. The ex-CEO wants one and Mrs ex-CEO says she's happy with that.

In the meantime, it's obvious our people do not know how to sell defensively. I spent an age with Newc this morning talking about how to sell in the way East did in the last fortnight to retain a customer. We do lots of training here for our people. This is going to be high on the agenda for additional training sessions in small groups for all people with customer contact as a result of this discussion (with which East and Newc offered agreement). My PA sat in. She's going to do some materials and organisation now.

Me? I'm off for a couple of days. I'm helping cover half term next week. That's the joy of being a Dad (which, to be honest, I love).

* * *

February 7 - Wednesday's seem like they're being scheduled as my long days out right now.

I was in the North and without steam to write on the way home (on the train - nothing else makes sense).

My object was simple. It was to review how new sites were settling down, and new people were working. There were several people to meet and I have a policy of trying to know all people who work for the company. I think it matters. North and I combined the two with some site visits.

I know I have lost enthusiasm for the customer who gave us grief up there at the conclusion of the install contract, but having them in the maintenance contract base is pretty important right now.

More than that, although we declined to bid for more of their installation at the time, I have heard that the company who did it is now charging more for maintenance than we are. I wanted the chance to let it be known we will maintain sites installed by other people (which is usually technically possible, although we like to use some bits others find hard to get, for obvious reasons).

I don't think that message was missed. That's as much as I could hope for.

The other thing I could wish for is budget approval. I still haven't got it. There's a reserve meeting date for next week if need be. It looks like I'll have to face the great ex-lovers in another of their ritual hate routines that we call board meetings. Something to look forward to.

* * *

February 5 2008 - I was pleased to be told by #1 today that she has agreed to the suggested audit approach AM put to her. I think we can win from this. If the auditors really think we need to upgrade our internal systems used primarily for management purposes I'd like them to consider that.

But that was all that I can say was good about today. I know other things happened, but the whole day has been dominated by a disciplinary hearing this morning. One of our people has been banned from driving. It's his own fault. The first nine points were for speeding. Now he has been caught slightly over the limit as well. He's out for a year.

Under our disciplinary code this is a dismissible offence for a person who has been engaged as a driver, but in the interests of justice they are allowed to present a case to show they can either still do their job (which, candidly is nigh on impossible) or to submit a case for doing another job in the interim.

This guy tried the second option, asking if he could shift to stores. If we'd got big installation orders on (as we did even during the autumn) I'd have been inclined to agree. They give rise to a demand for assembly that always creates more stores work. But we haven't got them right now and a temporary person we had last year has gone, back to Poland in his case. I can't justify a job we don't have.

So he's unemployed as of tonight. But this is the sort of thing I find hard as an employer. Call me a softy if you like, but this guy has been with us for a while, done an OK job, proved able to sell a bit and has been popular. And because he's been a plonker has made himself unemployed.

I've told him to come back in eleven months, just in case, but we can't carry him. And although I hate drink driving I still feel sorry for him and his family, whether it's his own fault or not. They might pay a heavy price for this.

* * *

February 4 - The final month of our financial year is really upon us (and I still can find no good reason to change from our odd year end without creating massive amounts of work which seem to outweigh any benefits).

I noticed the audit manager - AM - was in today with #1. I really wanted to know why - but the urge to micro-manage was resisted until I was invited in.

I've already noted that #1 thinks that the auditors are living in another era, doing things by what she thinks is a rather old fashioned book. AM has responded. They're willing to massively up the amount of analytical review they do this year because our systems justify it. But, if that is the case three things have to happen.

First of all we have to allow a complete copy of our nominal ledger to go to them for analysis. In view of data issues that have been in the press are we willing to do that?

Second, are we willing to spend more time explaining variances? This means that more senior people spend more time dealing with the auditors, and #1 has not been here most of the year.

Third, are we willing to accept recommendation on management systems which facilitate this as these will be relied upon a lot more as an integral part of the production of the financial information in that case?

Good questions I thought. I instinctively wanted to answer yes to all three. But I didn't. I indicated my willingness to do so, but I left the decision to #1. This is her first year end. Might she want a more conventional approach this year as she learns the year end procedure and imposes her will on it?

It was agreed she could think about it. I haven't heard yet. I am wondering if the AM has called her bluff. I am enjoying this!

* * *

February 1 - East thinks the situation about which I wrote yesterday will be OK. He believes the customer is very impressed by our reaction, so much so in fact that we might be able to bid for the downgraded work in another division of the company (there has always to be a silver lining).

And Newc continues to deliver - more enquiries are coming on for our new work, although that's the result of a lot of hard work. He has the bit between his teeth.

So have I. I want to be going on marketing and have my PA back now, and she now has considerable knowledge of what we're doing. So much in fact that I decided that the best thing I could so was de-brief her on what she's learned so far. This took some time.

The message is clear. We think we're good. We think we know what we're supplying. We don't have the evidence to support our claims. We don't know that the customer agrees with the value of what we're supplying. We don't as such know whether they're paying more, less or the right price for what they think they're getting as opposed to what we think we're delivering. So we can't predict who might look elsewhere soon, who is happy and who thinks they've got a bargain and needs to be sold more.

Big stuff. I told you I thought she was good. And in all these cases she could say why she thought this was the case, based simply on conversations to date, mainly internally, and by observation of some with customers.

This makes me realise two things. The first is she's the perfect person to help with marketing. The second is that we need to communicate much more clearly what it is that we sell. And in that respect she is right, and I could say why she was right although she could not. As I mentioned yesterday, what we actually sell is reassurance. What we think we sell is a product supported by maintenance services. We value the our supplies. The customer values the reassurance. The art of marketing will be to get the values aligned.

The only question now is the big one, how do I do that?

* * *

For previous installments of the CEO's Diary, see:

January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004
September 2004
August 2004
July 2004
June 2004
May 2004
April 2004
March 2004
February 2004
January 2004
December 2003
November 2003
October 2003