The New York Times today has a story, “A New Capital of Call Centers,” which focuses on the fact that many  companies with US customers are moving their call centers to the Phillipines or back to the U.S. because personnel in the new locations speak better English than, say, their counterparts in India.

Evidently, these companies believe that customers’ primary concern is the quality of the language used by the call center agents.  My primary concern, however, is whether or not the call center agent is actually able to answer my questions, solve my problem, and/or take my order accurately.  Overall,  I’ve had much better luck with the hard-to-understand foreign agents who seem to know what they are talking about than with US-based agents who are poorly trained and/or work in call centers in which no system is in place to help callers actually get their questions answered.

In brief, I wish companies would pay more attention to this Renee’s Rule™: Make my life easy.

What do you wish?

There have been many analyses written about what made Steve Jobs great, but the articles I have read have missed the key ingredient:  Steve was able to make things easy for his customers.  He knew instinctively that people would be more likely to use products that were intuitively easy to use, and his genius was that he was able to turn the idea of easy into the reality of easy.

My sons have saved my Apple IIe and the floppy disks with the  games they played.  We all love our iPhones, iPads, and Macs…..

I’ve been thinking about the  issue of “easy” because I had two “high-end” ovens installed in my kitchen this week.  Really, I just want to be able to put something into the oven and cook it, but the display is so complicated and the instruction book so inadequate that what should be intuitively easy, will take hours.  Will I love my ovens when I finally figure them out?  Of course, but the manufacturer has missed the boat by failing to provide the “customer delight” that results when something is actually easy to use.

Today, most of us feel that it has become increasingly difficult to get things done, so “easy” is now more important than ever.

As you may recall, one of  Renee’s Rules™ is:  Make my life easy.  This was one of Steve Job’s Rules long before it was mine.

One of the headlines today in the New York Times reads, “In Gulf, It Was Unclear Who Was in Charge of Oil Rig.”

If “who was in charge” was, in fact, unclear, it is scary, but, in my experience, too often the case.

Example one: Several years ago, in the process of considering whether to accept a family-owned business client, I interviewed 7 family members, most of whom were in the upper echelons of the business.  Because the company had no organization chart, I asked each person to draw one for me.  No two charts were the same.  The mother-in-law thought the son-in-law was running the company; the son-in-law thought the mother-in-law was running the company.  No wonder the company was on the brink of bankruptcy.

Example two: A 25-year-old, FDA-regulated company with operations in both the US and Canada had been cited for FDA infractions before my arrival.  Unlike the company in example one, this company had a detailed organization chart and job descriptions for every position, so when I met with the Director of Government Compliance and the Director of Quality Assurance,  I asked which one was in charge of ensuring FDA compliance.  The two looked at each other. Neither could answer.

You will not be surprised to learn that I solved the non-compliance problem by simply designating one person who had both the responsibility and authority for compliance. As a result, during the first FDA inspection following my departure, the company received  its first-ever absolutely “clean” bill of health.

The lesson: Imagine a ship with two captains, each issuing different orders—a symphony, in which the conductor is “conducting,” while the concertmaster is directing the strings.  No one would ever consider creating either of those scenarios.  That’s  Management 101.  Why, then, do companies, from small to gigantic, allow that to happen?

Renee’s Rule:  You can’t have two captains on the same ship.

When revenues decline, and profits are non-existent, companies often believe that if they buy or merge with another company, the increased revenues will solve their profitability problems.  In my experience, however, these “solutions” often exacerbate the problems.

To be successful, all companies need the essentials:

• A capable leader
• A carefully conceived plan
• A system for ensuring accountability

When these pieces are missing, a joining of two financially and operationally troubled companies is destined to fail.

An example from one of my clients:

• Company A was in an FDA-regulated industry
• The industry was experiencing both intense pricing pressure and consolidation.
• Company A, with multiple manufacturing and distribution facilities, was not only losing money but was also experiencing both product contamination and delivery problems.
• Company A, which was bleeding cash, bought Company B, which was also bleeding cash.
• Neither company had any of the three essentials listed above.
• After the acquisition, the expected “economies of scale” did not materialize; costs for the combined entity actually increased as a percent of revenues.
• The already stressed delivery system was now even more stressed.
• Expected  revenues did not materialize because frustrated customers switched to other suppliers.
• Chaos ensued.

We were able to save the company, but it was a close call…..a very close call…..

Two wrongs don’t make a right, and two sick companies do not make a healthy one.

Recently, I sent an email to key business contacts letting them know my turnaround client needed a new CFO.  I received approximately 160 resumes.

The quality of the  emails most candidates sent was appalling.  Based upon what arrived in my inbox, here is my advice to those looking for work:

1. Read the job announcement. If you send a lengthy email in response to an ad that includes the word “turnaround”, you should  assume you will not be considered.  Turnaround experts are looking for people who can cut to the chase and won’t waste their time.
2. Use bullets not paragraphs. Time is money. Cash is king.  Make my life E-A-S-Y.  I am getting hundreds of emails a day.  Which emails do you think I am likely to read? Those with 5 lengthy paragraphs or those with 5 concise bullets?
3. Make sure that the file name of your resume includes your name. If your resume does not have your name in the file name, you are out-of-the-running with me because I have to take time–my time–to change the file name before I save it.  Please, make my life E-A-S-Y.
4. Don’t be a pest. If the job announcement says “send email to,” please don’t call.  If you do, it appears that you have no respect for my time.

Renee’s Rule™: Think before you respond. If you were in my shoes, what would you want to know?

• What has the applicant DONE?
• What is he/she LIKE?
  • Will he/she be able to work in a highly charged, fast-paced environment?
  • Will he/she be the kind of employee who anticipates what his/her supervisor needs?  who will make my life E-A-S-Y?

Renee’s Rule™: Make my life E-A-S-Y!

Over the years, I have had the pleasure of working with many wonderful CPA’s who truly put their clients’ interests ahead of their own.  They ask the key questions.  They know what they don’t know.

I have also, however, seen some CPA’s do some really appalling things; e.g.,

• Providing inappropriate advice  ( When I arrived at my very first client, the company was on credit hold or COD with all vendors, bleeding cash, and faced with a threatened shut-down by the IRS.  The CPA, blissfully unaware of the severity of the problems, was billing the customer for business planning assistance.)

• Being unwilling to recommend a change of CFO when that CFO was clearly unqualified  (I’ve seen this multiple times and don’t know whether this happened because the CPAs did not realize the failings of the CFOs or because the CPAs did not want to risk losing their clients.)

• Recommending consultants based on industry or turnaround “experience” rather than on RESULTS   (For the dangers related to this, please visit my post, THE EXPERIENCE FALLACY.)

• Giving false assurances  (Several years ago, I had as a  client a third-generation family-owned business.  The company had experienced increasing losses for three years straight.  The CPA had told the elderly majority shareholders, “Everything will be all right.”  When I arrived, however, the company was at Death’s Door.   The company survived, but it was  an extremely difficult situation.  We had to implement an out-of-court Chapter 11.)

• Preparing unrealistic financial projections because the CPA did not understand the business

It is really important that CPA’s–and other professional advisors–know what they don’t know.

I have concluded that the vast majority of companies today either do not agree with and/or do not care about and/or are clueless about how to implement the above Renee’s Rule™.   There is a good chance you have reached the same conclusion.  It has become incredibly difficult to get anything done.  The simplest tasks have become complicated.

There seems to be widespread recognition that being nice is an important part of customer service, but the other piece–making things easy for customers–has somehow been lost in translation.  Personally,  what this customer wants/needs is for the companies I deal with to make life really EASY for me.  What do you want/need?

As you may have guessed, this post is the result of a my experiencing a  spate of bad (abysmal) customer service over the last few weeks.  Everyone is NICE; nothing gets DONE--or gets done only with much wasting of time…..I know that you, too,  have “been there; done that;” e.g.,

1. You are required to enter your phone number to get to tech support, but the first thing the person asks is, “May I have your phone number?”
2. You call for repair help.  You provide a description of your problem in infinite detail, but the details somehow do not survive the distance between customer service and the people who actually do the repair work, and it takes forever to get the problem solved.

I understand that many of the  companies we call could not care less about whether they are wasting our time…but do they have so many customers, and are they making so much money that they don’t want to improve their bottom lines by streamlining their customer service?   Think of all the personnel time and $ that would be saved if no one had to ask, “May I have your telephone number?” or if the technical person “on-the-ground” received enough detail from customer service to solve the problem on the first try.

Enough complaining for one day–you can tell I’ve had too much TERRIBLE customer service from too many NICE people….It may be time for a new Renee’s Rule™: Enough is enough!”

In future posts, I’ll share some examples from my personal experience about how companies can reduce costs AND provide better customer service.

Both national and regional bankers have told me recently that they expect a second wave of troubled companies…..For those companies that may be at risk, here are my key recommendations:

1. Renee’s Rule™: Don’t sell to customers who won’t pay.
2. Prepare worst-cast cash projections for each of the coming 6 months; if necessary, take action now to prevent a meltdown.
3. Solicit ideas from employees and advisors; implement those that will have the greatest impact in the shortest time.
4. Implement changes to company processes that will lower costs and improve customer service.
5. Renee’s Rule™:  If you think you may need help, you probably do.
6. Renee’s Rule™: The sooner, the better.

Every manager knows the axiom “What gets measured is what gets done,” but too often managers overlook key measurements.

An example: When cash is tight, and profits are lagging, managers, boards of directors and lenders often focus on reducing inventories.  Measuring dollar value of inventory and inventory turns can certainly be useful; however, if  there is no report that shows the AGE of the inventory (how old the inventory is and whether or not it is obsolete) and no report that measures stockouts, inventory reductions may produce undesirable, unintended consequences.

When a company holds old or obsolete items and reduces the size of its inventory, the dollars tied up in inventory do decline, but the % of  “bad”  inventory  increases, and the entity may find itself without  materials needed to deliver orders on time and/ or to stock its shelves with the products that customers want.

In addition, if a company does not write down old or write off obsolete inventory (and, yes, this still happens!), the company is inflating its bottom line.  Since financial statements are the scorecard of the business, if financial statements are not accurate, then management’s decisions are based upon misleading information.

Renee’s Rule™: What gets measured matters.

When I’ve abandoned almost all hope of ever finding good customer service anywhere ever again, I stop by Pearl Ace Hardware to reassure myself that there IS actually ONE place that really “gets it.”

Pearl Ace Hardware may be the best store on the planet. On-line reviews reflect this, and all of my friends and neighbors feel the same way.  I’ll bet that this is one retailer that  is profitable  in spite of the downturn.

Why? Because this store truly understands the marketing equation:

Renee’s Rule™:  Providing what your customers want/need + great customer service = loyal customers +  steady stream of revenue.

They ALWAYS have what I need.  They ALWAYS have knowledgeable, friendly staff available to help.   No problem finding what I seek; no trouble finding someone to answer questions; no long check-out lines; no surly clerks.   It is Customer Service Heaven on Earth!

When I check out, I inevitably find myself saying to the clerk, “I just love this store!”   (And trust me, Reader, I am P-I-C-K-Y.)

Some retailers compete by having the largest selection of merchandise–being a “one-stop-shop.”

Some compete by having great “customer service”–being super-nice to customers.

Too many businesses have neither; too few manage to have both.

If every cloud really does have a silver lining, perhaps the silver lining of this downturn will be that we will see a return to first-rate customer service.  After all, survival may depend on it.

Renee’s Rule™:  There is a connection between customer service and sales.

I’ve seen some pretty scary hiring mistakes.  Here is an example in which “The Emperor Had No Clothes.”

In the 1990′s, I became  Interim CEO of a  company that was experiencing the worst production problems I had ever seen.  The company had hired a new Director of Materials Management.  He had been referred by a management team member who had worked with him elsewhere, and his references from former employers were excellent.  Everyone told me–and seemed to believe–that this guy was a genius.  During meetings, he typed on his own notebook computer (fairly unusual at that time), looked impressive,  and made “pronouncements.”

I, however, couldn’t understand a thing the guy was saying (plus, of course, materials management  was still totally out-of-control.).  I said to myself, “I have an MBA, am pretty darned bright, and  have run more than 10  companies.  If I can’t understand him, maybe he isn’t saying anything.  Something is wrong.”

HR had checked his references, but I asked them to contact the universities listed on his resume to verify his degrees.  Surprise, surprise:  this fellow had lied on his resume and had no college degree.   Needless to say, that was the end of his employment with the company.  (The company, by the way, was successfully turned around.)

The question in my mind remains:  Why in the world hadn’t someone else called his bluff?  (A question to be explored in a future blog..)

At least three of Renee’s Rules™ apply:

• If you can’t understand what someone is saying, he may not be saying anything.
• Too often, people are afraid to speak out when they think something is wrong.
• Check references thoroughly.

When is it “safer” to hire a “big” professional firm rather than a smaller one?  This is a topic I’ll be exploring in several different posts.  For the moment, here is an instructional story. (The names and some details have been withheld to protect the guilty.)

Some time ago, a principal from PE (private equity) Firm A, with investments across the country, called me to take the place of the CFO they had hired because he was a consultant with a national (“big”) consulting firm.  Why was the PE firm replacing him?  When the portfolio company’s lender conducted its audit, guess what they found?  The “F” word: Fraud.  (I did not accept this engagement for a variety of reasons I’ll discuss in a later post.)

Several months later, PE Firm B interviewed me for a turnaround in an industry in which I had successfully turned around more than one company.  Did they hire me? No.  Why did they pick someone else?

• He’s from a national firm, so that’s “safer.”
• He has industry “experience.”
• We know him.

Here is what I know about this person:

• He IS a consultant with a national firm.
• He was involved with a company but definitely did not lead a successful turnaround in the “industry.”
• He was the person who was removed by PE Firm A because bank fraud occurred while he was CFO.  (Evidently, PE Firm B didn’t really “know” him.)

I also know that the company was not, in fact, successfully turned around.

Let me be clear:  There are some times that a bigger firm really IS safer; nonetheless, there are many lessons to be drawn from the above story.  Stay tuned for further posts.

In the meantime, remember these Renee’s Rules™:

• When hiring, RESULTS are more important than “experience.”

• Always check references.

• There is no substitute for common sense.
  

I have been shocked by the number of companies I’ve met recently that have been placed on COD or credit hold by their vendors but have not put any of their own, troubled customers on COD or credit hold.

Whether you are the CEO of a company, a law firm, or an accounting firm: Stop selling to customers who can’t or won’t be able to pay.  There is no way to overemphasize this point.  When a company is faced with declining revenues and profits, uncollectible accounts receivable make the situation worse and—in extreme cases—can be the tipping point that causes the company’s demise.

Today, it is absolutely not safe to assume that customers who have always paid on time will be able to pay on time—or, for that matter, at all, so review your credit policies and procedures and define carefully

1. Who can have credit?
2. Who can authorize credit, and what are the guidelines?
3. How does the company verify current credit worthiness of customers?
4. Who is responsible for monitoring timeliness of accounts receivable collections?
5. What are the company’s collections policies; e.g.,
   • What steps does the company take when payments are late?
   • At what point is a customer put on COD or credit hold?

I will provide additional information about sound credit policies in a future blog post.  In the meantime, another Renee’s Rule™ applies: “The sooner, the better.”

Too often, people make hiring decisions based upon “experience” rather than “results.” A true story illustrates my point.

Several years ago, at the beginning of what ended up being a very successful turnaround project, the CEO told me, “We have a new CFO who has experience in turnarounds.”    (I’ll call the CFO “Jill,” to protect her real identity.)

“Oh?” I said, “What kind of experience?”

To make a long story short, Jill had been CFO at company A, and it went out of business.  Then, she went to company B, and it went out of business.

During my tenure in this extremely troubled company, it soon became apparent that although Jill talked a good game (and, indeed, sounded very impressive!), she was simply unable to make needed changes.  She fancied herself a turnaround expert but was absolutely unable to fulfill even her most important job function; i.e., producing timely, accurate financial statements.   I replaced her with someone who could.

Not long ago, I read about a company that expected to have to shut down if it could not get additional financing very soon.  Guess who had recently been a financial officer for that company?

The companies that hired Jill undoubtedly made “experience” their key criterion.  Instead, they should have asked about and verified what RESULTS she had actually achieved.

Please note: Although Jill, who marketed herself as someone who could turnaround a company, was neither capable of doing that nor able to accomplish basic accounting functions,  there are many extremely capable CFO’s who have found themselves in distressed companies through no fault of their own.  I have had the pleasure of working with some of them.

Renee’s Rule™ – When hiring, RESULTS are more important than “experience.”

Recently, I visited a potential client.  The company was at Death’s Door.  Their bank had not required any financial statements from them since September 30, 2008.  Their bank had not suggested they get any outside assistance–even now.

Over and over again, I am seeing companies whose lenders have waited entirely too long to get timely financial statements from their customers and to take action to help the companies.  Given the economy today, 3-6 months is entirely too long to wait to see how a company is doing.

In the case of the company above, I declined the engagement because these people were going to commit bank fraud because they saw no other way out.

There are some companies that can be saved–even with declining sales–but they need help at the earliest possible moment.

It seems like every minute a new book with the “latest” business “secrets” hits the market.  In reality, however, running a business profitably and well boils down to taking care of the basics; i.e., having a well-conceived plan, having a capable leader, and implementing a carefully crafted management control system.  It is astounding to me that so many companies lack these basics—not just family-owned, but also publicly and private equity-owned (You know some of their names.)

Much of the information in this blog may sometimes sound like nothing more than common sense, but common sense and an attention to the basics are too often missing-in-action.

An example from my personal experience: In 2007, a private equity firm interviewed me for a turnaround project.  The company had been losing money for three years; there was no business plan; the president was clearly not qualified; and there was no effective management control system in place.  After I mentioned that the company needed these basics, the managing director said, “We know that.” (As in, “do you think we are idiots?”)  So…if they knew all of that, then where had they been, and what had they been doing for the past three years?  And these were people with MBA’s from prestigious institutions, who, presumably, have a fiduciary duty to their investors and definitely know better.

Find a way to step back from your business, to take a cold, hard look at where you are and what your real prospects are…Are you making money or losing money?

Approximately 20 years ago, I began compiling Renee’s Rules, which I will share from time to time on this blog.  (My son Jason created a great “talking” set of the original Renee’s Rules™.   If you would like a copy of the executable file, please contact me.)

Rule #1:  It never hurts to ask.

This true story illustrates the point:

Shortly after I began working as Interim CEO of a manufacturing company, it became apparent that the company was going to lose  its proverbial shirt on a large job.  The selling price was approximately half the direct cost of the job.  The company had not yet started the job.

We scheduled a meeting with the customer, explained the problem honestly, and told him that we could complete the job only if we doubled the price.

Instead of pulling the job, he agreed to the new price.

In these troubled times, cash-strapped companies simply cannot afford to sell below their direct costs.  They need to be better off–not worse off-on cash.  Period.

CEO’s of deeply distressed companies need to find a way either to reject cash-losing jobs or to increase the prices so that the company is better off on cash after the job than it was before.

It never hurts to ask.  For many companies, doing so may spell the difference between survival and liquidation.