Soft markets require sharp strategy
Furniture Today Staff -- Casual Living, June 1, 2008
You’ve heard it before: Anybody can do well in a hot economy; it is when times are tough that good management stands out from bad. So now that the news media has gone from talking about “the R word” to using the term “recession,” even specialty dealers in strong markets would do well to pause and take stock of a few basic business principles.
Keep your finger on the pulse of your business
Do you have a clear understanding of your financials?
“The numbers don’t lie,” said retail consultant Valerie Ziebron, principal of VRZ Consulting Co. “When you know exactly what your operating expenses, inventory and other financials are, and have them in the forefront of your mind, you have the upper hand in making important decisions.”
Ziebron suggests making financials as visual as possible. Use a highlighter on your financial documents, color code your inventory sheets so you know what product needs more focus, and even try a visual of putting a jar of beads on your desk to represent your debt.
Support your staff
Do you have current job descriptions with clearly stated priorities? The best support you can give your staff is ensuring their performance expectations mesh with yours. In small stores in particular, it might be true that “we all do everything,” but if that ambiguity takes the place of good job descriptions it can also result in some tasks being overlooked.
If you haven’t looked at your job descriptions recently, or don’t have them, take the time to write down and rank in importance every task you expect from each employee. Then ask each employee to do the same. You may be surprised.
Another helpful way to view job descriptions is to think of them as outcome descriptions, according to Quint Studer of Studer Group and author of “Results That Last, Hardwiring Behaviors that Will Take Your Company to the Top.”
“Job descriptions are based more on competencies than outcome,” he said. “Someone can have a competency but that doesn’t mean they will have the outcome.”
Studer suggests setting up verification systems to give staff specific outcomes to strive for and to measure their results. For example, set up a system to track customer contacts and follow up, and integrate it into staff performance evaluations.
Focus on service
Are you providing the best customer service possible? Studer recommends establishing a Standards of Behavior contract that owners and employees create and sign to reinforce a culture of service. These standards should be specific: Rather than “Display a positive attitude,” specify “Smile, greet customers by name,” or rather than “Follow up each purchase with a phone call,” specify when the call will be made and what questions the salesperson will ask the customer.
Keys to establishing successful standards of behavior include ensuring employees have input in defining what those standards are and everyone, including owners/operators, are held accountable.
Also, implementing standards of behavior can help owners and managers differentiate their high, middle and low performing employees so they can better target training.
“High performers are smart transfers of learning, so they are going to do what they need to do no matter whether they are trained or not. You need to focus on the middle performer,” Studer said. “Training them is the way to really move the organization.”
As for the low performers, can you afford to carry them in a soft economy? “You should be spending 92% of your time with high and middle performers and only 8% with the people who don’t really want to be there,” Studer said. “If you’re not, you must take steps to remedy that now.”
Avoid going negative
Are you reinforcing fears you and your employees share? Studer defines recession as a national confidence problem, and urges companies to accentuate the positive.
“Tell everyone how great your company is, how talented your people are and how excited you are about the future,” he said. “All this positive talk becomes a self-fulfilling prophecy.”
Ziebron agreed, but at the same time cautioned retailers to be realistic with employees. You want to open the door for constructive brainstorming about how to weather tough times, rather than create an opportunity for commiserating on how tough it is.
“Communication is vital now,” she said, adding it is important to take the time to talk with staff individually to listen to their concerns and ideas.
Studer suggested what he calls “rounding for outcomes,” in which owners and managers take the time to regularly touch base with employees to recognize their successes as well as identify their areas needing improvement.
Look for opportunities
Are you leveraging your strengths? If your market is the mid- to high-end, a soft economy isn’t the time to forego your customers and try to become all things to all people. That said, Ziebron believes it isn’t the time to turn your back on the lower middle market either.
“You might want to consider featuring a couple of value brands in your advertising at this point (to prevent) losing customers who might think you have nothing in their price range,” she said.
Finally, Ziebron recommends that specialty dealers take steps to learn from their experience. By constantly monitoring your progress and setbacks, you can adjust your strategy as needed and not only survive, but gain marketshare.