Applying effective stewardship in business is key to its success. What does stewardship mean today for businesses? Since the Great Recession, executives are more aware of their trust roles. These days, there is greater protection for shareholders. But we have a long way to go before effective stewardship is widespread in businesses.
What Does Stewardship in Business Mean Today
What is stewardship? Stewardship is acting as a steward. Who is a steward? A steward is someonewhogets responsibility and authority from an owner to look after the owner’s property in the owner’s best interest.
What does stewardship mean today for businesses? This will vary from firm to firm. These days, many boards of directors and executives see the need to be more accountable. They see this partly because of new government rules. However, executives know the cost of poor stewardship is huge. It hurts their brands. Greed filled executives in good years leading up to the Great Recession. During this time, many managers made decisions that caused major damage to their firms. (more…)
Customer centric firms are primed to create value for all stakeholders. Is your business customer centric? The late management guru, scholar, and author, Peter Drucker said, “The purpose of a business is to create a customer.” No customers, no business. No students, no school. No sports fans, no stadium! It’s that simple. If we believe this, why is poor customer service rife?
Oligopolies are not Customer centric
In Canada, two key industries, banking and telecommunications, are oligopolies. They are not customer centric. Yet, consumers accept the lack of effective competition, and are complacent. Often, firms in these industries provide poor services while hiking fees often. Ironically, when the government wanted more competition in telecommunications recently, companies played the patriotism card successfully. (more…)
Why Target Canada failed? Its poor start doomed it for failure. Target gave its rivals almost two years to respond to its entry in Canada. In 2011, Target announced it would buy Zellers’ leases, but only in 2013 did Target open its first store in Canada. Then, it tried to make up lost ground and ramped up too quickly. This two year delay alone is a valid reason why Target Canada failed. What was Target thinking?
It was no surprise when on January 15, Target said it was closing its Canadian operations. This will affect 17,600 workers and cost its owners over $6 billion pretax. What a waste!
Target saw a chance for its first venture outside the USA. It viewed struggling Canadian discount retailer, Zellers as a ready made vehicle. So, it bought Zellers’ store leases–not its business–for $1.8 billion. But, Target made basic missteps that led to its demise. These are three major blunders why Target Canada failed:
Protracted entry, rapid ramp up
Brand promise neglected
Competitive advantage overlooked
Why Target Canada Failed: Protracted Entry, Rapid Ramp Up
Target gave its rivals almost two years to react to its entry in Canada. In 2011, it announced it would buy Zellers’ leases. However, it did not open its first store until 2013. No doubt Target realized it was late, and opened over 100 stores during 2013 in former Zellers’ locations! During this rapid ramp up, many stores had empty shelves. From the start, Target Canada did not connect with its customers. It built up massive losses. Yet, it continued to open more stores in 2013, even with supply chain problems. (more…)
A small business owner has several challenges. Often he or she must play every important role. This can be stressful. However, I have been mentoring a few small business owners for the past few years, and each small business owner I coached was thrilled to be his and her own boss. Besides, each understood that it’s normal in a small business to not employ full-time specialists in each major activity.
I gained gear insights in the workings of these small businesses. Though I worked mainly in a large multinational business in many countries, one fact is clear. Apart from the scale, most challenges small and large business issues face daily are similar. Still, I think there are three areas a small business owner should address regularly. And a new year is a perfect time to do it.
As a small business owner you have the joy of being your own boss. However, this brings responsibility for the entire business. Unless you pause regularly to examine how you are doing, you can burn out emotionally, mentally, spiritually, and financially. This happens gradually.
Book publishers today will tell you business is tough. My American publisher recently emailed me to say their business was bankrupt. They couldn’t pay outstanding royalties from 2013, but would ship my inventory – at my expense – to any destination I chose. My first Canadian publisher trod a similar path five years earlier. Today I’m working with another publisher who could be headed in the same direction.
The eventual demise of these Christian-led businesses was obvious for several years in partial and delayed bill payments. However, many of us don’t heed such warnings and thus miss the opportunity to deal with structural challenges. Instead, we chase money-driven, unsustainable quick fixes.
But business executives who focus on relevant success factors will spot threats and opportunities early, and respond appropriately. I suggest these four keys to success in a mission-focussed business or organization:
Clear vision and mission
Careful attention to success factors
Attitude that puts people first
Simple strategy understood by the workforce.
Mission-focussed Business has Explicit Vision and Mission
For a Christian-led business, the vision and mission should satisfy needs or wants that honour God. (In business, “vision” defines an organization’s purpose in broad strokes, while “mission” expands and clarifies it.)
Highly visible and understood affirmations of the organizational vision and mission are essential to help a workforce remain engaged and motivated.
Unfortunately most organizations drift away from their mission. During boom times, new money-making ventures can seem too enticing to pass up. Leaders may hire and use loans to grab short-term benefits. But as the new business fades, debt grows, employees are laid off and a toxic environment develops.
Executives must never forget that the mission is the guiding light. Leaders must pursue it passionately, methodically and consistently. Doing so enables them to resist the temptation to follow every business opportunity that crops up.
Mission-focussed Business Explain and Track Success
Employees should know how their organization measures success, not only in their department, but overall. They should know the ingredients of success and understand it’s more than one bottom-line number.
I learned early at business school that “if you can’t measure it, you can’t manage it.” The challenge is to identify “it” – five to seven critical factors to track continually. Executives must monitor inputs that determine employee and customer satisfaction, and profitability.
Sadly, most people try to manage the wrong items. They may focus wrongly on outputs, when in fact only inputs (amount and quality of material, labour, and so on) are truly manageable.
Christian-led businesses must follow biblical principles while achieving reasonable returns. Executives must be unequivocal that the business will never compromise its values. When I served as vice-president at Alcan Inc. (now Rio Tinto Alcan), we had to submit a yearly letter to the president affirming we were unaware of violations of Alcan’s principles, objectives and policies. This formal process cascaded to front-line managers – each level submitting letters to the one immediately above.
Mission-focussed Business put People First
People are the greatest asset of any business. Motivated, passionate workers go beyond what’s needed. They lift productivity and provide superior services to customers – who in turn willingly share their positive experiences with others, thus benefiting the business.
Executives must invest time selecting, training and developing employees. They must value employees highly and treat them according to the Golden Rule.
Mission-focussed Business has a Clear Strategy
Vision, mission and strategy statements need to be simple and easily understood. A strategy should depict how the business intends to do its mission – essentially, how it will provide superior value to its customers. Executives should explain the strategy to the workforce – especially managers who must build and work with congruent departmental strategies and budgets.
The Bible teaches that the Lord will guide us when we believe in Him, trust, obey and lean on Him. Fundamentally, for Jesus’ followers, success is developing and treading paths that glorify God while doing His mission. It is aligning our lives with His – and these four keys to success in a mission-focussed business can help serve as signposts on our journeys.
What are the best criteria to hire new employees? Character trumps everything when hiring people. We can upgrade skills, but it’s almost impossible to train values and ethics.
In my 32-years business career, mainly in executive positions, I hired many people. In hindsight, some were exceptional. Others fitted well. But a few did not pan out. Hiring the right person challenged me. It was an area I studied, discussed with experts, yet each senior-level-hire created anxiety.
We did a job specification showing the needs of the job. We prepared a job description with the profile of the person needed. Then, we provided equal chance for all job seekers so we might get the best person for the job.
Best Criteria To Hire New Employees: Character First
What was my problem? How would I get to know each candidate? How would I go beyond résumés and application forms to learn about each person? I was sure each person would have a super résumé. Besides, I felt sure each would be well coached. Interviewees knew they were selling their skills. They knew they needed to perform well. And usually they acted brilliantly. (more…)
“Acquisition strengthens Loblaw and Shoppers Drug Mart in competitive marketplace. Will deliver more choice, value and convenience to help Canadians Live Life Well…We will drive growth and profitability through our unmatched mix of store formats, products and offerings. This is truly a case of the whole being greater than the sum of its parts.”
Loblaw believe one plus one will equal three; sadly, research shows most acquisitions lead to one plus one equals one. Here are three questions for Loblaw’s leadership:
Do they know most acquisitions don’t produce expected results because the acquirer overpays?
Loblaw paid around 30% premium for Shoppers, which delighted me, as a former Shoppers’ shareholder. But, how will the combined company generate an acceptable return from this high base? How do individual customers get more choice? There are no empirical data suggesting the takeover will cause Loblaw’s customers to gravitate to Shoppers or conversely. Then again, how do you create significant sustainable synergies when you keep Shoppers separate?
I believe Shoppers’ Stock Market value before the offer was realistic; a 30% premium on a high market price is a bad omen for Loblaw’s shareholders.
Sears, Roebuck & Company’s purchase of Dean Witter Reynolds and Coldwell Banker & Company real estate services business in the 1980s chronicled in Corporate Governance by Robert A. G. Monks and Nell Minow, gives me an eerie déjà vu feeling about this transaction!
2. Did Loblaw study my former employer, Montreal headquartered Alcan Inc.’s takeover by Rio Tinto?
I was delighted at the substantial premium Rio Tinto paid at the top of the market for my former employer of 32 years, Alcan, Inc. Though ecstatic as a shareholder, it was obvious in foresight that Rio Tinto overpaid. The aluminum industry is cyclical and prices were high by any standard. Rio Tinto shareholders’ only solace come from the CEO who did the deal losing his job, and so can do no further damage. As well, his successor acknowledged the mistake. Meanwhile, my former colleague, then Alcan Inc.’s CEO, Dick Evans, pulled off one of the best deals in recent memory for Alcan’s shareholders.
What went wrong for Rio Tinto? Clearly, they were not focussed on sustainable value and were distracted by industry events. Their due diligence obviously was inadequate, and they did not appreciate the industry’s cyclicality. Realistically, like most CEO’s in these over priced transactions, Rio Tinto CEO’s exuberance during the bull market trapped him.
3. Where does Loblaw expect higher earrings and lower costs to come from?
Here is another comment from Loblaw:
”Consumers are more focused on health and wellness and they are demanding more convenient retail locations,” said Vicente Trius, President, Loblaw Companies Limited. “Working together, we will capitalize on these consumer trends and create a compelling new blueprint for future growth and profitability.”
As part of their approval of the deal, the competition folks required Loblaw to divest some Shoppers’ stores. So, the new entity has fewer locations than the separate companies. As a Shoppers’ customer, how will this transaction alone change my buying habits and drive me to Loblaw? It won’t!
There are no significant synergies to cause the whole to be greater than the parts. What’s the “compelling blueprint”? To be sure, Loblaw’s offering “online pick up” at Shoppers won’t be a value creating juggernaut. Will existing Walmart customers choose to move to the new Loblaw because of the combination? I don’t think so. Will Loblaw go head to head with Walmart on price? This is a daunting prospect for Loblaw’s shareholders.
Loblaw and Shoppers have different cultures. A perceived simple matter as combining purchases will need significant study, patience, and exemplary leadership, to be effective. The good news is business literature are filled with many failures from which leadership intent on learning, can benefit.
If they haven’t, Loblaw’s leadership would benefit from Paul B. Carroll and Chunka Mui research-based book, Billion-Dollar Lessons, What you can learn from the most inexcusable business failures of the last 25 years. They would see clearly similar examples of failed acquisitions.
Many shareholders, including me, chose the full cash option causing Loblaw to restrict cash payment to 80%, issuing Loblaw’s shares for the rest. Accepting cash based on the high premium above market is one sign of Shoppers’ shareholders view of the combined company.
Loblaw’s leadership need to understand it is highly unlikely they will realize most synergies; the probability of unrealized synergies increases if they maintain two separate entities. That’s why Loblaw are likely to break commitments for no lay offs, no reorganizations when one plus one heads towards less than one! Leadership must understand that keeping two separate entities means less than the status quo–Loblaw, plus Shoppers encumbered by Loblaw’s bureaucracy!
I learned several lessons when I was part of Alcan’s mergers and acquisitions activities for several years. First, your investment banker is unlikely to tell you the proposed acquisition is headed for a train wreck. Second, you tend to over estimate potential synergies; not consciously, but you can’t anticipate implementation challenges. As well, often you will compromise and defer or neglect tough people decisions. Third, in the heat of the deal, you are likely to forget where you are in the business cycle. Don’t believe me? Review the Alcan and Rio Tinto deal!
Michel A. Bell follows Jesus, is author of five books, speaker, founder and president of Managing God’s Money, and adjunct professor of business administration at Briercrest College and Seminary. Michel was a senior executive at Alcan Inc., now Rio Tinto Alcan. For information on living a debt free lifestyle, visit http://www.managinggodsmoney.com/essentialtools/capitalfund.php.
God’s vision, mission, goals, can be unclear, but they are real. Doing them under His guidance is important if you are a Christian business owner. This will result in a business that will bring Him glory and be the best it can be.
Small firms employ almost 50% of Canada’s private sector workforce. It’s an important growth area. Are you in or planning to join this sector? Probably thinking about starting a home-based business? If you follow Jesus, ensure you work with God’s vision, mission, goals. It’s vital you have a clear vision, explicit mission, solid values, a coherent strategy, and a solid value creation platform.
Most Bible translations tell us in Proverbs 29:18 that where there is no vision the people perish. The Bible Knowledge Commentary states that a better translation is ‘without God’s word, people abandon themselves to their own sinful ways. On the other hand, obeying God’s Law brings happiness.’
If you follow Jesus and intend to start a business, listen for God’s word. Try to hear God’s vision, mission, goals. He will show you the business He prepared for you. Even if you have a dream to do such and such, turn it over to the Lord. If that’s His plan, He will place the desire in your heart (Psalm 37:4). (more…)
Tim Cook, Apple’s CEO should teach US senators effective resource management. They might stop wasting tax payers funds gained from their excessive taxation policies.
Isn’t the United States the bastion of capitalism? The country where folks aspire to the American dream? It’s sprouted corporations like Apple, Microsoft, Amazon, Whole Foods, Walmart. However, today it seems to be sputtering. Many home grown corporations are finding greener pastures abroad. Among other reasons, the United States has the highest corporate tax rate in the world. Not only is the corporate tax rate highest, but the tax code is complex, and the tax system operated by unionized bureaucrats determined to bully selected groups.
Tim Cook Would Not be doing hiss Job if he Brought Cash back to the USA
What did the Senate sub committee hope to achieve by hauling in Apple’s CEO, Tim Cook? The tax code allows firms tax-free retention of profits earned abroad. It taxes only funds brought into the United States. Therefore, what’s the issue? Clearly, the inquisition was just another public corporate bashing. To be sure, it will mislead the ignorant masses to believe big businesses are the bad guys. More important, it was one more sad showing of how anti capitalist the United States is becoming? Has become?
Informed folks should commend Tim Cook and other leaders for looking after stakeholders’ interests by keeping profits abroad. Why should Apple or any United States company opt for reduced growth at home when legally they can expand overseas with untaxed profits? Apple and several companies take advantage of the oppressive, complex tax system for the benefit of their stakeholders. To do otherwise, would be to act incompetently like those senators who bully big businesses. Thankfully, at least Senator Rand Paul gets it. He said, “if anyone should be on trial here, it should be Congress.” Right on, senator Paul!
Apple and other firm’ tax strategy of not bringing to the USA, cash earned abroad, will provide economic benefit in some country. Firms will have more funds to reinvest and create jobs, and, or send to shareholders. This will help to grow the economy and create jobs. This is a point politicians miss. Over time, retained profits will flow to different regions. That’s why countries must compete for these funds through taxation and other policies. No doubt, the United States government prefers the bullying approach instead of healthy competition.
For the skeptics, this would be a valid question: What happens if a company just sits on retained profits? Market forces and shareholders’ pressure will get that business to buy back its shares, pay dividends, or invest. Each of these actions puts funds into the economy. The funds might not end up in the United States. But they will go somewhere else.
Hopefully, senators will realize the US tax system is broken, and will try to fix it. That’s not rocket science. But for inept and ineffectual senators and government bureaucrats this could be a stretch. Unionized keepers of the status quo tax system will want to grow government employment, and the more complex the code, the better.
Governments must leave more funds with businesses. Firms create productive jobs. Governments are wasteful. Governments must learn to do more with less. They must shrink. What if the private sectors’ good stewardship practices applied to governments? Imagine how many programs and departments would be cut to curtail blatant waste and abuse! There is no evidence government uses funds wisely. Government collects taxes, increases debt, and runs budget deficits. Meanwhile, problems it’s meant to fix keep growing!
Rather than wasting Tim Cook and other corporate executives’ time to find out they followed tax rules, the Senate committee ought to be looking at ways to encourage businesses to expand at home. If they want funds returned home, they must provide incentives, not penalties! Will the senator who paid more taxes than due, please step forward?
Certainly, many firms abuse tax and other systems. Several executives overpay themselves. Still, the firm is the only viable productive jobs’ creator in the economy. Governments must encourage firms to invest profits at home. This will create jobs. They must provide the appropriate environment. Ideally, zero tax on corporations so they have more to reinvest and pay dividends. As well, less government and union harassment. And less regulations and general involvement in the economy.
Article first published as Apple’s Tim Cook Should Teach Effective Resources Management To Senators on Technorati.
Here we go again. Unions demanding more from Air Canada, and Canada’s myopic federal government dashing to stop a strike. When I listen to Minister of Labor Lisa Raitt talk about this matter, she reminds me of a first-year business student who does not grasp the subject. The minister justifies this meddling act by claiming the government must guard the economy and shield the public. Has the minister forgotten that Air Canada is a publicly traded corporation? Government must allow it to act within the law, and in its best interest. Air Canada must be free to lock out its employees. Similarly, government must let workers strike, if they have that legal right. Air Canada’s workers do.
Why is government interfering with Air Canada, preempting it from acting to solve this challenge? It is highly likely that this government decision will destroy long-term shareholder value. It hampers the corporation’s latitude, and curbs unions’ flexibility. Notably, it could be the tipping point hastening Air Canada’s trip to bankruptcy protection.
If the government believes an Air Canada strike harms the economy, it has other options. It can change foreign ownership limits to allow more competitors. WestJet, with Southwest Airlines’ successful business model, does well without unions. Why not allow room for others to compete head-to-head with Air Canada, and give the public more choices? This might lead to a smaller Air Canada, fewer workers, and fewer unions. Besides, it might entice unions to focus on Air Canada’s long-term viability.
Why do Air Canada and its unions keep battling? Air Canada has outdated human-resource management practices. Surely, it takes two parties to bargain. Even so, Air Canada must realize that the hostile labor relations environment has failed. To survive long term, union-management relationships must change drastically. What will it take for Air Canada and its unions to realize that they must work as long-term partners? They have fought many battles using the current failed model.
Maybe a protracted strike that leads to bankruptcy might be the catalyst for Air Canada’s break up. Other players could pick up pieces of Air Canada and define new engagement rules. This would have negative, manageable short-term effects on the economy. WestJet could ramp up its services, and government could allow foreign carriers to transport passengers between Canadian airports. In the long-term, Air Canada would not have unions snapping at its heels, constantly holding the public at ransom. Read more of this article first published as Canadian Public Needs a Protracted Air Canada Strike on Technorati.com.