When the company crisis, the options to improve the situation, not so much. Can fully rebuild the business model, streamline processes, but that takes time and money. But if you need to escape quickly?
After the Crimean crisis we found ourselves in a steep dive: profitability fell by half, the projected losses amounted to a few hundred million. The time for experimentation has passed, were we to rely only on the efficiency of employees. Here’s what came of it.
“We underestimated warning signs”
By 2012, following the success of SEO, our company has grown into a vertically integrated holding of five businesses and start-UPS. Each of them worked in different areas of Internet marketing: SEO, contextual advertising, performance marketing, and so on. When the company became multigrocery, the margins of the core business fell from 80 to 60%. This would be tolerable if not for the Crimean crisis.
We underestimated alarming symptoms. Finally understood that stalled when fell critically one of the indicators: the ratio of LTV to CAC.
LTV — is the profit which brings the client during the cooperation, and the CAC — the costs of attracting customers. A healthy relationship of LTV to CAC for a large service business must be more than two, and on the eve of perestroika, we had the 1.2. Our staff worked effectively.
Each business unit had its own functional structure, top management and business departments that essentially competed for the same client. This led to huge administrative costs with zero profit three out of five businesses.
The system is literally devouring itself.
Draw out every business individually was pointless, so we put everything on one platform and started to save with all possible speed. Literally 7-8 months rebuilt Commerce has developed a single content standardized materials for all departments. But still decided to personnel changes. We wanted to rely on employees who believe in the company and ready to change to achieve the result.
Don’t be afraid to part with top management
The merger we received is five businesses in one. The former General, commercial and operational Directors were offered alternative positions but, of course, with much smaller powers. Disagreement with the new policy of the company and the loss of power led to the fact that we lost half our senior management.
Failure of a company is always a failure of her steering. Unfortunately, many tops have not been tested for loyalty and professional ambition.
We expected that they recognize their mistakes and we will correct them together. But in fact, they found all sorts of reasons to justify their inefficiency and to save the post.
Of course, we wanted to retain top managers. The opportunity to build and scale expertise — our greatest asset. We fought for several tops, talked, convinced that restructuring is necessary and will open new opportunities. One Manager talked the whole year, but still broke up.
And here is the question: whether to persuade, to try to hold on to? Now I can definitely say: you need to ruthlessly let go. If a person, be it a top Manager or an ordinary employee, does not believe in the new deal, it is better to say goodbye. For one element, you cannot make changes in the whole system. The transformation should end.
Be prepared for problems with middle management and key employees
When a large company leaves the top, problems can be expected only in the medium and even long term. If you leave the middle Manager, it Department stops working well right here and now.
As soon as we started to unify the Commerce, the sales Department has left a third of staff and two middle Manager. We got a drawdown in sales for two months, but for the third and fourth more than it blocked.
The place of the departed employees came people with our values, who believe in the changes you want to achieve your goals. They are not scared when we revise the system of bonuses. Early promotion received remuneration for the mere fact of sale. Now part of the award — the so-called “pension” — is charged only if the customer has been with us for over three months.
Can such a task to handle an employee who is in question, is not it? No. What happened when the company were only those who shared its principles? It has become faster and more efficient: we have doubled the sales with the growth of costs within 10%.
Another reason recruitment of new staff is the lack of “memory of the past”. These people do not say, “But it used to be, and now isn’t, and it is bad” — they take the existing rules of the game. When a team or individual managers don’t want to change, better to change them.
To part with employees is necessary in any case.
To offset this risk, create a personnel reserve. The head of any level is obliged to raise a replacement. The result of the middle Manager must be on himself, and the younger managers in his Department. They will teach the newcomers, and the team quickly get to the proper level.
Lean on “their” people
Parting with employees helped to understand what kind of people we want to see in the company, which means “our people”. Each of them takes a model of sustainable development, using for this purpose all opportunities. Only then we realized how many mistakes in the headhunting did before. Service recruitment immediately went to the portrait of “their man”. This was invaluable in a period of transformation, when the time of the error simply was not.
For example, the sales Department: “our people” expert, ambitious and a quick, confident, will help in a difficult moment, understands what a team effort and cares about colleagues. Skills may vary — for marketing and technology units they own.
Importantly, every team member is required to develop: if the employee is not showing growth, its value is constantly decreasing, despite the current result. Remembering the management theorist Peter Drucker: “Culture eats strategy for Breakfast.”
Not everything went smoothly. After a series of incidents we have even introduced the concept of “talented bastard”. A man gives a stunning result, but spreads the negative, condemns the values of the company, casts doubt on its objectives, does not accept the care about his comrades.
It corrupts the team and negates all the work with the staff. With such people now leave with no regrets. More important to keep the spirit, faith and values team than to sacrifice them for the sake of momentary results.
With “their” easier to negotiate. “Your” man won’t leave unless he temporarily cut back on premium or powers. After combining one of the top managers was appointed head of the sales Department. He did not complain about destiny, but teeth pulled out a result. Six months later, we created a new structure — the Centre for the development of Commerce, he headed it, and multiplying income and powers.
During the transformation of people willing to change — “our people” remained, and many quickly climbed the career ladder.
Now the sales Department of 120 people brilliantly directs the employee, which in 2015 was an average leader in the area of customer service and began his career with the call center. However, over the last two years, three times we have received the international award of the CX World Awards for best customer experience.
Understand what people need, and swipe a clean series. New employees need to fit your values.
Tell employees about the changes
No matter how loyal and “your” was no man, the unknown is scary. There was a time when the state has reduced by 20%, cut bonuses. That people did not learn the news from gossip, we talked to them. It was a full strategy that included addresses from top officials and regular discussions of employees with their leaders. For two weeks we had over a hundred meetings explained the new steps, discussed plans and perspectives of each person.
In the period of transformation we have implemented team KPIs for production and Commerce: as the air we needed to extend the life of the client, its LTV. That is yesterday the award of the employee depended only on himself.
Now I had to think about where his actions will lead to in the future, as they relate to the decisions of other team members.
In these conditions the main burden fell on the supervisors. They worked with the objections, reviewed individual development plans of employees. If you can not cope themselves attracted to dialogue top management. It helped. At the end of the financial year we have increased the average lifetime of a customer by almost 30%, and the primary and secondary sales grew 2.5 times from a maximum during operation of the holding.
Don’t be afraid to overburden yourself with meetings. People should know what is happening in the company.
Centralize the function through control
To optimize the performance of employees, help them focus on the key objectives, we reviewed their responsibilities. Quality control — the package that will drown the most effective Manager. If you have a team of five people, with control cope immediate supervisor. But if five groups of 10 employees and each employee has a thousand phone calls and ten meetings a day?
The restructuring led us to a breakthrough: we have released a part of controlling function of the managers and passed beyond their zone of control.
The basis was taken “Client” and CJM (Customer Journey Map) — the customer journey from first contact to cooperation at the stage of sales and service. I highly recommend any business that has a multi-level engagement model — marketing, sales, service, — these things make end-to-end manner.
We have created a development Center of Commerce (CRC). He oversaw the execution of processes, training Junior managers, implementation of changes by a single scheme. Employees of the CDC took over the part of the operating task functional Directors, including verification calls and analysing problems in communications.
The CDC decided the old problem of service companies — a gap of expectations. In the field of digital customers often do not understand the rules of the game require immediate results or are not ready to follow the example of more successful competitors. The cure for this — a properly structured expectations. The client must clearly understand that you gave him.
This is very difficult to achieve, with only three or four points of communication on the stage of the life cycle. If built correctly, the customer almost always breaks the cooperation.
A good example: we slipped sales SERM (reputation management in the Internet). CDC experts analyzed all the stages of the communication and found the problem in the telemarketing division. Employees do not understand the new service and ill-formed expectations of the client, which had a negative impact on sales. Don’t be a dedicated structure, we have long sought to blame, wasting precious time.
Why I advise to pay attention on the quality control? This not only makes life easier for managers, but makes the control more detached and objective. When introducing new processes, it enables you to determine good or bad, and if it’s bad, it’s him or its incorrect implementation. From the competent control of the success of the entire restructuring.
Intermediate result of transformation can be assessed in figures. As a result of personnel restructuring and changes in Commerce, primary and secondary sales grew 2.5 times from a maximum during operation of the holding.
(NPS a net promoter score is the difference between brand followers and critics) reached 50%, and some products closer to 87%. For comparison, Apple’s NPS of 72%.
Looking back at the path, I understand: for a year and a half we solved hundreds of problems that could not understand the years. But most importantly, we checked the team’s strength and understand: you need to be honest with ourselves.
It is impossible to recover from alcoholism, not admitting that you’re an alcoholic. But if every stakeholder — from the top Manager to a trainee call centre — sees what he lacks and what to do to get closer to the goal, businesses will be able quickly to get out of the steep dive.
Materials on the subject:
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Cover photo: Unsplash
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