Archive for April 2016

3 ways to improve your vendor management

3 ways to improve your vendor management

Most companies hire vendors in the course of doing business. The vendor could be a supplier of goods, a service company, a technology provider, or a building contractor. Senior management and corporate boards justifiably have questions and concerns about how to protect against vendors’ actions that might produce a loss.

Examples that could happen to any organisation include the following: (1) a software vendor’s employee sabotages the hiring company’s records because of personal animus; (2) a vendor hired for window washing has an accident at the hiring company’s building, suffering a crash that injures the vendor’s employees and passersby; or (3) a vendor hired by a doctor to handle medical records leaves files on the train by accident, exposing patients’ confidential personal indownloadformation.

If the vendor will not or cannot cover the cost of losses it creates, either through insurance or liquid assets, then the hiring company will be on the hook for these costs. Even if the hiring company has insurance that will cover the loss, it will likely have to pay a deductible, incur further expenses, and get a rate increase from its insurer at renewal. The financial hit often can be less costly than the reputational damage a company suffers as a result of a vendor’s mistakes or poor judgement.

As hiring companies focus on making sure they have protection against vendor risks, they should recognise what they can do well themselves and what they may have to hire experts to do for them. There are firms that review vendor credentials, including insurance coverage and other aspects of vendor status. Here are three methods to adopt for better vendor management:

Selection criteria

Using of set criteria for each vendor category will enable the hiring company to narrow a large list of possible vendors to a handful. The final choice may be based on the weighting of the criteria, price, or another factor. Hiring companies can create criteria based on their experience, benchmarking with similar companies, or their best judgement. Some typical criteria include:

  • Minimum number of years in operation: Is a vendor mature enough to have a track record?
  • Minimum size (revenues or staff): Is it large enough to handle the assignment?
  • Geographic presence: Are its locations where you need them to be, and are any in a location that might be subject to high risk?
  • Satisfaction data (references, social media reputation, ratings by recognised accreditation services): Is the track record acceptable?
  • Management structure: Is there sufficient accountability?
  • Ownership: Is it reputable?
  • Financial stability: Do the financials raise any red flags?
  • Staff tenure: Is turnover a problem?
  • Staff education/certification: Is the staff knowledgeable?
  • Bonding: If staff needs to be bonded, what is the proof?
  • Staff hiring protocol: Are workers adequately vetted?

For these criteria to be effective, they must be used without exception. That someone in the hiring company knows a particular vendor’s CEO or has used the vendor in the past should not preclude the need for the vendor to meet the criteria.

Vendors can make claims that aren’t true. Therefore, care should go into making sure that information provided by the vendor is verified. Even references by the vendors’ other clients should be treated carefully. Do these clients have ulterior motives for giving a good reference? Are there a sufficient number of references to be meaningful? Are the references consistent with the vendor’s general reputation, comments about the vendor on social media, or the vendor’s legal history?

Insurance review

When a hiring company chooses a vendor, there is an expectation that the vendor is properly covered by insurance for losses incurred by its acts. To ensure that such insurance coverage exists, the hiring company needs to review proof that the vendor has executed a proper hold-harmless agreement protecting the hiring company and has appropriate levels of insurance to cover losses it creates.

A commercial general liability policy, for example, will cover situations such as (1) the vendor damaging the hiring company’s or another’s property or (2) the vendor injuring the hiring company’s employee or another person while performing work on behalf of the hiring company. Such a policy is not intended to guarantee the vendor’s work. That type of coverage would come under a performance bond.

A thorough insurance review of the vendor should determine the following:

  • The existence of insurance.
  • The insurance policy’s expiration date.
  • The identity and rating of the insurer.
  • The coverage or types of policies the vendor has (commercial general liability, workers’ compensation, commercial auto, cyber, etc.).
  • The insurance policies’ limits, deductibles, and exclusions.
  • Whether the hiring company is insured on the policy.

Typically, vendors present the hiring company with a certificate of insurance (COI) to prove that they have insurance. However, looking at the vendor’s COI does not provide sufficient assurance that the vendor is maintaining its coverage, the hiring company has been added as an additional insured (if that is part of the agreement between the vendor and hiring company), or the policy is free of problematic exclusions.

A thorough insurance review includes looking at the actual policy and checking the status of coverage during the policy period. An insurance review is not a one-time exercise. Periodic checks must be performed to make sure the policy has not been cancelled by the vendor or insurer and that endorsements, which might alter the coverage from the initial terms and conditions, have not been enacted.

Firms provide this service for companies to ensure that this aspect of vendor management is done thoroughly and professionally.

Performance evaluations

It is not enough to assume that no news is good news when it comes to vendor performance. Hiring companies should institute formal performance evaluations for each vendor at least once a year if not more. Time frames can be selected based on the significance of or the budget associated with a vendor relationship. These evaluations are a way to ensure that expectations of the hiring company and vendor do not deviate too far or too long without being addressed.

The evaluation criteria should include, at the very least, performance against the following indicators:

  • Budget.
  • Service-level agreement standards or other agreed-upon standards.
  • Ability to respond to changes or special requests.

This should not be an internal, secret document but rather a transparent gathering of performance data, resulting in an assessment and dialogue between the hiring company and the vendor.

It should become part of a larger record on the vendor, which includes historical and current information.

Source : GCMA

 

10 Things That Abruptly Happen When Real Leadership Shows Up

10 Things That Abruptly Happen When Real Leadership Shows Up

“There are no bad teams, only bad leaders.”―Jocko Willink

What does the environment around you look like?

Is it obvious to you and everyone else what you stand for?

Is your benchmark for success clear and understood by all?

Do you, as the leader, clearly reflect your vision and standards to such a degree that reading them is unnecessary?

Are you consistent in good times and bad times?

Are you a master of the basics and technical stuff, or have you lost touch?

When you experience failure, do you confront the future or wallow in the past?

No Bad Teams

There are no bad teams, just bad leaders.

Leadership is what determines how successful you and those around you are. If there is minimal success, there is minimal leadership.

There are very few real leaders:

  • Who genuinely stand for something and brightly reflect those standards
  • Who are willing to put everything on the line for what they believe in
  • Who create change and lead

Leadership is not born, it’s made. If you’re not excited about your current circumstances and success, you have complete power right now to make radical transformations.

Until you do, nothing will change.

Here’s what abruptly happens when you take ownership of your life and situation:

  1. Inject a winning standard of performance before you start winning

“How would your life change if you made decisions TODAY as if you were already the person you want to become TOMORROW? We tend to live up to our own feelings of ourselves (for better or for worse). If we plan to become something else, what better way to do so than to step into that skin now?” — Richie Norton

It doesn’t matter what your current circumstances are. Winners act like winners before they start winning.

Your mindset is what you grow into. Mental creation always precedes physical creation. Who you are in your head is who you eventually become.

Who are you in your head right now?

The first thing that happens when you step up as a leader is that you and everyone around you begin looking toward success. You start craving it, and believing it’s possible. In turn, your behavior starts changing.

It all starts with you.

It doesn’t matter where you are in your organization. As Robin Sharma explains, real leadership requires no formal title.

  1. Constancy among chaos and success

“Consistent effort is a consistent challenge.”―Bill Walsh

Most people can’t handle failure or success. They’re on a behavioral roller-coaster depending entirely on external circumstances. When things aren’t going well, they’re overwhelmed or depressed. When things are going well, they’re overconfident and lazy.

However, when you show up as a leader, your mindset and behavior remain constant regardless of success or defeat.

You are marching forward to the beat of your own drum. Everything outside of you is noise. You’re compelled forward by intrinsic vision and values. Your consistency reflects your conversion to your cause.

  1. Clear point of reference is established to keep you consistent

When you decide to lead, you provide a clear standard of excellence. Your standard of excellence becomes your point of reference, keeping you honest and consistent in all circumstances.

It ensures you don’t have too many bad days in a row. Or get derailed by haters. Or get overconfident when successful.

Your point of reference is what you really believe in. It’s why you do it.

When you’re struggling and failing, you look to your point of reference. When you’re crushing it, you look to your point of reference.

What’s your point of reference?

  1. Clear performance metrics are established to keep you accountable

“Where performance is measured, performance improves. Where performance is measured and reported, the rate of improvement accelerates.” — Thomas S. Monson

What does success looks like for you, behaviorally? What is your actual job? What do you need to do?

How do you determine if you’re failing or succeeding?

There should be clear metrics to measure yourself against. However, simply knowing what you should be doing isn’t enough. Clear accountability needs to be put in place.

That accountability, if possible, should be to an actual person, not just a spreadsheet. When you are required to report your progress — especially to someone you respect — your performance will improve.

  1. As the leader, you reflect the standard of excellence and recognize you are the ultimate bottleneck

When you don’t show up as a leader, everything falls apart.

You are the example of what optimal performance looks like. You become the living and breathing standard of excellence for others to emulate. You reflect your mission and values.

One thing is absolutely certain, your performance will be mimicked by those following you — whether good or bad. Thus, you are the ultimate bottleneck. Your failure to get to the next level hinders everyone relying on you. You can’t take people beyond where you currently are, personally and professionally.

Hence, Darren Hardy, author of The Compound Effect, has said, “Never take advice from someone you wouldn’t trade places with.”

Who you follow determines where you get in life. If your leader isn’t moving forward, you’re not moving forward, because your results are a reflection of your leader’s results.

Consequently, as the leader, you should be insanely determined to become the best you possibly can. The better you become the more clearly you can help others get where they need to go, because you’ve been there yourself.

The essence of true leadership is pure ownership. You’re no longer doing it for yourself, but so you can take those you leader further.

  1. A radical and permanent change in the environment and culture

“Man is not the creature of circumstances, circumstances are the creatures of men. We are free agents, and man is more powerful than matter.” — Benjamin Disraeli

Most people work from the outside in. They focus on the external environment, and thus, would take people out of the slums in hopes to improve their lives.

Conversely, as a true leader, you works from the inside out. You focus on the person, and thus, take the slums out of the people and empower them to take themselves out of the slum — so they can improve their own lives.

Most people focus on behavior. True leadership focuses on human nature.

As a leader, you know a person’s environment and behaviors are merely a reflection of them. If you change the person, they’ll change their own environment to match their new values and identity.

As you show up as a leader, and establish and exemplify a new standard of excellence, your environment immediately changes to match your internal reality. You create an environment that reinforces what you’re trying to accomplish, making your success automatic.

  1. A focus on values, principles, and philosophies over specific behaviors

In the book, Tribal Leadership, Dave Logan and John King distinguish organizations based on their tribal culture.

Most cultures focus on specific behaviors and practical applications. However, according to Logan’s and King’s extensive research, the most innovative organizations are not guided by behaviors, but rather, by values and principles.

When you’re doing what’s never been done before, there is no map or instruction book. Thus, you’re guided by ideals, and your behavior adjusts to meet the unique contexts you find yourself in.

And that’s the difference.

When you really show up as a leader, you instinctively place an enormous emphasis on teaching and learning. The human capital around you iseverything. The better your people become — as people, not employees or “followers”— the more successful and impactful you will all be.

  1. Any perception of independence is replaced with connection and extension

Most people focus on individual behaviors, and thus view themselves as independent entities.

However, when you become a leader, you recognize the inter-connected-ness of everyone you lead. Each and every person is an extension of each other. Each person lifts where they stand and fulfills their specific duty. Without each member, it all falls apart.

Independence is a broken concept, and has no place in real leadership. Being interdependent is where you want to be.

  1. An obsessive focus on the nuts and bolts (the fundamentals) creates an expectation of ensuing success

“Just as the yin-yang symbol possesses a kernel of light in the dark, and of dark in the light, creative leaps are grounded in a technical foundation.” — Josh Waitzkin

It’s all about the fundamentals. The better you get at the basics, the more confident you will be.

Like happiness, you don’t pursue success directly. Instead, you focus on perfecting your performance, and as famous coach Bill Walsh says, “The score takes care of itself.”

You don’t have to worry about the outcome when you master the nuts and bolts. Success takes care of itself. You just do work that’s so good it can’t be ignored. You focus on becoming a true professional in every sense of the word. Success becomes an organic and natural consequence of something much more important — who you are.

  1. Embrace failure as the path to victory

“If I fail more than you do, I win.” — Seth Godin

Failure is the path to your greatest success. And you will fail. You will fail hard if you really want to succeed.

And it will hurt like hell.

It will sometimes be hard to pick yourself back up. And in your deepest despair, you’ll confront your future as the leader you are, rather than wallowing in the past like so many do.

The past is over. It’s behind you. You are in this moment. And this moment is what’s going to make you.

Picking yourself up and continuing after big failures is the most important aspect of your personal development as a leader. Your personal confidence will be strengthened and solidified. You will begin to believe you can achieve anything.

Here are Bill Walsh’s 10 rules for failure:

  • Expect defeat and on’t be surprised when it happens.
  • Force yourself to stop looking back on the past.
  • Allow yourself some time to recover and mourn your loss. But not too long.
  • Tell yourself you are going to stand and fight again. You’re actually far closer to your destination than you can imagine.
  • Prepare yourself for the next encounter. Your next battle. One game at a time.
  • Don’t ask “why me”?
  • Don’t expect sympathy from others.
  • Don’t complain.
  • Don’t keep accepting condolences from others.
  • Don’t blame others.

Conclusion

The moment you’re ready to become a leader, you will experience these changes almost immediately in your life.

You are a magnet, and your environment directly responds to your inner world.

Are you ready to become a leader?

Connect Deeper

Thank you for reading! Have a beautiful day.

Source : Observer.com

 

How to avoid common mistakes during high M&A activity

How to avoid common mistakes during high M&A activity

Conditions remain strong for mergers and acquisitions, prompting 63% of CFOs to anticipate pursuing deals in 2016, according to global surveys Deloitte conducted in the fourth quarter of 2015. More than half of the CFOs who expressed interest in an M&A said they are pursuing deals to expand in existing markets, diversify in new markets, or achieve scale efficiencies.

Low interest rates, accessible and inexpensive financing, and healthy balance sheets boosted M&A activity to $3.8 trillion in 2015, surpassing the previous record set in 2007, according to data compiled by Bloomberg.

Uncertainty that is curbing the risk appetite in some countries may also slow M&A activity, but exuberance during periods of rapid M&A activity can lead to mistakes that companies aren’t usually prone to make. The three most common are:

  • Lacking a clear strategy as to what role an M&A will play in the company’s growth.
  • Paying too much for a deal because average bid premiums are driving up prices.
  • Resorting to an M&A as a last-ditch option to drive corporate growth.

To avoid the mistakes, CFOs can take these five steps:

Assess strengths, weaknesses, and opportunities for growth. The CFO and executive management should assess the company’s opportunities for growth in revenue and value and develop a strategy to complement strengths and backfill weaknesses. That may include deciding which customer segments in which geographic locations to serve and how to distinguish the company from its competitors, as well as understanding the capabilities and market access required to achieve the goals.

Identify priority pathways for growth. As part of the strategic assessment, identify new products or solutions that should be brought to market by a specific business unit at prices adding value for customers. These priority pathways for growth can highlight gaps and the role of M&A across specific units.

Examine competitors’ deals. Deals competitors have made in the past, including the size and geography of the deal, customer segments affected, and capabilities, can help prioritise M&A targets based on the company’s strategy.

Strategically screen identified opportunities. Generate portfolios of priority M&A candidates by screening identified opportunities. Screening filters such as size, geography, technology, and management talent, are important strategic choices that can help management and the board understand why a particular target was identified in the first place.

Execute with discipline. Anticipate potential culture clashes, labour disputes, and distribution gaps in a particular deal and factor them in during the screening process. With the integration risk identified, differentiate M&A opportunities and determine resources and talent needed to integrate effectively.

Source :  CGMA  Magazine