Hawai‘i’s visionary owners and CEOs face a unique set of challenges when striving for rapid growth in their businesses’ valuation. The limited market size and talent pool make it difficult to scale, while employee exits and disengagement can frustrate progress. However, the islands offer a few distinct advantages to these business builders.

The close-knit business community in Hawai‘i fosters effective word-of-mouth marketing. Owing to its monopolistic nature, players who dominate their industries can enjoy a lion’s share of the industry profits. This is particularly true for business-to-business (B2B) companies in Hawai‘i, where dominant players in each industry can expect disproportionately high valuations compared to their peers.

To capitalize on these opportunities and address the obstacles, growth-focused CEOs need their teams to be as committed to the organization as they themselves are. Where can they find help? Long-time investor, Charlie Munger, has a suggestion – “Show me the incentive and I will show you the outcome.” Here is a video of Charlie Munger and Warren Buffett talking about the power of incentives in driving growth at GEICO.

Growth Share Plan (GSP) is an incentive compensation model that shares year-over-year increases in net profit with key employees. It is proven to foster an owner’s mindset, where employees think and act like owners to drive the company’s growth and long-term success.

Early employees in Silicon Valley startups are highly engaged, in no small measure due to their stock options, which provide a sense of ownership in the company’s success. However, stock option plans can be complex and expensive for small businesses to manage. GSP serves as a more accessible alternative. By integrating GSP into their business model, Hawai‘i CEOs can hire top talent, harness the full potential of their workforce, create a sense of shared purpose, and ultimately, accelerate their company’s growth in a challenging market.

Growth Share Plan: A Game-Changer for Growth Businesses

Unlike traditional profit-sharing plans, a GSP holds financial value only if the company experiences year-over-year (YOY) growth in its bottom line. However, for each dollar increase in net income above the previous year’s baseline, 20 to 40 cents are allocated to the bonus pool.

To maximize the effectiveness of GSP, it’s best to establish quarterly targets at the beginning of each year. Meeting these targets triggers company-wide celebrations, fostering team spirit, and motivating employees who might otherwise be excluded from bonus payouts.

Moreover, we argue that a well-designed GSP should constitute a significant portion of total employee compensation. When targets are achieved, participating employees should receive a bonus equivalent of 25% to 33% of their fixed pay. At this rate, employees gain a substantial upside in driving growth, and it’s difficult to imagine anyone leaving the firm to join a competitor for financial reasons.

Strategic Approach to Foster Owner’s Mindset

To ensure the success of the Growth Share Plan and foster an owner’s mindset among employees, it’s essential for CEOs to take a disciplined approach.

Communication: Clearly communicate the goals, structure, and benefits of the GSP to employees. Transparency is key to employee buy-in. Educate each employee on how they can impact the company’s performance and grow their bonus check simultaneously. Celebrate successes to reinforce the plan.

Weekly Forecasting: Implement a system for weekly forecasting of financial performance (or the Critical Number, defined below) and the resultant employee bonus. This helps employees stay informed and focused on achieving the company’s growth targets.

Empowerment: Encourage employees to contribute ideas, take total ownership of their work, and make decisions that directly impact the company’s growth. Highlight the importance of client retention, client referrals, add-on sales to existing clients, continuous process improvements, and faster project completion in driving GSP success.

CEO Concerns

When considering the implementation of a Growth Share Plan, Hawai‘i CEOs may have some apprehensions.

Losing Money: CEOs may be concerned that sharing a portion of their profits will negatively impact their bottom line. However, Growth Share Plans usually lead to increased profitability, as they incentivize employees to work smarter and drive business growth.

Radical idea: Some CEOs feel that this is unfamiliar territory with uncertain outcome, maybe more suited to high-risk technology enterprises. Nothing could be farther from the truth. Lynsi Snyder (In-N-Out Burger)¹, Jim Sinegal (CostCo)², Herb Kelleher (Southwest Airlines)³, and many other iconic founders, owners and CEOs from various industries have attributed a big part of their organization’s success to incentive compensation of their employees. Closer home, Gourmet Events Hawaii’s amazing growth story was captured in this Forbes article. ZR Systems, a local IT firm (now acquired and renamed to Evocative) had a similar growth run.

Complexity: Some may worry that Growth Share Plans are too complicated to implement and manage. While it’s true that these plans require careful planning and execution, it can be done internally or by partnering with an experienced advisor.

Confidentiality: CEOs may be hesitant to share sensitive financial information with their employees. In these cases, Growth Share Plans are tied to a “critical number” – that most closely predicts the net income. Cypac, a Hawai‘i cybersecurity firm that we advise, ties its GSP to “devices defended”. Growing the count of devices they secure is key to driving profitable growth (and valuation) in their business. Also, since it is an existing operational metric, it is already well understood by the employees. However, in other organizations, the critical number may be more nuanced and need careful analysis at the start.

Ensuring Fairness: Concerns may arise about distributing the growth share fairly among employees. To address this, it’s important to establish clear criteria for eligibility and payouts.

Long-term Sustainability: Some CEOs question the long-term viability of Growth Share Plans, especially during economic downturns. By designing a plan that only rewards employees when there is year-over-year growth, you can protect the business from financial strain while still incentivizing employees during periods of growth.

With the successful implementation of a Growth Share Plan, your company can foster an ownership mindset among your employees, resulting in higher engagement, increased productivity, and lower turnover – all essential ingredients in Hawai‘i’s growth stories.

Note: Employee compensation needs careful design considerations and can have legal implications. Our blog content is for informational purposes only. It should not be taken as legal, financial or business advice.

Further Reading

1. Lawler III, E.E., 1990. Strategic Pay: Aligning Organizational Strategies and Pay Systems. Link.
2. Pfeffer, J., 1998. Six dangerous myths about pay. Link.
3. Lazear, E.P., 2000. Performance pay and productivity. Link.

The post Unlocking Business Growth Using the Power of Incentives appeared first on GUILD Consulting.

The Importance of Workforce Development in Hawaiʻi

Addressing Hawaiʻi’s “living wage gap”, defined as the difference between the state’s median wage ¹ and a sustainable living wage ^2,3, is crucial for preventing brain drain and promoting economic growth. This gap is primarily due to the high cost of living and the low wages in Hawaiʻi’s dominant sectors such as hospitality and retail.

In the next decade, Hawaiʻi can address this issue through targeted WFD efforts by building effective career pathways to “relatively high-demand” living wage jobs. However, in the long-term, Hawaiʻi must diversify to higher-wage sectors to address this fundamental issue in its economy and workforce.

Understanding the Challenges in the Current WFD Efforts

Despite numerous WFD initiatives in Hawaiʻi, several issues hinder their effectiveness:

• Siloed efforts: Fragmented initiatives in WFD, with incomplete understanding of the labor market, past and parallel efforts, lead to over-investment in some areas and underinvestment in others.
• Lack of evidence-based investment: Funding is often allocated without considering prior evidence of success, particularly in career pathway development.
• Absence of coalitions:  There is no effective coalition between the providers of education, technical training, wraparound services, and funding. Unlike  in the continental US, individual service providers in Hawaiʻi are either too small or capacity constrained to provide “bundled services” needed by the community for effective WFD.
• One-size-fits-all approach: Current initiatives often fail to provide targeted solutions for specific communities, which could yield a much greater impact.
• No champions: Unlike many other states ^{4, 5}., Hawaiʻi has not had a Governor or a top policymaker advocating for WFD as a cornerstone of their legacy.

Career Pathways: The Key to Living Wage Jobs in Hawaiʻi

Investing in WFD programs that target in-demand living wage occupations can help address Hawaiʻi’s living wage gap. Although, most entry-level workers will not make a living wage, by identifying and promoting career pathways to living wage occupations, we can make them more accessible to all workers.

Meeting Employer Needs is Fundamental

Employers in Hawaiʻi often struggle to find local candidates, especially in managerial or more specialized positions. While “equity” is important to many policy makers and funders, WFD efforts must prioritize near-term employer needs in their program design to avoid developing elaborate programs that don’t go anywhere.

Designing Effective Career Pathways

To ensure success, career pathways must be designed with industry- and demographic-specific considerations in mind. This includes addressing financial barriers, improving basic skills, and providing targeted support to underrepresented groups. It will require an effective coalition of educators, trainers, service providers, policy makers, and funders working together to meet the needs of Hawaii’s employers and communities.

Aligning Education with Market Demand

Educational institutions, particularly community colleges, must adapt their programs to align with the changing labor market. By offering flexible programming, industry-recognized credentials, and work-based learning opportunities, they can better prepare students for the workforce.

Role of Data in Workforce Development

Developing a shared understanding of Hawaiʻi’s labor market challenges is essential. By utilizing data to track both activity and outcomes, policymakers can make informed decisions about WFD initiatives.

Results-Based Investments in Workforce Development

Funding for WFD should prioritize scaling proven models and investing in organizations with a track record of success. This will ensure that resources are directed toward initiatives that yield the best results for Hawaiʻi’s workforce.

Hawaiʻi can overcome its workforce development challenges through concerted efforts from public, private, and civic sectors. By addressing these issues, we can create a brighter future for Hawaiʻi’s residents. We invite Hawaii’s employers to guide and support local workforce development programs.

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Singapore is different from Hawaii, but the same general principle applies to us here. The virus is still around, but we are reopening because we feel we can somehow contain the damage it will cause, and because the cost of economic shutdown is unbearable. As Hawaii begins to reopen from a soul-crushing lockdown, a dramatic dance of life and livelihood is about to begin.

Many well-intentioned experts will no doubt be a part of the great reboot. However, the final decision makers will have to weigh conflicting advice against their own political wisdom. No matter how prudently they act, not everyone will be satisfied.

To our political leaders, we offer three principles to deal with this long crisis which will likely come to us in waves.

1. Think Micro: You know Hawaii better than the federal government. The opposing sides of this open vs. close (of the economy) debate will feel the full force of every decision you make. Their long-term interests are quite aligned because we all live in the same small place.

In geography, think local (not island, but neighborhood, community, or district). In time, review plans day-by-day. In demographics, think age groups, labor categories and specific segments of our community.

We envision a control room with a wall-to-wall map of Hawaii showing the status of the crisis, in granular detail, updated in near real-time. Each neighborhood is either a RED (needing lockdown), YELLOW (maybe, wait-and-watch zone, or a buffer zone) and GREEN (open for business). There are several brilliant data visualization experts on the islands to assist with this.

Critical supply chain and health infrastructure, with their fallback arrangements, will need their own special tracking on this map.

2. Think Reversible: The defining characteristic of this crisis is its unpredictability. A detailed, but inflexible, project plan for an economic restart will fail on first contact with the reality. Adaptation is key.

The reboot management team will need to strike a balance between safety and economy—a balance that will never be perfect or popular. Without mass testing and a vaccine, the best we can do is to establish clear guardrails and keep the situation reasonably stable.

As such, a green neighborhood which is open for business may slide into a yellow if the leading indicators point to a potential relapse. If conditions deteriorate, the neighborhood may turn red (mandating a localized lockdown) to allow for its point-containment. The same thing can happen in the opposite direction. Once local conditions improve, a red zone may progress to a yellow, and eventually to a green.
The good news is that if we think of reversible actions on a micro level, we won’t have to endure another extended statewide lockdown. Instead, we can deal with cold, warm, or hot spots

3. Think Perception: What would it take for people in Hawaii to feel safe to go back to work in a downtown office? To shop at Ala Moana? The perception of relative safety, by individuals, will drive the recovery.

Should we deploy thermal screening? Mandate drive-through testing? Nearly everything will need to be reimagined to enable neighborhoods and the economy to reopen and thrive.

Similarly, the public needs to know that there is light at the end of the tunnel. Several plan-changes or even missteps will be made along the way, but every success story will uplift our spirits, and make the entire state smarter about dealing with this crisis.

The criteria for red-yellow-green classification will need to be crystal clear, and the “map” we propose should be shared with the public. Transparency will provide relative predictability, in the face of great uncertainty, for businesses. And for the public, a reason to comply with, what may otherwise seem arbitrary, decisions.

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In 2007, Nassim Nicholas Taleb, a finance professor and successful trader, wrote a book called The Black Swan. The phrase “Black Swan” is a metaphor for improbable and unanticipated events that have far-reaching ripple effects. Some examples are the 9/11 World Trade Center attacks, the launching of Sputnik in 1957, and the 1991 dissolution of the Soviet Union.

The current Covid-19 pandemic is a Black Swan. It arrived suddenly and will have major financial consequences from an economy unexpectedly shut down. Whether we are headed into a recession, deflation, or depression isn’t yet clear but whatever comes, it won’t be pleasant.

Leadership in Tumultuous Moments

Imagine you are director of a government agency that has 2,878 employees working in different divisions, branches, and locales and has been told to reduce its budget by 25%. Or, you are CEO of a small manufacturing shop that has 63 employees and you have to furlough at least 13 of them. Or maybe you are chancellor of a university, executive director of a not-for-profit agency, or a suddenly out-of-work head of household with a large extended family.

Unexpected belt-tightening is unpleasant. It unravels expectations and invokes fear. The more severe the shock, the more severe the manifestations can be. If you are a leader, you are also suddenly thrust into “crisis management” mode, which raises questions. What is your strategy? How will you go about making cutbacks and get smaller? Whom should I consult with?

The purpose of all strategy is to establish a desired position at a future point in time, stay productive, avoid aimless wandering, and minimize unproductive conflict. A strategy can be longer or shorter, more detailed or more general. The usual response is some version of official dictate, a decision in which you make short and long term gambles simultaneously.

In Thinking in Bets (2018) champion poker player Annie Duke says bets are the very tough decisions we make when there are serious consequences and we are under time constraints. Just like the politics of retrenchment, her big poker bets have high stakes, much at risk, and reputation on the line.

Our Experience

Both of us have had to make these kinds of bets. Both of us have served as senior leaders in complex enterprises with large budgets that had to be reduced because of Black Swan events. Both of us have also worked extensively as mediators, facilitators, and organizational consultants.

While every business, government, and civic organization has its own norms and expectations of engagement, here are some of the ideas we draw on when we are asked to help leaders and groups make hard decisions and they need to consult and engage with others in their organization.

1. Acknowledge Anger, Fear and Uncertainty. Find (or create) venues and opportunities for people to acknowledge the emotional and financial turbulence they are experiencing. Don’t start a discussion with numbers and dollars. Encourage people to take their formal hats off and speak personally about the impacts of the current crisis on them, their families, and the people they supervise or depend on. People will naturally go to their fears. Facilitate the discussion without prolonging it.

2. Commit to Group Engagement. Consultation can involve many forms including individual interviews, surveys, task forces, large group meetings and other problem solving initiatives. Choose one or a combination that serves the size, organizational culture, time, and resources available.

3. Preliminary Work. If circumstances allow, do a few strategic interviews or a survey to gather early thinking on (a) major concerns and worries; (b) the top items for preserving and keeping; and (c) what issues will be most critical for a focused discussion. Part of good preliminary work may involve identifying lessons learned from previous cutback exercises.

4. Agenda Setting and Ground Rules. Explain the agenda and clarify the task, timeline, and scope of discussion. Explain that there needs to be recommendations at the end. Put explicit ground rules in place for what is usually a difficult conversation. For example:

• This discussion is advisory to senior leadership, not decisional.
• Everyone is expected to look at what is essential for the whole
  enterprise rather than advocating for individual departments,
  divisions, or branches.
• Refrain from meeting “hijacks.” No one monopolizes the floor and no
  one speaks twice on a subject until everyone else who wants to has
  spoken once.
• Civility and courtesy are the order of the day. Disagreement during
  this deliberation is fine but the focus is on smart debate. Let everyone
  know that the discussions are preparatory for a series of straw votes
  on recommendations later in the meeting.

5. Develop Collective Assumptions. Discuss “Knowns”, “Known
Unknowns,” and possible “Unknown Unknowns.” Ask everyone to do a
brief crystal ball exercise and identify her or his key economic, political,
social, and legal assumptions. The objective is not a wish list. Hope is not
a strategy. For this one, people need to use their minds and critical
thinking, not their hearts.

6. Identify the “Unchangeables” and Non-Negotiables. Every organization has a central mission and core parameters that usually must still be honored even in a time of cutbacks. Identify and prioritize what central functions must continue.

7. Criteria and Principles. Before discussing specifics, make a list of the criteria or principles that will help inform individual enterprise-wide cutback recommendations. Depending on the nature of the enterprise, examples of criteria could be:

• Can be implemented quickly
• Protects public safety
• Preserves critical human and financial assets
• Continues essential services and products
• Treats owners, shareholders, and employees equitably

These or other criteria can be left as a general list to inform individual straw votes or collectively ranked if that is useful.

8. Agree on the Total Amount of the Budget that must be reduced. Identify the total amount of money that needs to be cut from a budget and over a specified time frame.

9. Identify All Potential Cuts. On index cards, post-it notes, a whiteboard, or on a computer screen, write down each potential budget cut and the amount of its reduction value. Label each option with a letter. For example:

• Option A – Scheduled raises: (Savings: $36,300)
• Option B – Elimination of new, unfilled positions: (Savings: $170,500)
• Option C – Advertising and marketing: (Savings: $43, 900)
• Option D – Travel for client contact: (Savings: ($73,830)
• Option E – Elimination of last three hires: (Savings: $252,000)
• Option F – Training and conference: (Savings: $58,500)
• Option G – Early retirement payouts (net value): (Savings: $40,000)

The list can be as long as needed.

10. Engage in “Paired Comparison” Voting. Make the straw poll question explicit so everyone is continuously reminded of the objective. Write it on a white board where it will serve as a persistent reminder when the polling starts. An example might be, “Which budget cuts must be made now so that our long term position is preserved when recovery begins?”

Discuss each prospective budget cut so there is clarity and agreement about the choices and the dollars involved. While there are many different straw polling techniques, paired comparisons (sometimes also called “Structured Interpretive Modeling”) is one that we have found particularly effective for cutbacks. It works like this.

Begin comparing items two at a time in random pairings and vote on which one is more important. For example, which of these two is better to cut now:

Option E – Eliminate last three hires: $252,000.
Option B – Eliminate new, unfilled positions: $170,500.

If B is voted more preferable as a cut, place it on top of E. Now keep comparing all items two at a time until a hierarchy is achieved. At the end of the exercise, review the work done, thank them for their effort, and assure them of what next steps will ensue.

Last Thoughts

Cutback discussions are messy and uncomfortable. Inevitably, there will be blowback no matter what cuts are made. One way or another, however, this kind of thinking exercise must be done. The goal of a consultation like this is not “consensus.” It is achieving sufficient “consent” for leaders to lead.

One further thought. The executive in charge can lead these types of consultations but they sometimes run the risk of going off the rails for the wrong reasons: old baggage, distrust, jealousy, interpersonal disputes, excessive turf advocacy.

Sometimes it is useful to have someone independent from the specific enterprise to serve as facilitator or moderator. This also allows the senior leader to not be present or to simply sit, listen, observe, and learn.

Authors

Peter S. Adler served as President and CEO of The Keystone Center and has held executive positions with the Supreme Court of Hawai‘i and the Hawai‘i Justice Foundation.

Kem Lowry was Chair of the Department of Urban and Regional Affairs at the  University of Hawai‘i and served as Associate Dean of the College of Social Sciences.

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Here are some tips, compiled by experienced remote workers, for managing yourself and your teams while working from home.

1. Act Like You Are in the Office

Simply acting like you’re heading into work can do wonders for productivity.  Set an alarm, make the coffee, and get dressed.  Then—you guessed it—walk over to your new home office and start working.  Merely maintaining the appearance of going to work can be the crucial difference between a productive day and never gaining any momentum.

Talk to your spouse and kids about your availability for office meetings, and communicate what you can to your co-workers through your online calendar.

Take intermittent breaks later in the day, but start the morning with a bang!

2. Use Task-Specific Technology Tools

With your team, collectively agree on four online tools—one for each of the following (only a subset of available software options are presented here):

• streamlining project management (Microsoft Excel, Google Sheets, Trello, Asana)
• individual and group chats (MS Teams, Google Hangouts Chat)
• document-sharing (MS SharePoint, Google Drive)
• video meetings (MS Teams, Skype, Google Hangouts, Zoom [be sure to review security settings to preclude uninvited guests])

Many workers already use only a phone and email for work purposes, and may not need software beyond this list.  If most of your team is already familiar with a tool, use it: this will greatly increase communication, efficiency, and team output.

Match your tasks with appropriate tools—such as using email when sending out information or a question that does not need a quick response.  However, when collaborating or brainstorming ideas, it is often better to interact by phone or video chat.  Text-only messages can be misconstrued, wheres a real-time, face-to-face video conversation can usually eliminate gaps in communication.  Transient or longer-term bandwidth issues of one or more remote team members may require modifying tool selection to permit smooth workflow.

Triaging tasks, and using smart tools tailored for each job, can streamline the workday and permit efficient task completion.

3. Outcome, not Activity

Many office-based employees are accustomed to operating on a daily schedule while managers ensure that the workers are occupied with work.  However, when working remotely, it is easier and indeed better to look for outcomes, rather than hours worked.  This paradigm shift was inevitable, but this crisis has made it a reality.

Managers can set expectations for team members being online and reachable through the team’s selected chat tool.  However, remember that managers may know vanishingly little about other employees’ living conditions, kids’ school-related activities, and other parameters.  Instead, an effective remote manager will focus on asking How long will this task take?  What’s getting done?  How much is being accomplished and in what amount of time?  Are there any bottlenecks?  For certain types of tasks, managers may find that more can be completed in shorter times due to fewer office distractions, no travel, and streamlined work.  In time, managers will get a feel of how quickly their teams can move, identify roadblocks, and find resolutions.

It is important that leaders remain mindful of not becoming hamstrung by performance measures alone.  Much of any strategic plan needs to now be revisited in light of these unprecedented changes, and certain metrics do not translate well to remote work.

Trusting the staff now working remotely can go a long way.  If the required work is coming in on time, they are more likely than not putting in the necessary time and effort.  Tell them!  Managers need to go out of their way to convey positivity to their workers.  Show them that trust has been earned, but continue to hold them accountable.  Offer rewards or send gift cards (the purchase of which Hawaii’s food and coffee shops can certainly use right now) for encouragement.

Allow the team to make decisions together: What time should the morning huddle be hosted?  What projects should be discussed first?  Who can work together and take point on this presentation?—and so on.

4. Focus on Communication Protocol 

Set up good communication practices for everyone to stay on task (and working in the right direction).  This includes a daily check in: invite all remote workers and discuss tasks and snags.  See if anyone has questions, and ascertain how each can best contribute that day’s efforts towards reaching a common goal.

One of the most important rules should be avoiding negativity.  Without seeing one another face to face, it is easy to type snarky comments in a chat window.  Even when joking, context can be lost and plaintext messages can be read and differently interpreted by the recipient.  Encourage a “no negative comments” policy early on to avoid any confusion or hurt feelings.

With such in place, talk frequently.  Chat programs permit easy communication with coworkers.  If the physical office had an “open door” culture, allow coworkers to start chats with managers at any time, unless marked on the team’s calendaring tool as unavailable.  Don’t waste time wondering if things are on the right track; real-time chatting can clear up miscommunication and free up time that would have otherwise been wasted.  Face-to-face video meetings are important to develop fragile ideas or discuss sensitive topics.

Managers should ensure a disciplined rhythm for meetings.  A defined timeline and pace should be established before bringing the meeting to order; all invitees should begin the login process before the defined start-time for the meeting.  Don’t waste time with off-topic wanderings.  Stay on task and be brief to best use everyone’s time.  If follow-up questions arise after the allotted time has expired, direct such to the team’s selected chat program and ensure that pertinent information so shared is summarized and, if necessary, conveyed to meeting attendees.

The tone of the meeting, however, remains critical.  Virtual meetings desaturate personable aspects that would otherwise permit team members to become chummy or feel comfortable.  Be inclusive of ideas and encourage all to speak up.  A shot-down comment will sting for a long time.

5. Know the Manager’s New Role

As the manager of a suddenly dispersed workforce, trusting one’s team and focusing on their progress (rather than on hours put in) will go a long way.  Discuss priorities, share expectations, and anticipate a certain amount of pushback by employees.

Check in regularly to see if members have questions or have hit any roadblocks.  It is likely that in days to come, workers will find that productivity groove and need less of a manager’s time; until then there are likely to be at least a few transitional difficulties.  This will also encourage—if not mandate—communication, whether with managers or by reaching out to each other through one or more of the team’s online tools.

Make room for emotional adjustment.  Being stuck at home all day, for some, can be depressing.  Having kids and family around while working can be overwhelming.  Managers who expect clear and absolute separation of the personal and professional lives of their colleagues will inevitably be disappointed.  Such an expectation is unrealistic, or even inhumane.

Start meetings by asking, “How are we feeling?”—tacitly acknowledging that these are emotionally charged times.  Only then move to the meeting’s agenda.

The bar for being an effective manager just got raised.  Godspeed.

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“Gov. David Ige calls for tourism halt for 30 days amid coronavirus pandemic” – Star Advertiser, Mar 18

These recent measures by Hawaii state may delay or limit the humanitarian crisis caused by COVID-19, but they make it abundantly clear that our actions to contain the virus will themselves cause massive business disruptions. And then, there is the imminent risk from virus spread in our communities.

For the Hawaii CEO, a “wing it” approach has zero chance of success. This crisis calls for business leaders to take deliberate, bold and swift actions.

We recommend the CEO take a 3-pronged approach (we will update our thoughts here, if new information necessitates that).

A. Financial Plan

1. Plan for six twelve months of depressed revenues. Build a quick-and-dirty revenue forecast based on the likely scenario of what % of your customers will be lost, and of those that remain, how much of their spend with you will be reduced. (Keep your assumptions simple so you can revisit them as needed).
2. Cash will be critical for business continuity. You don’t want to be cash-strapped in a down market. Use your revenue and collections assumptions to develop a cash forecast. Then, identify a “minimum cash” target that you feel comfortable with to weather this storm. In most sectors, Hawaii CEO’s should aim to build two three months of fixed costs (payroll, rent, etc.) in the bank. This “war chest of cash” is needed to safeguard your business through the economic downturn.
3. Assemble a core team to build a comprehensive action plan to address the liquidity gap you have previously identified. Look at all the drivers of cash – from revenue-loss mitigation, to aggressive cost-cutting, to rapid collections, to delayed payments to vendors, capital expenditure avoidance and contract re-negotiations. Prioritize immediate actions that your team will take and set clear targets in each area. Make sure there is individual accountability and a sense of urgency among the members of your core team. Nothing is more important for your business.
4. Be ready with a prioritized list of more aggressive actions if revenue declines are deeper or longer than you first assumed. Also, agree with your core team on what events should trigger those actions.

B. People Plan

1. Act as a bridge between your team and the health advisory by State agencies.
2. Over-communicate with your employees, customers, vendors, and other stakeholders; and encourage them to escalate any key issue directly to you or a designated chief-of-staff. Uncertainty will breed unnecessary fear, and kill productivity.
3. Invest in remote work, setting up as many of your employees and contractors to work from home, as feasible. Those who must come in to work will need staggered shifts to ensure “social distancing”. To make this transition effective, it is important to establish new ground rules for working “together” and, more importantly, do a mental switch from tracking staff efforts to looking at deliverables and outcomes. There are several great tools for online chat, task management and remote meetings to choose from. You can read our thoughts here.
4. Develop a deep personal understanding of various staff roles, criticality of those roles to business continuity, and the levels of current individual performance. Build basic contingency plans for any labor shortage due to sickness or unavoidable layoffs.

C. Stabilization and Growth Plan

1. Focus on the profitable core of your business. Is your organization stretched too thin? Are there lines of business which are subsidized by other, more profitable business units or offerings? If so, they may need to be temporarily suspended or permanently shuttered/ divested.
2. Major work streams (core operations) and the crisis response will need most attention. Establish a rhythm for virtual, daily huddles and weekly reviews, which dive deeper and track progress against the action plan. Take direct action in areas which get stuck or need policy-level changes.
3. Keep an eye on the market. While your primary focus is on mitigating business risks in this down cycle, listen closely to other market signals. As months go by, there will emerge excellent opportunities for M&A, or evolving your current offerings to deepen customer loyalty, or restructuring your business to be more online, or preparing for a “new normal” for operating on the islands. These opportunities can be leveraged by only those who are prepared.

The COVID-19 crisis will eventually blow over, and Hawaii’s economy will bounce back. Many businesses with poor liquidity or indecisive managers will perish. The bold CEO and her organization will emerge stronger at the other end. And, it will be because of their timely actions.

How can GUILD Consulting help you?

We specialize in “strategy” and “alignment.” We will perform the critical analyses and facilitate a 4-hour planning session with your core team (virtual) to develop an action plan with clear accountabilities and timelines. We will “stress test” the plan to make sure your team is aligned and ready.

To learn more, email us at solutions@guild.im or call (808) 729-5850.

The post The Hawaii CEO’s Plan for Dealing with COVID-19 appeared first on GUILD Consulting.

Yet, unlike their competitors, Hawaii’s SMBs are limited in both – their financial ability and risk appetite. While enterprises and well-funded startups aggressively invest a significant share of their revenue in operational improvements and innovation, the share is much lower for most SMBs. Focused on their core operations, SMBs find it difficult to allocate resources for strategic projects. Also, while a failed project is a routine setback for most entrepreneurs and Fortune 500, it can cause a major crisis in an SMB.

More significantly, Hawaii’s SMBs are financially and geographically constrained in hiring the best employees or accessing world-class consultants to truly compete on a level playing field. Unfortunately, hiring a local, freelance consultant through word-of-mouth is often a recipe for disappointment and mediocre results.

Below, we propose an objective and proven approach to hiring outside consultants. We believe following these steps will lead to superior hiring, predictable project outcomes, and consequently, longer strides for an SMB’s growth.

BEFORE YOU HIRE

1. Know why you are hiring: Use a consultant only when you can reliably expect a better result than what your internal team can deliver. It is preferable if your key staff acknowledge this fact, before you hire a consultant. This will reduce friction during the project.

2. Triage the problem (or opportunity): There are multiple ways to tackle most problems. For example, a problem in flagging sales may require a new marketing strategy, or better training for your sales personnel, or developing new products or markets, etc. Each of these paths require a different professional consultant. Know your high-level need before you approach a consultant.

WHILE YOU HIRE

3. Minimize uncertainty: There multiple sources of uncertainty in diagnosing the root cause of a situation, the choice of the consultant, and in deciding whether the money is being spent wisely. To mitigate these risks, we recommend the following steps.

a. Find the right specialist, no matter where they are.
b. Discuss your specific situation, talking in generalities is a waste of time.
c. If you can afford it, hire a firm instead of an individual. Their internal processes and reviews deliver more consistent results that a freelancer or even a coalition of freelancers find difficult to match.
d. Ask not “can you solve the problem”, ask “how have you solved a similar problem before”.
e. Look to interview at least 2 to 3 providers. See who listens well and teases out the “real problem”.
g. Compare their relative approaches towards working out a solution.

4. Disregard salesmanship: Discount the selling ability, brand value and personality of the provider. Once you find the right expert, the only remaining question is, can you see yourself collaborating effectively with the consultant?

AFTER YOU HIRE

5. Have high expectations: Service professionals rise or fall to client expectations.

6. Get off to a running start: Look for ways to shorten the “learning curve” for the consultant (it is very expensive). Consider adding relevant internal staff to the project team.

7. Break down big projects: Large, long consulting projects have higher failure rates. Try to scope them into smaller pieces of work. If that is not possible, establish clear progress milestones and provide the allowance for course correction. A good consultant should be able to help you do that.

8. Pay for results: Gain-share, fee-at-risk, performance-pay…there are several ways for getting your consultant’s skin in the game. If you do your part in selecting the right provider, you’ll be surprised to find them open to such fee arrangements.

Lastly, a true professional is not a commodity. The best consultants have demonstrable knowledge in their domain, a good understanding of the limits of their expertise, and a collaborative disposition to get things done in a new environment.

When the stakes are high, the difference between the best and second best can be the difference between success and failure. Keep that in mind while doing price and value evaluations.

Email us at solutions@guild.im or call us at (808) 729-5850.

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But if, as business owners, we invest in what matters through the efforts of non-profit organizations, we can create change.

In this time of resentment and umbrage, one of the harder questions is how to stay reasonably buoyant and make positive contributions. Here’s one answer that traces its origins to Loren Eiseley, a gifted anthropologist, educator, philosopher, and natural scientist, who taught and from the 1950s through the 1970s.

One morning an old man was walking on a nearby beach after a big storm had passed and saw the shore littered with dead and dying starfish as far as the eye could see. Off in the distance, he noticed a small boy approaching. As the boy walked, he paused once in a while, picked up one of the starfish and threw it into the sea.

When the boy came closer, they had the following conversation:

Old Man: Good morning! May I ask what it is that you are doing?

Young Boy: Well, I’m throwing some of the starfish back into the ocean. The tide has washed them up onto the beach and they can’t return to the sea by themselves and when the sun gets high, they will die, unless I get them back into the water.”

Old Man: But there must be tens of thousands of starfish on this beach. I’m afraid you won’t really be able to make much of a difference.

The boy bent down, picked up another starfish and threw it as far as he could into the ocean. Then he turned, smiled, and said: “It made a difference to that one!”

We have many words for starfish throwers. In older times that function may have been done by leopard chiefs (Central Africa), talking chiefs, (Polynesia), big men (Papua New Guinea), haku or lei makers (Hawaii), or rabbis, priests, counselors, or “confianza” in Latin America. Today, they may be called brokers, intermediaries, conciliators, mediators, facilitators, team leaders, referees, coaches, or resolution advisers.

Regardless, they take their satisfaction and small joys, one starfish at a time. But here’s the big question: What happens to the starfish after we throw it back in the water?

Non-profit organizations are focused on policy; they’re focused on change. By putting our efforts into helping them succeed, businesses bypass those seeking an agenda or watching their bottom line. Supporting their efforts is a great way to promote change and to find real movement within a cause.

Partners at GUILD Consulting will be happy to talk to you about our work with non-profit organizations and the impact they can provide to business. Email us at solutions@guild.im or call (808) 729-5850.

The post Focus on Non Profits to Make an Impact One Small Organization at a Time appeared first on GUILD Consulting.

If you are a pessimist, you are intensely focused on the negatives of what lies ahead for us. If you are an optimist, you think, “The cup is always more than half full and even if it has a few dabs of arsenic in it there are opportunities.” We at GUILD Consulting are amongst the latter.

We are also realists and pragmatists. Grappling with larger and smaller problems, we go to lots of meetings and many of us are called on to design, moderate, facilitate, or manage them. Some of them, especially ones that deal with contentious issues, get people’s blood up.

Imagine any or all of the following:

• The state has called an informational meeting for next Wednesday to talk about a new vaccination campaign to combat an outbreak of Zika virus. People are scared.

• Neighbors have gathered to talk about the potholes, inadequate lighting, and cars racing down streets where their kids play. People are mad.

• At work, the senior manager in your division has just announced that that company has been bought out and merged and budget and staff consolidations are coming soon. People are fearful.

Each of these will usually be attended by a variety of personality types: introverts, extroverts, deductive reasoners, inductive thinkers, people with technical minds, people doing politics, and people who just want to listen. Almost always there is someone who will talk too long, try to hijack the meeting, or want to beef with someone they don’t like or trust.

The old and new literature on facilitation and meeting management is rich with what trainers call managing “Difficult people.” Sometimes they are categorized as “Sherman Tanks,” “Exploders,” “Snipers,” “Complainers,” “Clams,” or “Know-it-alls.” Much of the advice for dealing with them is repetitious and comes down to a few platitudes. Fashion a safe setting where people can speak their minds, create ground rules, encourage everyone to speak up.

There’s another and better form of analysis. It doesn’t assume these are immutably flawed personalities. Rather, it says all of us have moments in public places when we at our worst.

In the 1950s, Dr. Eric Berne, originally trained in psychoanalysis, wanted a theory which would be understood and available to everyone to help reduce unnecessary friction in family, work, and community systems where people had no choice but to interact. He called it Transactional Analysis or TA. Part of his work was built around three role patterns that play out over and over again privately and publicly when we are struggling with complex issues: parent, child, and adult.

We see all three sides in meetings on snarky subjects.

In simplified form, what Berne was getting at was this. In our child roles, we tend to be self-centered, experience strong emotions, and are not always sociable. We get talked down to and don’t like it. We argue, rebel, and push back. As parents, we try to socialize children. We issue directives, admonishments, and lessons. “Don’t run with scissors.” “Always chew with your mouth closed.” “Play nice in the sandbox.” And as adults, we become more cognitive, careful, and thoughtful. We become capable of deliberation, give-and-take dialogue, and problem-solving.

Our new challenge is to find new ways to bridge the gap from “ready to rumble” to “open to discussion” and from “I’m mad as hell” to “Let’s talk about the issue.” In effect, to help people become “adults” when they are at those meetings that evoke fear or anger.

Our Partners at GUILD Consulting will be happy to talk to you about dealing with difficult subject matters. Email us at solutions@guild.im or call (808) 729-5850.

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The National Science Foundation, Pew Research Center, and others have noted said trends. And from a business perspective (or a local one), they’re worth looking into. Confidence in government has dropped, not just in the United States, but in all Western countries. Government institutions aren’t immune. Meanwhile, trust in churches, universities, schools, and research groups, has also continued to plummet.

At the exact same time, the rise of social media amplifies public disagreements. Project proponents have started using social media to advance their causes — this information usually shows up without warning or asking on the topic on Facebook Twitter, texts, e-mails, Instagram, Snapchat, and more. The goal of each post is to gain attention and persuasion. They say: “Look at this big cause. This is why you should believe us.”

On the other side of the spectrum, opponents of each cause do the same; they use social media to gather and convince sympathizers. Jan Tenbruggencate, a Hawaiʻian writer wrote:

Social media is a powerful force. 

It’s is a growing new reality to the modern cause. It creates viral images and narratives that work against efforts to strive together for solutions. A question for exploration is how do we use social media when we are trying to build new collaborative discussions on very hard topics?

We welcome your ideas. Our Partners at GUILD Consulting will be happy to talk to you about leveraging trends for social media in public policy. Email us at solutions@guild.im or call (808) 729-5850.

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