The Importance of Family Businesses in America

Family businesses are the most influential factor in the health of the U.S. economy and they are the ONLY solution to our difficult economic times.

This statement might surprise many people but consider the statistics. According to Family Business Review Magazine (Summer 1996) family businesses comprise 80% of all business enterprises in North America. They account for 60% of total U.S. employment, 78% of all new jobs, 65% of wages paid (Financial Planning Magazine, Nov 1999) and 34% of these companies are listed on the Standard & Poor’s 500 Index. With those stats as a backdrop, it’s not surprising that nearly 40% of family businesses in America will be passing the reigns to the next generation over the next five years according to Business Week Magazine (August 11, 2003).

Yet the most incredible statistic by far was the one postulated by Robert Avery at Cornell University in his paper, “The Ten Trillion Dollar Question: A Philanthropic Gameplan.” Avery noted that by 2050, virtually all closely held and family owned businesses will lose their primary owner to death or retirement. Approximately $10.4 trillion of net worth will be transferred by the year 2040, with $4.8 trillion in the next 20 years.

The plain fact is that family businesses are in trouble because succession plans are quite obviously less and less effective. This is primarily due to what I call the “motive gap” between generations. According to an article appearing in the Boston Globe on May 4, 2003, only 40% of family owned businesses survive to the second generation, 12% to the third, and 3% to the fourth. It s also a known fact that these companies are most successful when run by a family member. Family members have the passion, drive and purest motives to run the company in a way consistent with the founding member. While some of these companies will be successfully sold to those outside the family, these statistics represent a disturbing trend and concern for the future of family businesses and the American economy in general!

It doesn’t take a genius to figure out that the root of this problem, simply said, is that sons and daughters are not interested in taking over the family business. Now this may well be attributable to other interests and passions. Certainly this is understandable but it does beg the question of WHY they may not interested or excited about learning the ropes and assuming the reigns? I can tell you that after personally working with thousands of family businesses and in may cases counseling numerous reluctant second or third generation leaders this stems from significant generational differences. These differences can easily be reconciled but often both parties (parents as well as sons and daughters) seem to be completely oblivious as to the differences. The result of generational differences are often mistaken as ineffective work habits, personality flaws or other personal characteristic or attributes. Yet more often than not simply becoming aware of the differences in generational decision making, communication and leadership styles can resolve conflict and restore trust and continued harmony in the business.

This allows the business to thrive even in difficult circumstances.

If you’re in a family business and are interested in succession planning, send me an e-mail and request my free whitepaper on family businesses.

How beliefs affect your Sales Team

It’s 10 am on Monday morning at Hal Company.  Everyone knows it’s time for the sales meeting run by Jay, the sales manager.  Jay begins by describing the company’s successes over the last week.  He mentions that Martin gained commitment from a new client.  Everyone claps for Martin but he’s not there.  As Jay continues to talk about the company’s goals, he notices Sam disengaged, reading through what appears to be a contract.  Adam and Valishia are always upfront.  They thrive on these meetings.  Jay knows that they both rely too heavily on excitement to keep their sales up.Jay has a problem, but it is hard to see.Now, let’s investigate the real issues.Martin is at his desk working on a proposal.  He doesn’t see the need to attend the meeting.  From his experience at a large company, he found meetings to be a complete waste of time.  In addition, he and his old compatriots would frequently joke about tactics they each used to escape meetings.  This cemented the belief that “Meetings are useless, so I won’t attend.” Jay has experienced difficulty changing this behavior.  He has pulled Martin aside on several occasions and requested that he attend the meeting.  When he doesn’t, Jay permits it to slide because Martin is bringing in more sales than anyone else.Jay notices that Sam is consistently disengaged in various settings.  In other meetings and trainings, Sam usually has something to distract him.  While sitting with clients, Sam spends more time talking than listening.  This prevents him from attaining a high level of sales.  He believes that what he has to say is more important what others have to say.  This gets in his way.Adam and Valishia learned once-upon-a-time that sales is an excitement game.  They believe that if they stay excited, they will close more sales.  Because of this, they attend every meeting, event, internal and external training, and industry meeting.  The problem is they spend more time meeting people and very little time selling.From the article, “How Beliefs Affect Your Resiliency” we know that beliefs can’t be changed directly and aggressively.  They must be changed through coaching.  We recommend professional coaching because changing beliefs is difficult, but permanent. In lieu of using a professional coach, we would recommend that Jay sit down with each of them, explain how beliefs work (from the article mentioned above,) and asked questions that get to the heart of their belief.  Asking questions such as, “You didn’t attend the meeting, this was the behavior.  What was the expectation behind that?”  He may say that he expected no value to come from the meeting.  Then ask him, “What belief creates this expectation?”  He may say something like, “I believe that all meetings are a waste of time.”  Then ask him what would need to happen at a meeting to make it valuable for him to attend.Once you know, ask him that if you incorporated this new concept into the meeting, if he would attend.  Then ask why he would attend.  His answer builds emotional value into the meeting.Follow a similar format with the other individuals.This article was written by SBA Network Consultant Cory Halbardier.SALESPERSON:  If you are a salesperson, receive a FREE copy of our audio program Being More Productive by sending an email to me at with the name and email address of your sales manager.  We will send him this article along with a special audio program titled Motivating Your Staff. SALES ADVANTAGE: We are starting the next session of the Dale Carnegie Sales Advantage class.  If you are a salesperson who wants to learn the structure of effective sales, or just to improve your skills, the new class starts March 17th.  Sign up today by contacting Aaron Kent at or 562-426-8327 x210.Have a great week!-Cory Halbardier (

Turning the Economy Around

This is an interesting time. The recent layoff of 80,000 American workers has resulted in all of the financial gurus spouting their drivel about the global economic crisis we are facing. I have even heard some say we are entering another depression. Just a few days ago, I appeared on FOX TV and discussed this with business expert Neil Cavuto. He asked me how I thought this was affecting small business owners and what they could do about it. My comments were that maybe we should put some of these gurus on the firing line of small businesses and see how they do. Their demise would be quick and final. Because as I told Mr. Cavuto, the most important asset that entrepreneurs have today is their attitude.

Without a positive attitude, we are doomed regardless of how well or how poorly the economy is doing. Many of us perhaps have heard the Serenity Prayer – “We must accept the things we cannot change, have the courage to change the things we can, and wisdom to know the difference.” Surely, we cannot individually change the economy but collectively it is certainly possible. We can do this by focusing on the critical business issues at hand like, delivering a higher level of customer satisfaction, creative product development and line extensions, smart financial management, getting longer terms on payables, building customer loyalty programs and penetrating new markets. We do have the ability to turn this economy around but we must first look in the mirror and begin the change within. Do you have the courage to take that challenge? I sure hope so. All of our jobs might depend on it.View my latest appearance below:

To Meet or Not to Meet

Yuk! It’s meeting time.

 Don’t worry you’re not alone. A recent survey by the Harvard Business Review revealed that 92% of meeting participants in corporate America view meetings as a supreme waste of time! Frank Robinson, CEO of Robison Helicopter says, “I’ve always felt that meetings are one of the most wasteful things in industry. We avoid having meetings as much as possible. Most decisions don’t have to have a meeting.” I’m not sure I would agree with this but I certainly understand WHY many take this position when asked about meetings. A meeting should be used to carry out communications, planning, setting policy, making decisions, or motivating a team. The most effective meetings are well planned and executed.   They should serve to bring forth the best in all team members – the best ideas, the best decisions, and the best follow-up. Here’s some tips on how to make your meetings more valuable, effective and hopefully a pleasure for all that attend: 1. Always send an agenda to all the participants in advance. The agenda presented at the start of a meeting just doesn’t cut it. Attendees can not prepare for a meeting if they don’t know the content and purpose of a meeting ahead of time. If no agenda exists ahead of time it is highly possible that there is no plan for the meeting. 2. Always begin the meeting with a statement of the goal and get everyone’s agreement. End the meeting with a quick review of the action items that have been established and who will do what and when it will be accomplished. 3. Never hold a meeting to learn the “status” of various initiatives. This is accomplished far more effectively by reports from team members. This can be done via email, written memos or even by using voice mail. When 5, 10 or 20 people are gathered together at a meeting to hear the reports of others, very little is being accomplished. 4. Brainstorming ideas is a good use of a meeting as long as there is a plan so that attendees can prepare their ideas in advance. Those ideas can then be collected quickly and efficiently at the meeting. However, attempting to brainstorm the content of a document at a meeting is a terrible waste of time. If a group must all agree on the contents of a document I recommend providing a draft to participants several days in advance, collecting feedback and doing a summary presentation of the collaborated draft to the group. 5. Create a system so that all the participants can contribute. There’s nothing worse than having just one or two members dominate the meeting while others passively stand by just listening. Often times those who speak the least have the best ideas or are fearful of disagreeing with the most vocal participants. Many times I have found that it is these very participants who will raise the most critical issues that need to be resolved. 6. If you are a facilitator of a meeting – BE PREPARED or cancel the meeting, know the goals for the meeting in advance, have a start and a stop time and stick to it and be prepared to facilitate any conflict which, by-the-way is a good thing. Having constructive conflict within a meeting is moth healthy and necessary to creating the most valuable and cost effective solutions. I hope this helps at your next meeting. Also I’d love to hear some meeting success or horror stories. Send them to:

The Death of Corporate America

Remember the old days?

Our fathers and grandfathers worked for the same company for 20, 30 or even 40 years. Generations of sons and daughters toiling under the protective arms of the “COMPANY.” 

Today it’s more likely that we will outlive any organization that we work for. 

It has snuck up on us. We turned our head and all of a sudden Corporate America is dying. 

It is the result of a powerful force that has emerged in our society. Not a company or a new technology or even a new industry. It is the evolution of workers themselves. For the first time in history, there are more workers operating as “free agents” than there are people working for Corporate America. Fortune 500 companies no longer form the bedrock of our workforce. 

How Has This Happened?
This evolution has been rapid and decisive. It has occurred for a number of reasons. First, the social contract of job security has long been broken. Jobs are no longer sacrosanct at Fortune 500 companies. One day these firms are in expansion mode and the next they’re “laying off” 35,000 workers. Second, e-commerce and automation technologies have leveled the playing field so that smaller companies with less people could provide the same benefits as larger multi-national firms. This resulted in corporate re-structuring and downsizing. And finally the loyalty/security pact of the previous five decades has been broken. This was evidenced in the mid nineties when IBM broke it’s “full employment policy” by reducing it’s payroll by a whopping 120,000 employees. In this century, being loyal to a company does not guarantee job security.

What Does The Future Hold?
Today the largest private employer in America is not Ford, General Motors, or even Microsoft. It’s Milwaukee’s Manpower Inc., a temporary help agency with over 1,100 office throughout the United States employing over a million workers. Temporary staffing has grown from a $1 billion industry to more than $80 billion while employing over ten million temps nationwide. It is estimated that there are over 33 million solo, self-employed workers. And there is an emergence of a new category called micro businesses. These are small businesses employing just 2 or 3 people to drive particular initiatives on either a full or part time basis. In fact, more than half of today’s companies have fewer than 5 employees! Don’t look to our government to reconcile this societal evolution. They’re a full century behind. The Bureau of Labor and Statistics still divides all workers into two categories: farm and “non-farm.” Figure that out. 

What Free Agents Love
The work ethic of free agent entrepreneurs is considerably different than corporate employees. These entrepreneurs crave, freedom, control, security, and loyalty. If you think about it, these are the very job benefits lacking in Corporate America. Today free agents come in a variety of forms, entrepreneurs, independent contractors, consultants, advisors, 1099ers, hired guns, nomads, etc. But their focus is on producing a measurable result for an organization rather than performing a specific role within it. Free agents tend to provide a higher return on investment for organizations because of their accountability to themselves rather than to a hierarchy.

Freedom is the ability to exercise one’s own will. Within the corporate cocoon freedom takes on the meaning that the company as a whole projects. Some companies smother their employees in affection others try to purchase individual freedom with stock options and incentives. Free agents can choose to follow their own work ethic. This extends not only to what they believe, what they do and where they do it but also WHEN they do it. Free agents have succeeded in melding work time with home time. Gone is the Monday through Friday 9am to 5pm ritual. Today they balance a full time home life with a full time work life.

Life in Corporate America is about lining up behind the company culture and philosophy. Free agents can control their own destiny. Consequently they develop skills in areas which they desire to excel. They build relationships with those that match their business culture and paradigm. They focus on selling insight, talent, expertise, ideas, creativity and solutions rather than just performing tasks. They realize that what matters in the course of a day is what is accomplished not how many hours are worked.

The last decade has been one of prosperity. Members of Corporate America had job security but that prospect is diminishing. While a high standard of living has reached deep into middle class many members of Corporate America do not feel that their lives have improved. This dichotomy has altered our expectations of comfort and prosperity. People are looking forward to more than just a comfortable retirement after four or five decades of “work.” People are realizing that it’s not good enough to work to make money and survive. They desire to work to make meaning for themselves and their families. 

With free agents loyalty does not run up and down an organizational chart. It runs from side-to-side in allegiance to clients, colleagues, teams, projects, vendors and industries. In this sense free agents are far more loyal than company men and women. Companies can also afford to be more loyal to free agents because they lack the overhead that employees bring. Both benefit from the free agent structure because whereas vertical loyalty within an organization depended on one connection (boss and employee) this new horizontal loyalty depends on many connections.

How It Impacts YOU!
In the end I believe that we will see the free agent philosophy infiltrate every industry, profession and area of expertise. Those that are most prepared for this transition will benefit the greatest. Think about your own business. How could you use the “free agent mentality” to bring efficiencies to your business? If you’re an employer, how could you increase productivity and reduce overhead by employing free agents? If you’re an employee, how could you deliver greater production to your employer and increase your earning capacity by utilizing the above free agent infrastructure?

Team Innovation

Today, businesses large and small like to say they are “team oriented” (whatever that means). I guess it means they work in teams. Big deal. Does that improve their performance? Does that mean that the quality of their product or service is better than the competition? Does that allow them to complete a project more timely, profitably or effectively? Is teamwork really a better way to go about solving problems than say the “hermit” approach? What about Thomas Edison or Leonardo DaVinci or Alexander Graham Bell?

If you’ve ever worked on a team you know there is one thing that can not be avoided: CONFLICT. At some point someone is going to disagree with somebody else and then, look out! Getting to a simple solution can take hours or days while these two “team-members” fight over minutia. Sound familiar?Let’s face it, often times, teams can hit roadblocks that can sabotage their success. There are a number of things that can be done to ensure good teamwork:Conflict is GoodAs team leaders we must not allow ourselves to think that we solely carry the burden of resolving conflict. I see so may managers, owners and team leaders rush to squish the most subtle sign of conflict within their team. Without conflict we can not reach the best solution. This also places us in a patronizing, parental position that encourages your team members to abdicate personal responsibility for resolving conflict. It keeps them from developing the skills to necessary to grow, mature and hold each other accountable. Allow the team to detect conflict and manage only those that escalate.Guidelines for Managing ConflictAs leaders we need to model guidelines that set the tone for resolving conflict. In this way we will be educating our team members to take responsibility. These should include:

  • No personal attacks
  • No heated outbursts
  • No backbiting
  • No hostile assumptions

Establishing Expectations
Over the years I have noticed that communicating expectations to the team is paramount in achieving exceptional team performance. The following are areas that team leaders should develop clear expectations for members:1. Work methods – Make sure your team knows the methods and procedures you expect them to follow when completing the job. If they do not they may frustrate themselves by taking the “long route” and end up disillusioned.2. Deadlines – Make sure that the team fully understands the time frame for completion. This should include non-negotiable dates as opposed to to dates that can slip.3. Responsibilities – Ensure that every team member understands their role in the team process. This should be communicated one-on-one with each team member prior to establishing the team. Also ensure that the team members responsibilities are consistent with the teams responsibilities.4. Priorities – It is critical that team members know the proper priorities. What’s to be done first, second and so on.5. Performance – Paint a picture of the outcome for the team. Show them a vision of a “good” job vs. a “bad” job. Make sure they understand the degree of effort that you expect them to each contribute to the successful solution.6. Measurement – Establish a system to measure performance in small increments.7. Communication – Establish a format for consistent communication with the team. This forum will give you the ability to ask the right kind of questions to determine whether the team is “on-track.” At this pint you can provide feedback to the team and make suggestions on course correction.8. Resources – Make sure that your team members understand the resources that are available to them. This could include staff, facilities, technology, equipment, outside consultants and so on. Encourage them to use the resources to their best advantage but in a cost effective way in order to achieve their goals.As leaders it’s our job to foster innovation. Team members look to us for confidence, guidance, direction and innovation. What can you do to set the stage for creative thinking in the teams that you lead? How can you get your team to discover the best solutions in the most cost effective manner. Remember teams are not just resources, they are people. As I have said many times, we line in an age of relationships. How can you create relationships that go beyond just getting the job done. How can you create relationships that can produce the kind of Edison, Bell and DaVinci innovation.


Over the last few weeks I’ve been talking about some of the intangible traits that define “who we are” or “who our company is.” We’ve been looking at Rule #11 from my Rules of Attraction: Who we are is more important that what we do.

In my last few Business Updates I wrote about Integrity, Vision and Enthusiasm. Today I’d like to look at another trait that makes up “who” we are – selflessness.

Henry Stimson, Secretary of War during World War II once said, “no one who is thinking of himself can rise to great heights.” It sounds nice. It looks good in quotes. But the reality is that this statement runs counter to what most people truly believe and how we live our lives. In fact it is the opposite of what most of us are taught as children. That is, we must FIGHT for what is ours. Even in school we teach our children evolution. We beat into their little heads – the survival of the fittest. Only the very best make it to the top. We make no bones about the fact that we live in a dog-eat-dog world. Where is selflessness in all of this? Don’t get me wrong I am in no way saying that I live up to this trait. I am ashamed to say that I often fail miserably at being selfless. I do think it is necessary that we illuminate the fact that those who have molded their character to a selfless mindset ultimately create attraction and bring about change.

There has already been much written on the lives of those famous selfless individuals who have changed the world. People like Gandhi, Mother Teresa and Nelson Mandela. I will not dedicate extensive discussion to their accomplishments in this book but as point of illustration allow me to touch on them briefly. I think you will see that their selfless actions did in fact create massive attraction. I will attempt to demonstrate that this type of character-based attraction, like integrity, vision and enthusiasm can be implemented in a powerful and genuine way by regular folks like you and I.

In his youth Gandhi was a regular guy. In fact the name Gandhi means “grocer.” Educated as a lawyer in England he ultimately managed to lead his people to freedom from British rule by practicing nothing BUT selflessness. He never wavered in his unshakable belief in nonviolent protest and religious tolerance. When Muslim and Hindu compatriots committed acts of violence, whether against the British, or against each other, he fasted until the fighting ceased. Independence, when it came in 1947, was not a military victory, but a triumph of human will. 

Mother Teresa taught at St. Mary’s High School in Calcutta from 1931 to 1948. However the suffering and poverty she saw outside the convent made a profound impression on her. She asked for permission from her superiors to leave the school and devote herself to working with the destitute and dying in the slums of Calcutta. Although she did not have a single penny, she relied on Divine Providence, and began the first school for slum children without even a building. Her selflessness attracted volunteers and eventually financial support. By the 1990s there were over one million Co-Workers in more than 40 countries.

While selflessness is indeed a rare commodity today, I think we can all give a bit of ourselves for someone else. We don’t have to be Gandhi or Mother Teresa to help another person. I think this is as relevant in business as it is in our personal lives. How often do we place our own interests before the clients? How often do we let our egos get in the way just because we can? If I had to answer that I’d have to say, TOO OFTEN!

What would happen if we took the long view, overlooking a confrontation in favor of a selfless approach? Do you think it would create attraction? I’d be willing to bet my bottom dollar on that. In a society that focuses on gratifying ourselves, imagine the impact we can create with our clients, shareholders and team members when we take our eyes off ourselves and look to a brighter future.

Selfish or Selfless?

Happy Holidays to all. I thought I’d take just a moment to look at a popular concept this time of year from a unique angle – the idea of giving. At Christmas we focus on giving, making others happy, showing our appreciation, blah, blah. Yet during the other 364 days of the year we focus on “getting” and make no bones about it. Its “dog eat dog, eat or be eaten, get it while the getting’s good, and nice guys (or gals) finish last.”
Just look at our heroes: Donald Trump, Sam Walton, John D. Rockefeller and Warren Buffet – ruthless billionaires. We admire ruthlessness, tough-mindedness and persistence. In fact, we try to emulate these qualities. Hey, I don’t exclude myself. I can be as self absorbed as the next person.

Many have said that selfishness is in our blood. They say that as humans we have had to cultivate a form of selfishness in order to thrive. Many have drawn the correlation to Darwin’s theory of evolution linking selfishness to the genetic evolution of a “selfish gene”. After all, even a school child knows that only the strong survive. Surely this connects nicely with Darwin’s theory of natural selection and the survival of the fittest.
But our world is changing. Just ask Martha Stewart, WorldCom and Enron.Even the tobacco manufacturers are becoming altruistic today. You would be hard pressed to find a leader in business who isn’t focused on some type of charitable endowment. Ethics is the watchword of the day. According to there have been over 122 books written about corporate responsibility in just the last 12 months.
It’s a shame we need such a wake-up call. For more about this, check out Richard Dawkins book, The Selfish Gene. But for now, how about this? Let’s let it begin with you and me. I have found when I give it comes back to me 100 fold. In fact, it is the 14th rule of attraction: Be a giver.

So let’s make that read, “Be a giver…the other 364 days of the year too!”

Happy Holidays to all. It is an honor to have you as my subscribers.
Have a great week!
I hope that this “Business Update” has been helpful in assisting you to improve the performance of your organization. For more information on how the Small Business Advisory Network assists companies in improving their performance, please feel free to contact us at 310-320-8190 or email 

Mark Deo

Personal Internal Vision

In 1961 John F. Kennedy put forth the idea of sending a man to the moon and bringing him back safely before the end of the decade. The American people were no doubt moved by this vision. But frankly he received much opposition from Congress due to the Cold War and the fear of technological failure.

A team of legislators were sent to Cape Canaveral to determine whether the funding should be allocated for the project. One day Florida Senator George Smathers, a member of this team, was touring the facility. He slipped away from the group of dignitaries for a moment to get a drink of water. Attempting to rejoin his group he became lost and found himself wandering the halls. The place was immaculate. It looked to be sanitized. Suddenly he came upon a woman sweeping-up and he explained his situation to her. She seemed to know her way around the complex and quickly told him how to rejoin his party. Smathers, impressed with the woman’s knowledge asked her, “What is it that you do here?” He was astounded by what she told him: “Why sir, I am part of a team helping to put a man on the moon and bring him back safely.”Smathers went back to Washington with a renewed fervor in his heart for the lunar project. He told his colleagues, “If the janitor at Cape Canaveral has this kind of sense of mission, what might the scientists and astronauts be like?”This simple cleaning women understood her humble job of sweeping-up to be far more than it appeared to an outsider. She was an important part of the Apollo project. Do you think that, as a result she was far more committed to her job? Do you think she went out of her way to do an extra great job of cleaning up? You bet she did. Her answer showed her deep understanding of her “personal internal vision.”Please understand I am not talking about a corporate vision or mission. Not that a corporate vision/mission is not necessary. On the contrary it is the first step in organizations developing their personal internal visions. But today many corporate visions or missions have become more like slogans than anything else. A PIV, or “Personal Internal Vision”, is a one-on-one relationship between you and your job. For that cleaning women that might have meant having the floors shine, the porcelain gleam and the corridors sparkle. What is it for you? Or if you’re a business owner or manager what does it mean for each one of your people?The purpose of a PIV is to give people the freedom they need to succeed. It allows them to take full responsibility for their choices. This is really the only way to create an environment of accountability. When a company asks their people to develop their own personal internal visions, they also give them the freedom to break the bonds of authority and excel beyond what might be expected from management.The fact is that accountability and responsibility lies with those closest to the task. Owning their job and future allows someone to let go of the idea that they need someone to look to for direction or control. It allows people to be responsible to the entire organization and the customers rather than their manager or supervisor. It takes the focus off of doing things right or by the book. It puts the focus on doing the RIGHT things. This improves decision making, performance and productivity.Improved performance and increased productivity aren’t the only benefits of a PIV program. Implementing PIV allows people to improve their skills by taking personal risks that will benefit the organization. They become more trustworthy and more trusting of others. They tend to hold themselves to higher standards and operate with greater integrity. They are often willing to put the interests of others above their own. This makes sense if you think about it. When their OWN success is at stake rather than some stranger’s company, do you think they will make better decisions and operate with greater commitment? Of course.In fact, in the coming economy, the only alternative to implementing a PIV program will be increased employee turnover, continuing resentment and ultimate stagnation. Don’t take my word for it. Ask the folks at Southwest Airlines, Harley Davidson, Nordstrom, Dell Computers and the list goes on. The bottom-line is that having a PIV program can be the difference between achieving your company’s goals in terms of financial growth, manpower development and customer satisfaction.If not for that cleaning women’s PIV, might there be a Russian flag on the moon today?I hope that this “Business Update” has been helpful in assisting you to improve the performance of your organization. For more information on how the Small Business Advisory Network assists companies in improving their performance, please feel free to contact us at 310-320-8190 or email mark@markdeo.comMark Deo

Office Politics

Someone asked me the other day: “Mark what do think is the biggest challenge for small businesses today?”

I didn’t have to think about this very long. I know they were expecting me to say something about: the affects of the economy or the stock market or the impact of technology or the lack of funding or resources or even the breakneck speed which we are expected to operate at.But the reality is that these are relatively minor forces when compared with the most powerful force of all:Office Politics!If you could walk with my consultants and I, in and out of businesses we each see everyday you would see the obvious yet devastating result of office politics. I believe it is by far the biggest obstacle to change and growth for companies today. Not that this is new. Office politics has been with us for decades. But the changing financial, political and social landscape makes it more insidious than ever and literally threatens the survival of many small businesses and even larger organizations.Why? Because of the exorbitant cost associated with office politics.The cost of office politics is a kind of activity-based cost. It includes time lost, waste of resources, low staff morale and ineffective delegation. Some of these costs are tangible but not accountable. Often time this kind of loss is ignored or neglected. Since many political activities are cross-departmental, office politics can render an organization completely dysfunctional in a very short period of time. While it is usually unwise to let office politics freely develop, unfortunately many companies cannot tackle such a political problem and let it erode their productivity and profitability and sometimes even endanger their survival.Office politics is about the application, distribution and negotiation of power and resources in an organization. This power includes authority (formal power) and influence (informal power). Politics is basically the application of that power. The desire for power is determined by one’s personality. Leaders can affect this principal in every organization. Strong, ethical leadership regulates the application of informal power (i.e. influence) to avoid the overuse and abuse of authority. Abuse of authority will lead to a chain of negative effects such as low staff morale, conflict, bias, bad image, poor communication, dishonesty and social conflict.When ethical leadership exists, office politics will abate. This is because ethical leadership is essentially self-management and self-control as an example for subordinates to follow. It is the strongest influence for change in any relationship. As I’ve said before, leaders act the way they want their team members to act. Cultural actions cannot be ordered or commanded. Most political office issues are symptoms of weakness at the senior management and organization level.While every organization is different, most have some type of definable culture. Some call this the organization design. It is essentially referring to the general distribution and structure of authority, responsibilities and resources in the organization. Poor organizational design is a common cause of office politics because ineffective organizational structure allows too much room for the negotiation for authority and resources.The organization chart in the business leader’s mind is far more important than the official one. Ricky W.O. Lau, author of Politics in Business calls it the “hidden organization chart.” Often times this means that the leader has bias and personal favor to individual members but does not act openly and his delegation is based on the hidden organizational chart rather than the official one. This is a common yet unfair and very detrimental management practice.While delegation is the distribution of specific work, responsibilities and authority, in an effective organization, delegation must be based on the organizational structure. Otherwise, there would be structural overlap, confusion, conflict and politics. Conflict usually involves different interests of different people (especially in different departments). Conflict may be minimized if the focus is on the whole organization rather than individual department or individuals. Some management styles may easily lead to office politics because the focus is on the performance of individuals and departments rather than the organization as a whole.Certainly interdepartmental conflict cannot be completely eliminated. Nor should we attempt to do so. It is important to remember that disagreement is not equivalent to conflict. People may disagree or criticize others if:

  1. They view the matter from another viewpoint
  2. They have misunderstood other’s meaning
  3. They want improvement
  4. They want to challenge others’ position or power.

Out of the above four motives of disagreement, only the last one is the result of conflict and is a political motive. However, when a manager is too politically sensitive, he may mistakenly treat the first three motives as political motives, and interpret the conflict as an intention to challenge his position or power.Desire of power may be a strong motive to perform, but it may also lead to a negative and destructive result. An effective manager should apply his influential power rather than authority because abuse and overuse of authority can lead to poor relations, distrust, misunderstanding and disorganization.Are office politics an issue in your business? If any of these symptoms are present in your business, its time to think about making some core changes to your business culture. At the Small Business Advisory Network we like to say that we influence decisions, improve performance and inspire change. That’s what our consulting, workshops, web site, weekly articles and The Small Business Hour Radio Show are all about.