Rising From Mismanagement
I’ve read an interesting story in Entrepreneur magazine about a tool steel businessman who’s business was almost brought down to it’s knees due to cheating employees, Asian financial crisis back in 1997 and his spending attitude. It’s really common sense that living in frugality will really help a business manage it’s finances well, not only in business but also in our ordinary daily living as a typical worker. But not everyone have that discipline especially if your spouse is not thrifty enough even though you did your best to become frugal. The COO of the Special Steel Products, Inc., Joseph Anthony Pardo said so himself that “although the Asian financial crisis was totally unexpected, the company would not have been as hard hit if they handled their financial well.”
Another aspect that became their major problem is the employee’s dishonesty. In 1986, when some of their former employees started selling cheap steel to their clients, claiming that they were the same as Bohler. The company lost a number of clients to the copycats who offered a cheaper yet substandard alternative. They (dishonest employees) also resorted to unethical means just to sell such as cheating the customers by substituting materials, and spreading black propaganda about their company.
Employee honesty is really hard to predict and determine. It’s beyond the employers control to make an employee honest even the employer is fair to it’s employees. Based on the story, I think, a contributing factor that solved his employee problem is the creation of human resources department. Having a human resources department will, at least, minimize the error in employee selection. The problem is prevented before it start by selecting the proper personnel suited for the job and from the very start the HR will determine the employee’s attitude by giving psychological tests on the hiring process or conduct evaluations and trainings with it’s existing employees.
On the marketing side, to beef up sales, Joseph and his staff studied customers’ preference and needs more carefully and used them as a guide in deciding on their inventory mix. ” Before it was more of a gut feel. But now we support that gut feel with some figures through surveys. Among our staff, we started having sessons for inventory forecasting” he shares. For example, slow moving inventory was sold at a minimal mark-up just to turn stocks into cash. They also took better care of clients, focusing more on customers who were loyal than those who were price conscious”.
On “focusing more on customers who were loyal” it is interesting to note that customer retention is very important because it shows how you make a customer happy and I think that no advertising and marketing gimmick will top that. If you have happy customers, the word of mouth advertising will take care of itself.
Source: Entrepreneur Magazine