An organization’s ability to create critical dialogue is directly related to its level of earnings performance.
What is critical dialogue? It is the ability to tactfully and respectfully discuss key issues affecting the organization’s financial health and well-being with candor, honesty, respect and an appropriate sense of urgency. Most often, this is known as asking the tough questions.
We’re too nice to have critical dialogue
Many of us are extremely blessed to be working with truly talented and very nice people on our teams. So what’s the problem? Well, what makes us great can also be our greatest challenge. The talented people on our teams enable us to exist and frequently thrive in business, while the nice people allow us to enjoy our work. The skill, however, that many very nice people often struggle with is the creation of critical dialogue within their organization.
Too many companies experience lackluster earnings performance, not because they aren’t skilled at their craft, but because they are not comfortable asking the tough questions regarding performance deficiencies within their organizations.
Proof of concept
If you don’t believe there is a strong correlation between an organization’s earnings performance and its ability to create critical dialogue, then please conduct your own personal survey to prove this point out. Look around and create a short list of companies that are very successful financially and create a short list of companies that are not. Hopefully, these are companies that you have a contact within the organization so they can provide you with their perception of the company’s ability to create critical dialogue.
Next, talk to any business advisor that you believe to be both astute and effective in assisting their clients in improving their operating performance. Business consultants, attorneys, accountants and bankers are in a position to see countless organizations from a very intimate perspective, and if they are good at their craft, they will have made the very same observation.
Companies that successfully create critical dialogue consistently enjoy stronger earnings performance compared with their counterparts that are less effective at asking the tough questions.
Talk in terms everyone can appreciate
In a company I had previously sold, we had members of our technical services team who were very talented, nurturing and giving when servicing our customers. Rightfully so, this was a key component to our success and a very big part and corporate culture. Our internal mantra was, “customer for life.” This meant every member of our team was to behave in a way that would produce a life-long customer relationship.
Several members of our talented technical services team were so nurturing and giving that they struggled with telling the client that they were requesting billable services and not ongoing support. The difference between billable services and ongoing support was clearly articulated previously, yet because of the nurturing personalities of several members of our service team, we were losing incremental revenue month in and month out, as they were providing billable services for free. Keep in mind, the words incremental revenue should not imply insignificant revenue.
During the next three or four months, and after numerous educationally-oriented conversations with the services team, I was unable to convince them to significantly change their behavior of providing certain billable services under the banner of ongoing support. Finally, I conceded. I told the services team that if they wanted to continue providing certain billable services under the banner of ongoing support (or at no charge), they could do so under one condition. That condition was, if they felt compelled to give billable services away for free, they could do so as long as they didn’t charge the company for the time that they spent giving services away. It was at that point that we were all talking in terms that everyone could appreciate. Again, these were talented people doing their very best to behave in a way that would produce customers for life. But it was my (and management’s) responsibility to ensure the service team clearly understood how their behaviors impacted the organization financially.
This is one example of critical dialogue. Believe it or not, this was an emotional issue for several people on our service team. They truly felt it was appropriate to give services away in the spirit of creating customers for life. Management needs to find a way to cut through the emotion (critical dialogue) in order to educate the team so they have a complete understanding of not only the delivery side of the business, but also the impact on the financial performance of the organization as a result of their behaviors and decisions.
CD (critical dialogue) equals earnings squared
This isn’t the quadratic equation. However, it is a formula for producing improved earnings performance. Always being direct, honest, candid and timely in handling performance shortfalls should be part of the core values statement of an organization, because it is critical to the organization’s success.
Philip Mydlach is the owner of Mydlach Management Advisors, a corporate planning and performance improvement practice in Waukesha. He can be reached at (262) 662-4646 or pmydlach@aol.com.
April 29, 2005, Small Business Times, Milwaukee, WI
