About Customer & Supplier Relationships:

Giving and Receiving in Everyday Life

By Rainer Busch

Foreword

The idea for this article was generated by consulting assignments involving problematic customer & supplier relationships. However, rather than presenting a case study, I decided to explore the theme of customer & supplier relationship in a broader context. The purpose of this article is to stimulate and generate discussion about how we, as individuals, behave as customers and suppliers in everyday life.

Introduction

There appears to be a prevailing attitude in the market place that groups customers and suppliers into opposing camps. We are being told that as customers we demand greater choices and better deals for products and services. This attitude is being used as justification by many businesses to ‘squeeze’ their suppliers to breaking point. In this article I will argue that all of us act in roles of customers and suppliers interchangeably and that there is no ‘us and them’, only ‘us’.

The ‘Customer’ Perspective

The Australian Oxford Dictionary defines ‘Customer’ as “someone who purchases goods and services.”

However, I feel that in today’s context, this definition is too simplistic. A customer today is not just a person who purchases goods and services, but effectively anybody who takes or receives something. (Example: A recipient who draws social services from a government agency or a charity is as much a customer as someone who buys a loaf of bread from a shop). – Customers could also be called ‘Takers’ or ‘Receivers’.

 Everybody has needs and wants that arise as part of everyday life. In some way or another we are all continually ‘taking / receiving’ something. This essentially means that we are ‘customers’ all the time. We must ‘take/receive’ to satisfy our requirements. The multitude of different variations of products and services that is on offer is evidence of this.

 Abraham Maslow grouped individual needs into what is known as ‘The Hierarchy of Needs’.  Maslow stated:

“Man is a wanting being. He is never satisfied, he always wants and he wants more. …. Human needs constitute a hierarchy made up of five broad classes.” He defined these classes from the bottom up as:

• Physiological (i.e. Food, Drink, Housing)
• Security (i.e. Personal Safety; Knowledge)
• Social (i.e. Friends)
• Esteem or status (i.e. Love; Admiration)
• Self-realisation or actualisation (i.e. Being who one wants to be.)

In order to satisfy our needs:  

1. We recognise and work out what is needed.
2. We work out how to satisfy this need. (Example: Once I have worked out that I am hungry, I know that I need food. I can now think about what I may want to eat.)
3. We begin to communicate with others and  start looking elsewhere if we are unable to meet our immediate needs with the resources available to us. (Example: I may decide to go to a bakery and ask for a piece of my favourite cake.)
4. We must be prepared to give something in return for what we require – ‘pay a price’.  (Example: I will give the baker some money in return for the cake. Alternatively the baker may just need someone to help him move a piece of equipment. I offer to help him and so he lets me have the cake in return.)

As consumers we are responsible for defining and communicating what we want. We must also be prepared to give something in exchange and take responsibility for the choices we make.  (Example: If I cannot communicate to the baker what I want, she may either not give me anything or may give me something I do not want.)

The ‘Supplier’ Perspective

The dictionary defines ‘Supplier’ as “one who supplies something (needed or useful).”  Another name for supplier could also be ‘Giver’ or ‘Responder’.  We all give something as part of everyday living. However we may not realise we are doing this. (Example: If someone gives us a smile we may smile back.)

Most suppliers tend to take the following steps to satisfy customer needs:  

1. Market and advertise goods and services that customers may need.
2. Communicate with customers to understand what their needs are.
3. Assess the ability and capacity to satisfy the customer’s needs and make an offer.
4. Negotiate and agree with the customer on the scope of supply. (i.e. What are we prepared give? What consideration do we expect? What is the customer prepared to receive and give in return?)
5. Finalise the exchange.
6. Obtain feedback from customers to ensure that goods and services supplied were satisfactory and use customer feedback to improve goods and services.

Any exchange of goods and services for compensation (i.e. money) can only be completed if both, the customer and the supplier, agree on the exchange. Both parties must want to complete the transaction successfully. Without this ‘goodwill’ the giving and receiving process cannot be completed to the satisfaction of both parties.

(Example: If I go into a shop and just take something without paying for it, there is no agreed exchange. The shop owner will be far from ‘satisfied’ and in the eyes of the law I will have committed the crime of ‘theft’. So I would be ‘a thief’. If caught I may have to give up some of my personal freedom by spending time in jail. – There is always a price to pay.)  

The Customer – Supplier Relationship  

In line with the definitions listed above we can deduct that all of us are customers and suppliers as we go about our daily life.  

Here is another example: If we continue to plant and harvest vegetables in our garden and we do not return to the soil the nutrients this practice removes, our crops will lessen and the soil will eventually stop producing. – In an organisational sense this means going out of business. 

In a work situation we supply our labour in return for money and other benefits. This money is then used to obtain goods and services from other suppliers.  

However, not all ‘supply’ is based on the exchange of money. Supplying love and understanding to our partners and children usually reciprocates their love and respect in return, etc.  

The most important issue here is that for anything ‘taken’ something must be ‘given’ in return. – It is all about maintaining a balance. 

‘Giving and Receiving’ in Business 

To illustrate the flow of goods and services from suppliers to customers the term ‘Supply Chain’ is frequently used.  The supply chain is usually depicted as a linear process with the supplier on one end and the customer at the other. 

Example 1: 

                        Suppliers                                              Customers         

Example 2:

Raw Material Suppliers         Manufacturer        Wholesalers           Retailers            Customers

I want to argue that the ‘Supply Chain’ is a circular process where all ‘Givers’ and ‘Receivers’ are linked. In other words there is a connection between all participants, including nature. This may not be obvious when we first look at a business that we have no known connection with. However, upon closer examination, we will find that there is a connection somewhere showing that this business is part of our supply chain.   

Our part in the ‘Supply Chain’ 

As suppliers are also customers it would make perfect sense to treat each other with respect and courtesy. (i.e. “Treat your suppliers as you would like to be treated yourself”) 

Taken into a business context I believe that we must ensure that the demands we make on our suppliers do not exceed the demands our customers make on us. We must remain aware that our suppliers are also our customers, if not directly, then indirectly. – Unfortunately this is often forgotten.

Businesses are made up of people. It is people and their goodwill and cooperation that cause the supply chain to work. Whilst we use money as the main means to facilitate the exchange for goods and services, the choices and goodwill of the people involved will ultimately decide if a transaction will be completed successfully.  

Example:  

Let us assume a manufacturing company has various suppliers that supply components for the products it makes. In order to offer a competitively priced product the manufacturing company continuously applies pressure on its suppliers to provide components at a lower price.  

This behaviour seems to be driven by: 

• A fear that somebody else will offer cheaper products
• A belief that customers always want and will buy only cheaper products
• A desire by businesses owners and shareholders to generate ever-increasing profits 

Let us further assume that the people at the manufacturing company use various tactics to avoid paying the supplier.  

This may be done by: 

• Not paying invoices on time (stretching payments well beyond agreed terms)
• Not paying invoices in full
• Making unjustified claims for discounts
• Demanding regular price reductions for no return
• Refusing to negotiate price increases that are due to events out of the supplier’s control (ie. rise in global commodity prices)

This means the ‘Giving and Receiving‘ process is now out of balance. As a consequence one supplier’s business starts to suffer. It struggles to pay its people and suppliers on time and it has to defer planned investments into new technology. – Eventually the business fails. 

If this happens it may cause the manufacturing company many problems. It will have to find another supplier, possibly at short notice, prepared to supply on the same terms. However, this may not be an easy task and, depending on the circumstances, could cause severe problems for the manufacturing company. 

Supplier’s employees are of course also customers and suppliers in their own right. Some of their remuneration comes out of the money suppliers receive from the manufacturing company for components supplied. A percentage of employee’s wages may in fact be used to purchase the products that the manufacturing company produces. 

This example illustrates that whilst the effects on a manufacturer in the short term may translate into cheaper component prices that will contribute to cheaper products and/or higher profits, the long-term effects will be negative. If a supplier has to close their business their people will lose their jobs and they will no longer have the means to purchase products such as those supplied by the manufacturer. – Everybody loses. 

Maximising a company’s profits by ‘squeezing’ its suppliers can prove counterproductive.   

Conclusion 

A push for cheaper supplies and increased profits may cause a strong ‘imbalance’ in the supply chain.  

There is a permanent connection between suppliers and customers. Whatever one does will have an effect on the other and therefore has an effect on the whole (i.e. all of us.)  

Nobody can escape the giving-receiving process. Partaking is essential for life as we know it.  The idea that somehow customers, suppliers and shareholders can exist in isolation is absurd. We are all participants in the same ‘Giving and Receiving’ process.  

Our challenge as participants in the ‘Giving and Receiving’ process is to find and negotiate balanced, sustainable outcomes. Everything we require to satisfy our physical needs is ultimately provided by and/or taken from nature. This means we must take into consideration not only our needs as individuals, but also the needs of the environment around us. – We all have choices and we are all responsible for the choices we make.  

When you next demand more from your suppliers please ensure that what you contribute in return is enough to keep this balance. – At the same time, if someone asks you to give more, ensure that you can actually sustain what you are asked to give. 

A Final Note 

We are all guardians of the giving-receiving process and as such responsible to keep the process in balance.

 When all has been taken, there is no more to give.

When all has been given there is no more to take.

Raidho Solutions assist businesses with harmonizing their customer – supplier relationships through effective contract negotiation, contract management and conflict mediation.

References:

 Maslow, Abraham, H.; (1954) ’Motivation and Personality’, Harper and Row, N.Y.

The Australian Modern Oxford Dictionary, 1998

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 Introduction

This story serves as a metaphor for a dilemma that consultants and their clients may experience. It is aimed at consultants, CEO’s, executives and board members. What has gone wrong here? How could the outcome in this story been prevented? 

Scenario

A group of people hear about an exotic destination that sounds very interesting. Group members have heard and read about this place. The group leader decides to invite someone who knows about this destination. He asks the person he knows to give a presentation so that group.

The group listens to the presentation, likes what it hears and decides that this type of journey sounds like a good idea. However the group is uncertain how to go about in organizing the journey and how to get to the destination. There are a number of unknowns such as how difficult the trip will be, how long it will take, how much it will cost and what benefits the group will obtain from this journey. 

The presenter suggests that the group hire a specialist ‘tour guide’, an expert, who has taken other groups to this destination and who knows some of the safest and most efficient ways to travel there. 

The group leader authorizes the presenter to find and hire a tour guide who will assist the group in the planning of the trip and who will accompany and support the group on its travels. 

An expert is found.  

This tour guide is a very experienced and committed individual who always ensures that anybody taken on these journeys receives the best possible outcomes from the trip. The tour guide accepts the assignment. He starts his work by having an initial discussion with the group leader. The group leader clearly states that he and the the group are very excited about the journey and the destination. He assures the tour guide that everyone is fully committed to get going as soon as possible. 

The tour guide begins his preparations. An agenda is prepared. Prices obtained. Timing planned and a budget prepared. Next the tour guide prepares a detailed itinerary and presents it to the group. After some discussion, the group accepts the proposal and the tour guide begins making further travel arrangements, spending some of the allocated budget in preparation for a timely departure. This is a very substantial journey, involving lots of planning work and organization.

To speed things up the tour guide requests to hire an additional person and is given approval to recruit another ‘expert’ to help with the work.  

The preparations take several months with regular status briefings between the tour guide and the group. – All seems to be going well. 

Some weeks before the scheduled start of the trip the tour guide requests a meeting with the group to clarify a number of important issues and to show the group what has been done so far. The tour guide makes it clear that in order to take the final steps it is essential that all group members individually specify their particular requirements and expectations of this journey. 

During this meeting group members seem very evasive and unsure about articulating their needs and wants. When questioned further by the tour guide some group members, including the group leader, begin to question the purpose and need for the journey. After some further discussion the group leader closes the meeting and requests the tour guide to come back to the group with another presentation. The purpose of this presentation is to show the reason(s) why the group members should go on this journey and to demonstrate what the benefits will be for the group. 

The tour guide is confused. In an effort to obtain some further clarification the tour guide meets with each group member individually to find out what his/her feelings and needs are about the journey. 

During these discussions it becomes clear that whilst group members can see some benefits in going on this journey, most feel that they don’t really want to go. Nobody shows any ‘excitement’. However all group members indicate that they would come along on the journey if the other group members absolutely wanted to go.  

After these meetings the tour guide speaks with the group leader and suggests that it appears that group members are not committed to go on the trip. 

The group leader tries to convince the tour guide that everybody, including himself was still committed to the trip. However, the group just needed more information. The group leader also states that it was his belief that it was up to the tour guide to ‘market’ and ‘promote’ the journey to him and the group. 

After these meetings the tour guide feels disappointed. The tour guide meets with the person who hired him and asks what actual discussions had taken place before he had been hired. The hiring person is surprised to hear about the group members’ hesitations and assures the tour guide that when he had initially spoken to the group he thought the group had really wanted to go. – Something must have changed. 

The tour guide is wondering what to do. 

He knows from past experiences that there is absolutely no point in taking someone on this type of journey unless people really want to travel and understand all implications of taking the trip. At the same time he is very aware that he has put a lot of effort into the planning of this trip and that a reasonable amount of money has been spent already, most of which would be lost if the journey did not proceed. The tour guide discusses the developments with his assistant who is also disappointed.  

The tour guide prepares another presentation about the journey and the destination.  

However he is now having difficulty in getting group members together to show and discuss the presentation. Time is passing and the tour guide decides to put any further trip preparations on ‘hold’. He feels that it would be irresponsible to spend any more time, money and effort until the group has made a final decision about this journey.  

Both, the tour guide and his assistant feel stuck. 

Tour guide and assistant do not believe that it is their role to ‘market’ the journey and its destination to the group. They were hired to assist the group to plan for this journey and to guide and support the group during the journey. Their role is not to promote trips and destinations. In other words they are in the business of satisfying needs, not creating them. 

Outcome 

The tour guide concludes that the group does not want to go on this journey.  

He advises the group leader and the person who hired him that because the group is not committed in taking the trip he is not willing to take the group on the journey.    

The tour guide and his assistant resign from their roles. 

Most group members seem understanding of the tour guides’ decision to leave. However, nobody tries to stop their departure.  

The group and its leader do not seem to be concerned about the time, effort and financial resources that were wasted during the months of preparation. – Change has been averted. 

N.B. You may send your comments to rainer@raidho.com.au  – Thank You.

Here we are. 2012 has arrived with the usual fireworks. We hope you all had a peaceful and save festive season and you are now ready for a new year with all its opportunities and challenges.

We are starting 2012 with an updated website and a good dose of optimism. Despite the much publicised ‘gloom and doom’ we remain confident that the new year will be a good one. More change is definitely on the agenda for us all. However it is up to everyone of us on how we manage this. As always, we welcome any opinions, suggestions and constructive criticism of our website. This site is really there for your benefit, so please send us your comments.

Please keep us in mind for any of those ‘special projects’ that may need to be done in your organisation and that you have trouble resourcing. It may also be time to review your processes to ensure that your operations are best equipped with any challenges to come. – We are here for you if you need us.

Please consider the MindMapper 12 and Paradigm 3 software applications as part of your management system improvements that you may have planned for this year. They are great products and great value. With the high Australian Dollar, MindMapper 12 is particular good value. Go and download a free trial version and have a play. You will have 30 days to try out MindMapper 12. There is absolutely no obligation to buy. If the 30 days are up and you do not want to purchase MindMapper 12, just uninstall the application. – Easy.

Right, all set for action in 2012? – Great. – Have a healthy and prosperous year.

Before I forget, check out our ‘Opportunities‘ page. We need some help to promote our services. Maybe you know somebody who may be interested? – Please let us know. Thank You.

Kind regards

Rainer Busch

I recently attended the ‘Small Business, BIG Marketing’ conference organised by the Victorian Government as part of the 2011 Victoria’s Small Business Festival at the Melbourne Park Function Centre. The expo was aimed at small businesses interested in finding out more about marketing and related services. Exhibitors covered marketing related subjects such as Banking, Public Relations, Intellectual Property, Branding, Marketing Campaigning, Business Mentoring, Accounting and others.

My main interest during this expo was focussed on what the key speakers had to say. After a brief introduction by Ben Angel – Author, Personal Branding & Influence Expert and Russell Northe – Victorian MP Parliamentary Secretary for Small Business, we first heard from Ross Cameron, Managing Director – Cameron Research Group about ‘Running a small business – Why would you do it?’ Ross shared with us that his research into small business owners had identified three core types of people who start a small business:

As nothing is ever totally black and white it can be said that some people who start a business will be ‘hybrids’ of the three styles listed above, however there will always be one core type that dominates. One other very important trait identified in most people who start up a business (at least initially) is ‘passion’. Prompted by audience questions Ross listed some of the most common mistakes and problems faced by small business owners. These can lead to the demise of the business and the death of the passion:

An interesting question raised by somebody in the audience was ‘How do you choose the right business
partner?’ Ross Cameron’s short answer to this question was:

• Ensure that business partners have complementary skills and passions. (A ‘Business Builder’ may find that partnering with a ‘Life Style Changer’ will cause much pain.)
• Set clear boundaries of operation between partners within the business.

Ross Cameron’s research also seems to indicate that many small successful businesses have ‘evolved’ into their current state. This means that rather than following a set of detailed plans, such businesses adapt to and change with their environment. They cease opportunities as they come up and grow organically. Such businesses do make mistakes, but learn from those to become better and stronger.

(This is in line with research conducted by Saras D. Sarasvathy at the University of Virginia in the USA – please refer to her paper called ‘What makes entrepreneurs entrepreneurial” at http://www.effectuation.org/teachinginstruments/what-makes-entrepreneurs-entrepreneurial ).

The next speaker was, Naomi Simpson, CEO and founder of the online business ‘Red Balloon’. Naomi shared her early struggles and how she overcame them to build a very successful business (refer www.redballoon.com.au). Naomi was very particular about the importance of listening to and being aware of the ‘customer experience’. Her stated main aim in business is to ‘Make a difference in people’s lives’, reasoning that if people have a great experience they will come back for more. However in order to provide a great experience a business owner must engage with customers and find out what they like and what they dislike.

(Note: Some research conducted many years ago showed that the average customer would tell 3 people if they had a good experience, but would tell 11 people if they had a bad one. However because of the prevalence of social media unsatisfied customers will now potentially tell thousands of people if they are unhappy. – Refer “Satisfied Customers Tell Three Friends, Angry Customers Tell 3,000: Running a Business in Today’s Consumer-Driven World” by Pete Blackshaw”)

Other recommendations for business owners Naomi Simpson provided were:

• Be clear about what you love about your work and what you do not like.
• Be clear about your strengths and weaknesses.
• Take care to employ people who share your passion.

Last, but certainly not least, we heard from Simon Hammond, Creative Executive Director – Bastion Brands. Simon’s presentation included some great live guitar play and singing by a musician and some great visual imagery in the form of photographs and videos. His basic message was that many of today’s business problems are related to a strong disconnect between business and people. His belief is that much of today’s business life is fear driven and that there is a severe lack of emotional truth in how business interacts with people.

Simon’s key message was: “People need substance and hope”. People want to belong, be part of something they can identify with; and most importantly, they will change their behaviour in line with what they believe in. An example quoted was the ‘Free Hug’ campaign started some years ago in Sydney. Simon also used the ‘Apple™’ brand as an example illustrating how people part with their cash to buy products that makes them feel like they ‘belong’.

Simon Hammond’s presentation reinforced the message that good business is about giving people something that makes them feel better, that gives them hope and a sense of belonging. A business that can convince people that their product or service will make their lives better has a solid foundation for success. However, unless the business’s messages convey the ‘emotional truth’ about the organisation’s values in a way that connects well with people the products or services on offer may not sell as well as anticipated.

Having worked with many different businesses and organisations over the years I want to conclude with a final comment:

People will support and follow businesses and organisations they can trust to provide them with something that makes them feel good and that will alleviate their suffering, whatever that may be. It is becoming increasingly evident that our current environment of risk aversion and fear mongering has a paralysing effect on businesses, people and communities all over the world. As small business owners we can change this. – Let’s do it.

Raidho Solutions assists individuals and people in organisations to be more productive and efficient. We assist with the identification and elimination of inefficient and wasteful practices and facilitate growth through managed change.

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I recently came across an opinion article titled: “Be productive or perish: the lesson for our businesses” by Neil Plumridge.

The article deals with the fact that overall productivity amongst Australian businesses has been somewhat stagnating and that there seems to be an unwillingness by organisations to do something about it. The article’s sub heading states: “The key to lifting the economy out of its consumer funk is by increasing productivity. But businesses seem reluctant to tackle the issue.”

Whilst I am not so sure if increased productivity will lift ‘the economy out of its (current) consumer funk’ I do agree that all organisations, not only businesses must lift their ‘productivity’. However, when the author writes “businesses seem reluctant to tackle the issue”, he is of course referring to ‘people’ being reluctant. Organisations are not just impersonal entities. They are founded and run by people. These people do not just live in the land of organisational entities, but they are people who are also consumers and who, with their families, friends and acquaintances are part of a community. This means that their attitudes and behaviours at work are also influenced by multiple interactions, attitudes and experiences in life.

The word ‘productivity’ conjures up various images. Most of these images are, in my experience, related to the faster and cheaper production of goods. However productivity is not just about supplying more or cheaper goods and services. In order to be more ‘productive’ one does not just need to figure out how to do more with less. It is about working smarter and employing resources in ways that are more efficient and effective. Improving productivity is not just about improving processes, it is also about questioning the need for a process in the first place. What is the use of spending time and effort in improving a process if the outcome of that process does not serve a worthwhile purpose or if it actually does harm?

In my consulting work I frequently come across businesses that are very keen to be more productive. However to many business owners being more productive means reducing overheads by cutting staff numbers or staff remuneration, replacing people with technology, finding cheaper materials, ‘screwing down’ supplier prices, etc. However, whilst that sort of behaviour may improve the bottom line for a limited time it will not necessarily improve the long term productivity of their organisation. I agree with the four productivity improvement areas Neil Plumridge refers to in his article:

1. Removing all wasteful, bureaucratic, and non-value work and outputs.
2. Being more ambitious and effective in process automation and technological change.
3. Developing and utilising the full talents of human capital.
4. Being deliberate and audacious with an innovation agenda.

However, as far as I am concerned, item 1 is the most important of the lot. In my experience it is also the most difficult to address, because it involves a number of human factors relating to personal values and behaviours of the people in an organisation. These are values and behaviours of all the people in an organisation, not just management. The actual removal of wasteful, bureaucratic, and non-value work and outputs is not necessarily much of a problem because once the relevant wasteful practices have been identified it is not very difficult to remove or change them. In my experience the real problems relate to the following:

1. Not being very clear about what drives the organisation and its people. What is the organisation’s core purpose?
2. A lack of skill in the identification and awareness of core and non-core processes that are required to operate the organisation.
3. A lack of clear definitions relating to the organisation’s goals and targets and their relation to the values of the organisation’s people and their customers.
4. A lack of acknowledgement that current processes can always be improved and that there are multiple ways to perform a process with the same outcome. – (ie. You would not believe how many different ways organisations have developed in processing an invoice.)
5. The inability to formulate clear definitions of what constitutes ‘wasteful’ and ‘non-value adding’ behaviour within the context of the organisation in question. (‘Waste’ can mean different things to different people.)
6. A reluctance to spend the necessary time and resources to process map core and non-core processes ‘as is’ to enable the relevant people in the organisation to gain a thorough understanding of what is done, how it is done and who does it.
7. A reluctance to spend the necessary time and resources to analyse the ‘as is’ processes involving the people that are part of these processes, identifying the waste and non-value items and redesigning the processes as required.
8. An inability to developing disciplines within the organisation that scrutinize all processes on a regular basis for waste and non-value.

In our work we have observed that some organisations have made great improvements to their production processes (i.e. making more widgets cheaper), however their administration processes are often cumbersome and inefficient. The same can be said for some non-for-profit and government organisations. Their core service(s) may be delivered very effectively, however their back office processes are run poorly and may have never been examined.

Improving an organisation’s productivity is not a once off and straight forward exercise. It involves people to come out of their comfort zones and often requires challenging their own and each other’s behaviours and values. It requires behaviour change. However, apart from improving productivity, behaviour changes can bring many new opportunities to organisations and their people.

Raidho Solutions assists organisations to address the items listed above. We can facilitate a programs utilizing the organisation’s own people and resources that will bring about lasting productivity.

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Metaphorically speaking it can be said that every business is supported by a ‘Three Legged Stool’. Each leg of the stool represents one of the three essential elements needed to run a successful enterprise: Expertise in ‘Product/Service’; ‘Marketing’ and ‘Financial Management’. These three elements are described by Ernesto Sirolli as the Trinity of Management™. In a successful organisation the three ‘legs’ will be of equal size. However if one or two of the legs are shorter or thinner than the other the business may not even get started or it will be out of balance, risking ‘falling over”. The more the legs differ in size, the higher the chances that the business will fail. Short legs of equal length and strength make for a sturdy stool(business). This means the business may be small, but strong. An example would be a small husband and wife enterprise. However as clients demand more the organisation will need to start growing in line with the increasing demand. The legs of the stool must grow in proportion to the increased demand/load in order to minimise the risk of business failure. At some point in time it will become vital to apply some well-engineered ‘bracing’ to the legs. This will ensure that the legs remain in place and are well supported preventing the business from getting into trouble. The ‘bracing’ in this scenario is a metaphor for suitable business systems and processes that keep the business functioning safely, effectively and efficiently. This ‘bracing’ would include management systems such as those related to product / service quality, human resources, risks management, corporate governance and occupational health and safety in the form of IT systems, policies, procedures, forms, process maps, etc. In short the ‘bracing’ relates to all the effort required to manage the documents and data necessary to run a business at an optimum level and within the relevant standards and regulations imposed by customers, governments and other external authorities (including shareholders).

The ‘bracing’ does eventually become as important to the business as the three legs and care needs to be taken to ensure that it is of the correct size and type. If the ‘bracing’ is too weak it may break under the increasing demands put on the business. However if the bracing is too strong it may mean that vital resources are wasted. In extreme circumstances systems may even act as a ‘straightjacket’, stunting required growth. It is therefore absolutely essential to keep striving for the right ‘balance’.

As consultants at Raidho Solutions we see our role as facilitators who assist entrepreneurs and business owners by bringing together the people that have the required drive and expertise to build and maintain successful organisations. Using a people centred approach we help to ensure that ‘the three legs’ are of adequate size to start off with and we help to design and implement suitable ‘bracing’ as required.

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I want to explore the late Carl Ally’s definition of a consultant:

“A consultant is someone who borrows your watch to tell you what time it is.”

This definition is sometimes used as a derogatory description for consultants that are seen as not having fulfilled client expectations. I know many consultants who cringe when someone quotes this definition. On the surface the definition does indeed seem unkind. Given that almost every person wears and knows how to read a watch, it seems quite ridiculous to get someone else to read your watch for you and tell you what time it shows.

However, when I started to look at the definition as a metaphor and compared it to my own consulting work I began to see that this definition in many ways resembles what I do. – Let me explain:

As a consultant to organisations and individuals I spend much time observing and studying organisations and their people. Using my own senses and perspectives I construct images of what is going on in an organisation. This work can be compared to borrowing the clients ‘watch’. The ‘watch’, in this case, becomes a metaphor for the organisation with its people, infrastructure and systems. However in other consulting situations the ‘watch’ may be restricted to a particular part of an organisation or process. By going into the organisation as someone who does not know what goes on there, I borrow and observe the ‘watch’. I study shapes, colours, sounds, movements,
behaviours, practices, dynamics, interactions, processes, spaces and functions.

Based on my observations I provide feedback to the client. This part is like telling the client the time from his/her own watch. Presenting the client with my observations may or may not match with the client’s own perceptions. Whatever the situation may be, the tricky part is for both, the client and the consultant to explore what these observation actually mean. We need to ask ‘so what?’. For example, “There are no visitor car parks and there are no visitor chairs in the lobby – So what?” or “It is 10.53 AM on the clock in the warehouse – So what?”

As I compare my observations with my perceptions and experiences from other organisations I worked with (other watches) I may come to the conclusion that this organisation is moving at a different speed to others or that certain behaviours or systems seem odd to me. As the consultant it is my responsibility to share these observations with my client in a constructive manner. I may say that: “I would feel more welcome, if there were some
visitor car parks and chairs available. Maybe othervisitors and customers feel this way also?” or “Your clock in the warehouse says it‟s 10.53 AM, however the official time is 11.12 AM. Do you feel that this may have an impact on your goods delivery times?”

It is important to note here that I do not see my roleas telling my clients what I believe to be right or wrong, or what to do or not to do, but to report my observations together with „so what‟ responses. It is my role to raise the client‟s awareness on alternative views and perspectives. Having raised the client‟s awareness, it now becomes his/her choice to decide what to do with this new awareness. I will remain with the client to encourage, support and assist in the quest to find meaningful, practical solutions. This methodology ensures the empowerment of the client to make responsible choices. The client remains in charge. This is important as I do not want to create a situation where the client may feel dependent on me to make a decision; a situation, Bion describes as “waiting for Godot”.

In my work as a consultant I do not only borrow the client’s watch and tell him/her what time it is, but I also help him/her to have a critical look at his/her ‘watch’ and to make sense of the significance of the ‘time’ it shows. For a client to obtain real value from a consultant, both, client and consultant must be prepared to ask the pertinent ‘so what?’ questions and explore possible answers and solutions.

By Leon Gettler, The Age
April 28, 2005

Employers might be kidding themselves if they think they are running a great organisation, a report has found.

But then, more than half are avoiding finding out what their employees really think of them.

The study by global human resources and recruitment firm Hudson found that 75 per cent of employers believed their employees could identify why their working conditions were so good. Furthermore, 81 per cent of employers said there was no gap between rhetoric and reality and that what they promised and what they actually delivered to employees were pretty much the same thing.

Trouble is they had little evidence to back it up, and they seemed to be in no hurry to find it.

In the survey of more than 8000 Australian employers, only half had any systems in place toevaluate the workplaces that they ran. When asked if their company had a systematic process for measuring its reputation as a workplace, only 49 per cent said they did, 33 per cent said they didn’t and about one in five (17.5 per cent) said they didn’t have a clue.

The potential gap between what employers believe and reality seemed to loom larger with the findings of a separate survey of 2500 job seekers.

According to that survey, 63 per cent of job seekers said their employers had failed to deliver on the promises made when they joined up.

Because the findings of the second survey evaluates job seekers and because many of the respondents might be disillusioned with their job, the results might be questionable as there is the possibility of a biased sample.

However, the Hudson Report said the findings could point to some dissonance between employer perceptions and employee realities with almost half the companies failing to even measure their reputations and a large number of employees looking for another job.

“Accordingly, these results raise the possibility that many organisations currently operate under a delusion, or a misguided impression,” the report said.

The bosses seem to be flying by the seat of their pants without systems in place to check staff views

“They may think their employment brand is working for them, when in truth it is missing the mark and possibly even working against them.”

System auditing is a requirement of management systems based on external standards such as ISO 9000; SafetyMap; QS-9000; ISO 14000; HACCP; VicRoads VASS; etc.

It is unfortunate that the internal auditing process is often seen as a burdensome requirement rather then an opportunity to improve the business. During my work with many small and large organisations I have found that internal audits are often not considered to be important and that audits are not performed at useful intervals.

The common remarks I hear are: “We just have no time to do these audits.” or “Audits are a pain, let’s get someone from outside to do them’ and “Why do we have to audit anyway?”

As internal system auditing is a requirement of most certified management systems they must be done in order to comply with the relevant standard. Management systems are essentially just frameworks that assist to facilitate, document and measure organisational performance. Auditing is a tool to help monitor and improve an organisation‟s performance.

Rather than looking at audits as a way to finding non-conformances and a way to allocating blame let’s look at auditing as an ‘opportunity’ to highlight inefficient processes and ineffective work methods. There
is strong argument that internal audits should be performed by people that are working within the organisation, rather that by external auditors / consultants.

There are opportunities for the three key stakeholders of an internal audit:

• The Auditee (the person(s) being audited).
• The Auditor (the person(s) auditing). and
• The organisation as a whole.

Opportunities for Auditees include:

Having a chance to suggest and discuss improvements to the system and work processes; pointing out shortcomings of current methods; being listened too; learning from the auditor(s) experience(s) and points of view; etc.

Opportunities for Auditors include:

Internal auditing is a great chance for employees to step out of their normal working environment to learn about other functions within the organisation and how they interrelate. Audits provide time to listen and to
discuss system issues with Auditees and to find out what really happens rather then what system documentation says, should happen. Audits also provide internal auditors with and increased awareness of organisational issues and provide a better understanding of what other people in the organisation are working on.

Opportunities for the Organisation include:

Internal audits highlight any gaps between current practices and the documented system. They provide data for improvement initiatives and improve the communication between members within the organisation.

In order to take advantage of any of those opportunities we must change the way we look at, talk about and conduct management system auditing. For a start, the management team leading the organisation must want to improve the organisation‟s performance. (ie. its products; services; status in the community; etc.)

Very few people would disagree with the statement: ‘Performance improvement is a positive move.’ However in order to achieve organisational improvements from audits we must ensure that our audits are
designed to provide us with data that is meaningful. For this to occur auditors must not only be trained in the technical aspects of auditing, but must have the necessary interpersonal skills to clearly communicate with all people throughout the organisation. The auditor‟s role needs be seen as that of an internal consultant / coach working with the auditees to collect and document data with the aim to improve the organisation‟s performance. The auditor should be looked upon as somebody who is there to help, not as a police officer who is there to ‘enforce’ the system.

To obtain maximum benefits for the auditor, the auditee and the organisation it is preferable to train and utilise people from inside the organisation for system auditing. (Note: New recruits can sometimes make good auditors. They are often keen to learn about the organisation. Auditing provides them with the opportunity for training and meeting people in the organisation. They are also still unaware of ‘internal politics’ allowing them to ask questions and to initiate the discussion of topics that others in the organisation may not comfortable with.)

Whilst external auditors and consultants can also pick up and feed back valuable information, they can only make a limited contribution. Because they are not part of the organisation, they often do not know the intricacies of the various processes and fail to ask pertinent questions that need to be asked to flush out potential process improvements. This usually means that they will only check if current practices match documented procedures and they often can only make suggestions

Summary:

1. General Purpose of Management System Audits
• To establish if current practices conform with documented procedures (ie. Quality, OH&S, Environmental; Corporate Governance, Regulatory / Statutory and Other).
• To establish the effectiveness of the management system and the organisation‟s specified objectives.
• To highlight any opportunities for improvement in the organisation (ie. Policies, Processes, Work Practices, etc.)
2. Key Roles and Responsibilities of Auditors
• Auditors need to:
• Have the necessary technical background relevant to the organisation‟s operating environment. (ie. Software Development; Mechanical Engineering; Chemistry; etc.)
• Plan and perform assigned tasks effectively and efficiently.
• Communicate clearly with auditees. (Active listening; give and obtain feedback; be assertive in obtaining objective evidence; be empathic, friendly and encouraging; etc.)
• Treat all information gathered as confidential.
• Base observations on objective evidence and accurately document and report observations and recommendations.
• If requested, verify the effectiveness of corrective actions taken as a result of previous audits.
3. Some desirable personal attributes of Auditors
• Auditors should:
• Be courteous, respectful, objective and without bias.
• Make a good outward impression (appearance & conduct).
• Be alert; comprehending and reasoning.
• Be calm; self-confident; assertive and task oriented.
• Be honest, reliable, constructive, helpful and diplomatic.
• Be open minded and curious.
• Have a genuine desire to help and improve the management system so that it truly benefits the organisation.

References:
- ISO 10011-1:1990, Guidelines for auditing quality systems – Part 1: Auditing
- ISO 10011-2:1991, Guidelines for auditing quality systems – Part 2: Qualification criteria for quality system auditors

To find out more about setting up effective internal auditing practices, call Raidho Solutions on (03) 9795 1546.

Welcome to another News update from Raidho Solutions.

MindMapper 12 Released

SimTech Systems, a leading provider of professional mind mapping software has announced the availability of MindMapper 12, the most powerful and easy to use MindMapper yet. MindMapper 12 is a major upgrade to much acclaimed MindMapper 2009 software.

MindMapper 12

MindMapper 12 delivers powerful ideation, project management, visualization, planning, and other organization related features in a simple and easy to use graphical environment. Your most popular features are strategically placed on the ribbon menu, and the new task pane boasts productivity improvement by providing many related components in a single pane. New presentation features make displaying your mind map a snap, and a new table conversion feature allows easy to visualize table structure for your graphical mind maps.

SimTech has also announced that prices for MindMapper 12 will remain the same as for MindMapper 2009 and everyone who purchased MindMapper 2009 during year 2011 is eligible for a free upgrade to MindMapper 12.To trial or purchase MindMapper 12 please go to the Raidho Solutions MindMapper Page 

MindMapper Mobile for Android