‹ back to March 2010 issueIdentifying best practices

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By Gene R. Baldwin 

“We do things differently around here.” Whenever this statement comes out in the first interview with management, my antenna really goes up.

In one sense it is essential for any successful, multi-unit retail company to be perceived as a unique company with distinct and differentiated products and/or service offerings. You must fill a particular customer need in ways that no one else can. However, what the leader of a company usually means by the statement “we do things differently around here” is that they ignore best practices of their industry and think they get better results because of their homegrown policies, procedures and methods. Almost without exception, I find the attitude behind this statement is one of arrogance.

Managers who operate this way think they are smarter and more creative than everyone else. I will admit that my opinion is likely colored by the fact that, predominately, I work with companies that are underperforming and financially distressed. In many cases, the fact that these companies have ignored industry best practices is partially to blame for their current, uncomfortable situations.

The deficiencies in best practices that I see most frequently show up in the areas of financial controls and operating policies and procedures. Here are a few examples.

• Employees can be given wide latitude to make unsupervised and unwise decisions. These practices are allowed in the name of empowerment. There is no question that employees should be encouraged and empowered to meet the needs of customers, but this mandate must have its limits. For example, restaurant managers must not set their own work hours (especially when they choose not to be in the restaurant during its busiest times), create their own recipes, purchase unapproved products, have authority to approve unlimited overtime hours, create their own bonus systems, set their own opening and closing times or use unapproved vendors. You can imagine the chaos that is created when individual managers have free rein to run their restaurants without basic financial and operational accountability. It would be like allowing a football quarterback to create and run his own plays without any regard for the coaches or the playbook.
• In the opposite extreme, some operators usurp all decision-making in a system of micromanagement that stifles the morale and enthusiasm of their employees. This “worst practice” subjects the company to growing and improving at the pace of the micromanager (who is typically a workaholic). Subordinate managers feel no empowerment to improve. They become very passive and typically only understand “what to do” and never the “why” behind their instructions.

As a business leader, you must find and implement best practices in your company. It’s a constant challenge because best practices are not static. Improvements can always be made. The business climate and our society changes over time and what works best today will not work best tomorrow.

There are several ways to stay abreast of best practices. The first way is to participate in industry conferences and seminars. Often times, speakers at these conferences will have insight into the latest management trends and best practices. The second way is to have small group or one-on-one meetings with similar sized companies. My auto dealer friends have regular “20 group” meetings and my New York Life agent meets twice a year with a small group of fellow agents. Their meetings involve members taking turns presenting an in-depth analysis of a certain issue to the group. YPO members attend annual conferences with educational presentations. If you are a franchisee, you have the benefit of access to the franchisor and other franchisees.

However you choose to do it, make an effort to stay current on the latest operating trends. Be open to ideas from others who have been successful. Listen and learn; it will make you successful.

Gene Baldwin is a partner of CRG Partners and has authored numerous articles regarding the operational and financial management of multi-unit retail businesses.