How do you make decisions? Many of us have read articles or have taken personality surveys that describe how a person makes decisions.
These personality surveys focus on your relationships with others and how you interact.
My human resource experience has taught me that although personality certainly plays a part in the decision-making process, the actual process-the steps you take to make a decision-are of critical importance to your personal growth and your company's success.
Your decision-making process affects your relationships with your boss, peers and employees as well as the success of your bottom line.
Over the years I have studied different decision-making styles or processes.
I have been very fortunate to have worked with some great minds in the tire industry. Recently, through a three-year assignment with my consulting business, my path has crossed and interacted with a hardworking, bright, competitive and driven individual.
He began in his area of specialty and progressed to the managerial level in a brief time frame. As a new manager, he analyzed a struggling business and made it profitable in short order.
Although impressed, I have seen people turn businesses around in their area of specialty, so I did not take special notice of this feat.
However, when the company moved him into a position of oversight in three new areas with which he had no clinical or business expertise, I began to really study his approach to turning a business around.
The three businesses he was given were on track to lose in excess of $2.5 million. One was losing so much that the company basically gave it to him to close.
Over the next 18 months, as I observed his approach, his efforts led the businesses to the break-even point, turning two of the three into strong bottom-line performers. The third one is on a successful track but needs to cover a few more miles.
During my tenure with TCI-Tire Centers L.L.C., where I worked for 16 years-we were honored to have some excellent managers who systematically turned their stores or regions around.
The process I'll describe in this article was demonstrated by those managers.
My column will explore in detail the thinking processes of these successful executives, who take a classic linebacker approach to obstacles: hit low, lift high and get them out of the way! I also must acknowledge that they love to win and are brighter than the average person.
I believe the strength that sustains them is their focus on the bottom line and their excellent decision-making abilities. After studying their processes and watching their results, I've concluded that the process they've used to reach decisions is applicable to most industries.
For purposes of this article, we will define decision-making as a process that involves taking a series of interrelated investigative steps and designing a plan to solve a problem or answer a need effectively in a manner that meets the needs and goals of the individual and the organization. The process consists of five steps:
* Collection of data-Try to do this in an unbiased manner. Do not stack the deck.
* Analysis of the facts and problem identification-If you take a truly unbiased view of the data, you may find problems that surprise you (such as a national account business that keeps you very busy but has margins that are so low that all you are is busy from the business...not profitable.)
* Problem identification should lead to goals and then prioritizing the goals and establishing an appropriate plan to meet the goals-Most people can get through to this point, but the next two steps separate the majors from the minors.
* Implementation of the plan-Schedules with time frames and accountability are critical here.
* Evaluation of the plan-How are we doing in terms of meeting the goals? Make sure to take the necessary steps and adjust the plan if necessary.
Let's take a look at the collection of data. One must focus on collecting both objective and subjective data. The dawn of technology has made this step easier.
Your dealership's computer system should provide you with sales, customer and product data to help you quantify where certain problems may originate.
Of course one must have an understanding of suppliers' programs, accounts payable past dues, sales incentives, inventory turns, capital charges and your customer base to be able to manipulate the data into an informative format.
In addition to your computer, which seems to provide the answer to all questions nowadays, I am particularly fond of an ancient technique called the interview.
An interview with a knowledgeable, typically more senior person is one of my most effective tools in the collection of data.
An interview can reveal a number of things: information about a customer's or employee's complaint; historic information regarding what has been effective in the past; pertinent information from a supplier; and a more detailed assessment of a problem.
Involvement of your customers should be considered. A call or interview with them to determine their observations and any concerns about service may be helpful.
Additionally, perhaps the greatest benefit of the interview is that it assists with establishing a business relationship that may be mutually beneficial to all parties.
Remember, don't get caught in the failure spiral of collecting too much information. This can bog down the process and prevent you from proceeding to the next step.
Once data are collected, the dealership must determine the appropriate screening or assessment techniques to help in the next step, which is problem identification.
Although others may help you collect the data, your tire industry knowledge is critical at this point.
Thus, for purposes of this article, let's use the example of deciding if a certain customer is a profitable account for your business. If the account is not profitable, the goal will be to make it profitable-or move away from that business.
To set up effective screening and assessment techniques, you need to know the true costs of servicing the customer. Those considerations include wages, commissions, benefits, service vehicles, tools, fuel, tolls, billing, administration, etc., and the net profit from the customer.
Notice I didn't say the sales. Sales are important, but as some of my favorite tire center managers have taught me, ``It's necessary to cover overhead, but the net profit is what pays the bills and pads your pocket.''
Your assessment data should be organized from the first step. Now you need to use your tire knowledge to analyze the data.
For purposes of our hypothetical problem, your analysis could begin with determining the true costs for your business to service a certain account. The best tire center managers are able to prepare accurate numbers to reflect their true costs.
If you had one tire technician devoted primarily to this account, make sure you include all the costs-including that employee's salary, benefits, truck, maintenance, fuel, cell phone, administrative support person, etc.
Identification of any impairments/problems standing in the way of success is critical at this point in the process. Ask yourself several questions:
What, if any, problems are revealed by the data? Are your costs in line but your margins too skinny? In other words, is the account that sounded good in principal just turning your inventory but producing inadequate margins on the tires?
What circumstances could you control to help make this a more profitable account?
For example, is it necessary for your employee to report to this commercial customer's location every day? Could another arrangement be made that would allow you to use your commercial tire worker to service an additional account? Or could your employee be on the customer's lot but be pulled off and sent on another road service call if necessary?
Analyze your data and generate an ``asset list.''
According to the data, what is your dealership particularly good at? Is there a way to better utilize these assets to reduce your costs of servicing this customer?
Be creative yet realistic in identifying problems. Whether the concern is expense control, a necessary increase in sales margin, the need for the customer to be able to order online, or the need to streamline your billing process, identify the problem areas realistically.