The restructuring program focused on the personalized coaching and training of all key personnel to bring them to speed on all the organizational and operational systems and controls that were developed for the company as a whole.The Senior Estimator was introduced to the bid/quote software and shown how he can measure the performance of each Estimator. Starting in the new fiscal year, all Estimators will record their estimating activities in the shared software, which will automatically produce key information on the total number of bids, % of awarded jobs, pending, and lost. He will also be able to distinguish which Estimator has contributed the most. Because this information will be available on the networked system, a healthy competitive environment will evolve to stimulate more bid activity.
The field supervisor has completed several employee evaluations and understands how to do it efficiently. The scheduling of foremen and crews on the production management software, which was introduced recently was used to set up the construction schedule for the next two weeks. It will facilitate the allocation of crews to different jobs, and tighten the number of hours. He appears to have no difficulty in using the new scheduling program.
The fabrication foreman has gained control and respect in fabrication. He now has to take the next step and become a better planner. He has been provided with new tools to develop time standards for all the operations, to maintain key operational statistics, and to establish weekly workloads. More time will be spent with him to make sure that he is totally comfortable using the new tools properly. He has to understand that the “paperwork” (now software driven) is a necessary part of becoming a more effective manager of the fabrication department. A list of stock room changes was initiated, which includes a location map for all the items. This should be fully implemented in the next 60 days.
After discussing the situation with the installation inspector it was agreed that the transfer of supervisory responsibilities for inspection can be achieved earlier than originally planned. The new responsibilities were reviewed, and it was stressed that he is expected to grow the inspection revenue stream by 15% in the next two years. He appears to be keen to take on this more challenging position and offered some interesting ideas on how to grow the inspection work with old and new customers.
An effective sale and marketing program was completed and introduced to the sales and marketing personnel. It stresses that in order to build a plan for the future it is necessary to analyze the past. The marketing people will be able to turn out much more useful data from the CRM system, analyze revenues per different product/service streams, and break it down further into market segments so that they can determine the relative contribution of each. Specific goals will be set for each segment depending on relative gross margin contributions.
The old accounting system had a limited capacity to produce sales reports that provide the necessary details, but the last two years’ summary of sales per customer were adequate to develop a top 20 and top 40 list, and then break those down into five market segments. It shows that the top 20 customers provided 80.2% o the total revenues last fiscal year and 74.3% in the preceding year. It is important to track gains and losses of business from the top-20 and take action when there is a pronounced change in sales. As an example, the analysis showed that sales were down 16% with the number one customer. The accounting department will combine with marketing to examine lost or diminished activity early in the year so that strategies can be developed to regain lost market share.
A spreadsheet on the long-term goals of the company was used to develop more in-depth marketing insight, which will be tied into the strategic plan. The Company will be able to clearly define what sets them apart from the competition, what the market size is in their territorial reach, the possible extension of that reach, and diversification of products and services that will provide profitable growth. Some interesting ideas were generated by the sales staff for further discussion. The strengths and weaknesses of the Company were defined, and the sales staff searched for ways that will force customers to look beyond just price when awarding contracts. This information will be assimilated and result in a formal plan for growth connected to the financial parameters set in the three-year financial plan.
One of the most critical factors in the on-going growth and expansion of this business is ensuring that the management team accepts the goals and objectives laid out in the new business plan. This will require more team building and motivational inspiration from top management.
Management’s mental paradigms control their actions, feelings, behavior, and abilities. It is only when the paradigms change that they reach beyond the norm and meet the business challenges each day. The subordinate employees are also controlled by these same mental restrictions. As a result of their belief system, employees have either a positive or negative mental attitude. The negative attitudes restrict the company from achieving its goals. Until they examine those beliefs, they will continue to have negative attitudes. Management has a responsibility to help them break out of their prisons of unbelief and develop new attitudes.
In order to assist in this process, a management-training program was developed and introduced to the management team. We challenged the managers to start thinking and acting in the realm of success and visionary thinking.
Great effort was placed on setting up accurate information flow for the accounting software conversion. All of the entry items must be compatible with each department to synchronize the purchasing process. From estimating, to engineering, to purchasing and inventory, and then to accounting for job costing, all must be using the same item numbers in order to ensure the integrity and accuracy of the system. This has required the involvement of each department in order to guarantee that their individual needs are met.
There are a number of procedures that will be different as we convert into the new accounting software. The process of integrating the purchasing, inventory control, billing, timekeeping, and payroll will be much different from the old system. All purchase orders will be entered directly into the software. When an invoice is received from the vendor, the system will automatically charge the items to respective jobs and enter it into the accounts payable.
Working with the heads of all departments, a budget was developed for the new fiscal year, which is one of the most important aspects of responsible accounting. These projected estimates for revenues and profits will serve as measurable goals by which every manager can be evaluated. Costs and expense budgets serve as the financial expression of the corporate strategic plan and are the standards against which actual performance is measured. This was connected to a performance-based incentive plan that includes every employee but weighs the relative level of their contribution to overall results. This will motivate the entire organization.