April 2009 Management Insights Newsletter
April 24, 2009
From the Chairman’s desk:
Welcome back… Spring is definitely in the air with the flowers and tress in bloom and the farmers in the fields signaling the start of a new growing season. Our economy seems to have stabilized somewhat. Many of the major banks are reporting fairly strong first quarter profits which should begin to loosen up the credit market. We are seeing some positive signs.
I always look forward to Spring, not only for the weather, but it is the time I can look at my businesses and get a good idea of the kind of year we will have. The first fiscal quarter is now behind us and as we know in funeral service: As the first quarter goes often times, so goes the year. But what is also great about this time of year is the fact that I have the time to change some things, make needed adjustments and get my staff involved in those changes.
This issue we will devote to some ideas on how you might think about doing your spring house cleaning a little differently this year. What I find is we are all guilty to some degree of doing the same things the same way and not taking the time to see if we can, in fact, do it differently and better. It falls in the category of “Complacency.” Yet we should have that attitude of “Continuous Improvement.” Large corporations today actually have a senior management position titled “Lean Management”. That position is focused full time on findings ways to eliminate waste and to do things better and more efficiently.
We hope you had a chance to tune in to our webinar this week on our Management Services Division. With our economy where it, many businesses are experiencing a sharp decline in revenues. For that reason, our Management Services Division is experiencing a very strong first quarter growth. If you missed the webinar, you can go to our website and listen in at your convenience.
This issue we will feature two articles: one on “Kaizen” the Japanese word for continuous improve and how you may apply it to your business. John Prentice offers some thoughts and ideas. Our Work Flowing Analysis and Better Solutions is our answer to Kaizen.
In addition, our associate Bill Bischoff has written a thought provoking article on Family Surveys. At Johnson Consulting, we use client surveys and at our funeral homes we follow up with every family we serve. It is truly a gold mine of information from consumers that know you best: clients that have used your services.
We hope you find this issue informative and most importantly useful in your business. We are here to help. We find most businesses that we work with do not need a complete overhaul of their operations. They just need a tune up and perhaps, a new set of plugs. We are confident we can put the spark back in your business.
In closing, I leave with this simple quote from B C Forbes:
It is only the farmer who faithfully plants seeds in the Spring, who reaps a harvest in the Autumn.
Let us help you with your Spring planting…. Until next time
Regards,
Tom Johnson
Chairman
Kaizen Your Way to Dramatic Results
There is a New Paradigm for Profit
There’s a new sheriff in town, and you’ve met him. It is the new paradigm for making a profit. It used to be that you would add a markup to your cost, baking in your profit, and that would be your selling price. “Cost plus profit equals price.” Not any more. Today the market sets the price, you subtract your cost. Your profit is what’s left over, if anything. “Price (market driven) minus cost equals profit.” For funeral products and services today that are highly competitive, the way to profit is to reduce cost. That’s the pressure you’ve been feeling.
To read the rest of the article, visit:
http://www.johnsonconsulting.com/kaizen-your-way-dramatic-results-john-prentice/
Just When You Thought You had all the Answers, They Changed the Questions…
The challenges of running a successful business today require a different approach and skill sets than perhaps the past generations. The answers to current challenges come from a different set of questions than were asked in the past.
I have consulted with funeral homes owners and managers for many years and the first question I always ask about their operations is, “Why do you it that way?” The standard answer is [you guessed it], “We have always done it that way…” This leads me to the conclusion that they probably achieve the same good or poor results over and over again.
To read the rest of the article, visit:
Bill Bischoff is an associate partner with the Johnson Consulting Group located in Scottsdale, Arizona. He has spent his last 33 years in senior level management positions with the leading suppliers to funeral homes and cemeteries.
Just When You Thought You had all the Answers, They Changed the Questions – Bill Bischoff
April 24, 2009
The challenges of running a successful business today require a different approach and skill sets than perhaps the past generations. The answers to current challenges come from a different set of questions than were asked in the past.
I have consulted with funeral homes owners and managers for many years and the first question I always ask about their operations is, “Why do you it that way?” The standard answer is [you guessed it], “We have always done it that way…” This leads me to the conclusion that they probably achieve the same good or poor results over and over again.
The famous philosopher-scholar Francis Bacon once said: “Half of wisdom is asking the right questions.” Perhaps, I should have asked: “How do know your families appreciate and value the services you provide?”
Throughout the years I have worked in funeral service, consumers’ needs and demands have been changing. In order to meet these needs and demands the questions must also change. Regardless of the industry or business, success will not be determined solely by the current knowledge, abilities, and skills of the owner, management and associates. We succeed only by listening to consumers, understanding them, and solving their needs and demands. The consumer drives our economy. They vote everyday with their pocket book.
Successful companies stay very close to their customers and continually ask the right questions to ensure they are doing the right things and, equally important, doing things right. Consumers are very willing to share their ideas and reactions to what they paid for and received. Asking customers for feedback shows the company cares and is very appreciative of their business.
Surveys can help answer questions such as: “Did we earn your future business?” “Are we the best that we can be?” “How can we improve and do it better?” Customer and consumer research are the best resources and PR tools a funeral business can use to reach out to families.
I heard a few disturbing statistics not long ago: Only 25-30% of funeral homes offer a post-service questionnaire to their families; and many of the surveys have not been revised in years.
Less than 5% of the firms that survey families use analytical tools to effectively evaluate what their families are saying, set service benchmarks, and determine which, if any, recommended changes should be implemented. This resource of surveying families served is a gold mine of information that helps a funeral home continuously improve.
Funeral service offerings have changed because the consumer has demanded change. The people we hope to serve are more knowledgeable and informed thanks in large part to the Internet. Google “Personalized Funerals.” Need I say more?
The younger generation [care givers] wants things done differently. Creativity is part of today’s culture. Technology is a big part of today’s funeral service, including virtual showrooms, videos, testimonials, Webcast services. If you don’t believe it, just ask them!
Survey Approaches
There are different approaches used in doing surveys that originate from the funeral home. One is to design the survey in house or use one from a funeral service organization. It can be sent in the mail to the family a few weeks after the funeral or part of an Aftercare program and personally deliver the survey.
The most candid, honest and valuable survey information is one that is sent out by a third party from whom you receive a monthly report containing specific and useful feedback with recommendations on where and how to improve in performance. Families are more apt to be candid and forthright with their responses if the survey neither comes from, nor returned to the funeral home.
A professional service organization can provide insights and analysis that are often missed or overlooked when attempted in house. Getting this right is very important — especially if your results measure satisfaction by location and individual arranger. A third-party survey program helps to understand “value” as defined by the families you serve and to appraise your organization’s ability to consistently provide the value your community demands and deserves. Simply put, consumers are willing to pay for what they want and if the experience you provide meets their expectations, you can count on loyalty and referrals.
Here are just few questions that you should consider to incorporate in your survey. Open ended questions are best so the responses are in their own words. Certain questions could be accompanied by a numeric score to accommodate a metric measuring system.
- Why did you choose our funeral home over the competition?
- Have you had an experience with another funeral home in the community? How did we compare?
- Tell us about your initial contacts with the funeral home?
- Did our arranging funeral director listen to your wishes; ask good questions about your loved one’s life and then respond with creative service arrangements?
- Did our audio visual resources meet your needs?
- Did you go to our funeral home website? Was it useful and accommodating?
- Was our concierge service helpful?
- Evaluate the staff and the services provided?
- If you could have changed any part of the service, what would it have been?
- Did we meet your expectations?
- Would you recommend our funeral home to another family member or a friend?
Words to the wise: If some of these questions do not fit with your current operations, you may not be the funeral home of the future in your community.
In addition to implementing a proactive customer experience measurement program (survey, tracking and method of implementing improvements), I recommend that funeral home owners perform a monthly analysis of service contracts. Surveys and contract analyses should then be directly tied to a funeral home’s accounts receivables.
The “best-in-class” services with receivables in the “90 days” column equates to a less than successful financial business. Profits drive business growth and long-term success. I would also recommend doing a market research study and market share analysis every few years to learn about consumer and market changes, and to determine if your ongoing survey results correspond with your market study.
In order to get the maximum return on your efforts and investment, it is paramount you review the findings with the entire staff. Surveys should also be used with each member of the staff to allow the staff to rate themselves and provide ideas and ways to continuously improve in all areas of the funeral home’s operations. Unfortunately, this is the step that is missed most frequently, yet the one that has proven to be extremely valuable.
It’s all about asking the right questions and using the answers to the funeral home’s advantage to better design and communicate your product and service offerings. If you take nothing else away from this article, just remember: It’s not the owners or the staffs of funeral homes alone that will determine the future of your business or funeral service, it’s the consumer.
If the right questions are asked we learn what we must do to continuously improve the processes and, most importantly, deliver what the consumer wants to buy and preserving the value of funeral service.
Professional consulting companies can provide all of these services along with recommendations and training programs to improve performance where it is needed. They can simply put a “spark” back in the business. The payback is almost immediate.
Bill Bischoff is an associate partner with the Johnson Consulting Group located in Scottsdale, Arizona. He has spent his last 33 years in senior level management positions with the leading suppliers to funeral homes and cemeteries.
Kaizen Your Way to Dramatic Results – John W. Prentice
April 24, 2009
There is a New Paradigm for Profit
There’s a new sheriff in town, and you’ve met him. It is the new paradigm for making a profit. It used to be that you would add a markup to your cost, baking in your profit, and that would be your selling price. “Cost plus profit equals price.” Not any more. Today the market sets the price, you subtract your cost. Your profit is what’s left over, if anything. “Price (market driven) minus cost equals profit.” For funeral products and services today that are highly competitive, the way to profit is to reduce cost. That’s the pressure you’ve been feeling.
Service Processes Can be Full of Waste
Did you know that business processes, especially service processes, can be full of costly waste? It’s true. Here’s what Michael George, another leader in this field, says in his book Lean Six Sigma for Service: “Service processes are usually slow processes, which are expensive. They are slow because there is a lot of “work in process” (WIP). When there’s too much WIP, things can stop and wait up to 90% of the time. But, there is hope. In any slow process, 80% of the delay usually is caused by only 20% of the activities. You may need only to find and improve the speed of 20% of the process steps to effect an 80% reduction in cycle time and achieve 90% on-time delivery.”
Why Processes are Full of Waste
Can you think of some examples of office process waste? (As a funeral director, do any of these sound familiar?) Too many approvals required. Unclear process steps. Unclear job descriptions. Obsolete databases/files/folders. Purchase orders don’t match quotes. Errors/typos. Waiting for information. Too many meetings. Poor office layouts. Unnecessary emails. Your list may be longer.
It is Not About Working Harder
To get these kinds of improvements, you must change the way you do things. You’ll never get there by working harder. Where might you look for waste to remove? The waste is not found when you are moving forward in the process. Look for waste when things are stopped, waiting, or sent back for rework. Then, remove the barriers that cause the waste.
Others Have Made Dramatic Improvements
By employing a process improvement technique called Kaizen, others have made dramatic cost reductions and improvements in service, as well as getting more things done with the same size staff. It’s more than that. Those who have done it will tell you about the renewed pride in their organization and how their results will translate into even better service for their customers.
For example, in three week-long Kaizen events one organization applied the tools and made immediate improvements of 30%-70% vs. previous baseline measures.
Process (Improvement)
Admin. Process (+ 30%)
Payment Process (+ 70%)
New Product Time to Market (+ 30%)
A Personal Postscript
If I could tell you one thing about modern strategies and tools for enhanced business performance, it would be this: THEY WORK.
I believe process improvements are designed and implemented by people, not in spite of them. In my 30 years of business experience, from factory floors to board rooms, I have never seen any concepts so simple work so well for all types of organizations. People are winning 30% to 50% improvements every day.
John Prentice’s 30+ year career has touched financial services, manufacturing and the automotive industry, and includes experience in P&L management, strategy, planning, start-ups, marketing, and continuous improvement (Six Sigma and Kaizen). Most recently he was an Executive Director for Hillenbrand Industries, a global Fortune 1000 company, acting as an internal consultant on merger & acquisitions and other strategic issues, as well as consulting for the company’s European operations. For more information about John Prentice and Prentice Consulting, Inc. visit www.PrenticeConsulting.com