Category Archives: Profitability

How to Boost Morale Without Spending a Fortune

In these tight economic times, would you like to know how to boost morale, increase motivation, and decrease turnover without breaking the bank?

How To Lead in Tough Times

When the economy is down and business is tough, a manager’s first tendency is to seek new ways to be efficient. Efficiency is good, but pushed too far, the human cost can outweigh the financial benefits of efficiency.

Life_vest

Perhaps you should stop trying to run a tight ship and start thinking about the welfare of the crew members.

It turns out that your people are less enamored with your business acumen (e.g. that you can move them around on a spread sheet to squeeze out another couple of bucks) than they are with your concern for them.  When they know that you will look after their best interest, you will have their loyalty.

Motivation as the Key to Efficiency

Hug Your PeopleJack Mitchell wrote a wonderful book for leaders who reject the idea that efficiency is all that counts in management. In Hug Your People: The Proven Way to Hire, Inspire, and Recognize Your Employees and Achieve Remarkable Results  he suggests the following:

Treat your Employees like Associates: No, seriously–treat your people like colleagues that deserve respect (because they do). And, don’t just talk about it. Let your actions speak for you.

Get to Know Them Professionally and Personally: Your associates will gladly support leaders who care. They will be cautious with cold-hearted managers who would kick them to the curb to save a buck.

Have Fun with Your People: You can enjoy working with your associates, and if you do, they are more likely to be more motivated.

Have Expectations and Standards, Not Rules and Regulations: Rules are stifling, but expectations breathe life without crippling motivation. Bad managers love to enforce rules. In contrast, good leaders let expectations manage people.

Know the Difference Between Employees “Working For” You vs. “Working With” You: The former is hierarchical. The latter is collegial. In the former, you check up on them to make sure they are doing their work. In the latter, you check in to see how you can help.  

Discourage Reliance on Yourself: Good leaders want their people to grow and succeed without them. They encourage decision-making because they want followers to grow. Good leaders are pleased when their people succeed (with or without them).

Would You Want To Work for Jack Mitchell?

Get your MBA Now from Charleston Southern University

Who wouldn’t want to for a manager that truly cared about his people? Wouldn’t your manager get the best out of you if he treated you this way? But these are not techniques to trick employees to be motivated for the sake of efficiency. They are heart attitudes and they must run as deep as familial affection or patriotic ardor. You cannot fake concern for your people.

Mitchell summed up the core of his philosophy as follows:

Relationships are personalized–this means that people engage one another as real people rather than as job responsibilities. They get to know Ralph not as a shoe buyer but as someone who likes to go Kayaking and has eight-year-old twin girls. Michael’s not accounts receivables, but a marathoner who loves mango pudding.

When you care about your crew, you will not have to worry about running a tight ship. Take care of Ralph and Michael, and they will take care of you.

-Darin Gerdes, Ph.D.

December 3, 2012

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Dr. Gerdes is the Director of the MBA Program at Charleston Southern University

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Filed under Books, Effectiveness, Efficiency, Leadership, Management, Motivation, Profitability, Success, Trust

If You Do Not Read This Article, You Will Simply Hate How Much Money You Will Lose.

The Christmas season is here and it seems that everyone is having a once in a lifetime sale. Deals are everywhere. But listen closely to the advertisements and you will notice a funny trend. They all say: “buy now,” “limited time offer,” or “quantities are limited.” These companies are not out of merchandise. Instead, they are setting psychological traps intended to play on your fears of scarcity.

What is Scarcity?

Definition of Scarcity from Investopedia.com

Scarcity means that you cannot have everything you want.

Corporations understand that you desperately want certain items. Parents want to get particular toys for their children. Dad wants the largest TV possible. Mom wants some alone time (and for those of you who cannot get it, you truly know the meaning of scarcity).

Corporations Use Scarcity to Inflate Profits

Do you remember when cabbage patch dolls were all the rage?

It was the 1980s and I was in junior high school. I recall how difficult it was for Aunt Gail to get one for my cousin Amy. The lines at the toy store stretched around the block. People paid unbelievable prices, and they were thrilled if they could get one even at that price. Black markets formed where Cabbage Patch dolls were scalped.

I was only in junior high, but  I remember thinking that the company must have lousy executives to plan so poorly before the Christmas rush. With a little forethought, I thought, they could have produced plenty for everyone to buy.

Ah, but I was young and na·ïve. I did not understand that they were intentionally manufacturing scarcity in order to inflate profits.

I saw the same phenomenon repeat itself in 1996 with Tickle-me Elmo. The $29  toy was resold for as much as $1,500 because they were so scarce. Parents did not want to refuse their children the one toy that they most wanted.

Do not think you are immune. Apple uses this strategy when they roll out each iteration of the iPhone.

Scarcity Inflates Value.

This can be done in many ways: Producing fewer items produces scarcity Limited time offers create scarcity. As the clock counts down to Christmas morning–scarcity.

Get your MBA at Charleston Southern UniversityCorporations know how scarcity works and they use this understanding to manipulate you. They intentionally say things like “But you had better hurry. These deals won’t last long.” Then they have the After-Christmas sale, End of Year Clearance, and New Year’s Sale where they repeat the same line.

How To Protect Yourself From the Scarcity Mentality.

Understand what is happening.

1. Companies sometimes intentionally limit distribution in order to induce scarcity. Remember the Black Friday sales? Limited quantities drove consumers to camp outside in the cold for hours in order to purchase an artificially scarce item. Did the company have more in the warehouse? Of course they did.

2. Sales with limited time-frames also create scarcity. Companies want you to think that if you do not buy now, you will never have the opportunity again, at least not at this price.

3. Specific items that do not have substitutes are scarce. For example, when I was a kid, I wanted Star Wars action figures. These were more expensive than any alternatives on the market. To my dismay, I got Star Trek Action Figures. To my mom, it was all the same, but on the play ground Mr. Scott and Dr. McCoy were not welcomed on the Millennium Falcon.

Now, here is where parents get into trouble.  Remember the large TV dad wants? There are many brands and most have similar ranges of quality or substitutability. Dad will likely be as satisfied with a Panasonic, Sharp, LG, or Sony as long as the screen is 60 inches.

However, if your little darling desperately wants a Doc McStuffins Time for your Checkup Doll, there really are no clear substitutes. A knockoff simply is not the same, and Disney knows it. They have been selling Doc McStuffins through “commercial-free” Disney Channel cartoons all year. This is non-substituability.

What To Do

1. Recognize that if you are chasing a popular but limited item, the laws of supply and demand are working against you.

2.Do not be duped by limited time offers (e.g. Black Friday or Cyber Monday are the only times you will see great deals). Deals will ebb and flow.

3. If you simply must have the  Doc McStuffins Time for your Checkup Doll, you will pay dearly to have it. But you can lower your bill  for adult items by overcoming scarcity with substitution (e.g. a different 60 inch TV than the particular brand you want) or time (e.g. the After Christmas Sale).

4. Budget. The best plan is to know how much you plan to spend ahead of time. Do not exceed this total.

A good deal, such as 20% off, becomes a bad deal when you pay 120% because of the credit card payments.

5. Don’t believe the lie that your love can be measured by how much you spend.

6. Remember that scarcity is a mindset. Corporations attempt to inject it into the equation. You will pay less when you reject a scarcity mindset.

I am not a financial Planner, but I highly recommend Dave Ramsey’s Financial Peace University, which I have used  in  my classes.

The Professor’s Recommended Reading

Financial Peace University

November 26, 2012

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Dr. Gerdes is the Director of the MBA Program at Charleston Southern University

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Filed under Books, Economics, Leadership, Profitability

How to Gain Good Will While Increasing your Business Revenues

Sometimes businesses do stupid things. Sometimes they are incredibly smart. This article is about the incredibly smart business decision that will gain good-will and increase revenue.

Texas Roadhouse has been a serial supporter of one of my favorite Charities, Christy’s Legacy of Hope.  The Charity was named for Christy DePriest Wright, one of my former students at Liberty University.

Christy earned her business degree in order to more effectively meet the needs of orphaned Children in China. She had worked in orphanages short-term, and she planned to go back to China full-time, but she was struck down with a rare form of cancer in 2010.

Her family incorporated a 501(C)3 to carry on her work.

Texas Roadhouse has been a great help from the start. I recall a fundraiser in 2010 at a local restaurant (to defray medical expenses for her illness) and Texas Roadhouse has come through again.

Christy’s Legacy Card

Christy’s Legacy Card

Gift Cards have become trendy holiday gifts. Most gift cards exchange equal value (e.g. $50 dollars in exchange for $50 dollars of value on the gift card). Some offer a slight discount.  This one gives 10% of the proceeds to Christy’s Legacy of Hope to provide for the needs of orphaned children in China.  Additionally, the customer who uses this card will get a free Baby Blossom with the purchase of a entrée for an entire year.

Sounds Like an Expensive Proposition for Texas Roadhouse

Is Texas Roadhouse losing money? They are giving away a lot of free food and foregoing 10% right off the top. It seems like they are leaving a lot on the table, but I would bet they will make it back in free publicity, new customers, and return trips.

Get your MBA at Charleston Southern UniversityFor example, I am pretty sure that I would not have written this article for the sake of maximizing the profits of Texas Roadhouse. But because they are contributing to a great cause, I am contributing my time to write about it. And now you know about it. It is a virtuous cycle and you can join in. Buy a gift card, pass this along to a friend, and keep the cycle going. Tweet about it.

Here is the short link: http://wp.me/pYT7Z-bU

The Lesson

Texas Roadhouse created value by contributing to a good cause (creating good will) which will increase their revenues (increased traffic and free marketing from people like me) leading to further good will and increased traffic.

What can your company do to create such a virtuous cycle?

-Darin Gerdes, Ph.D.

November 23, 2012

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Dr. Gerdes is the Director of the MBA Program at Charleston Southern University

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Note: The gift card will be available until Christmas 2012. The 10% donation will continue to stream until Christmas of 2013

The FREE BABY BLOSSOM IS ONLY VALID AT TAYLOR LOCATION (14660 PARDEE ROAD TAYLOR, MI  48180)

Contact Jessica Ericson of Texas Roadhouse at (734) 788-1410 or TaylorTexRoad@gmail.com.

A $0.40 fee will be applied for shipment of the card.

Thank you to TEXAS ROADHOUSE.

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Filed under Current Events, Effectiveness, Efficiency, Leadership, Management, Organizational Behavior, Profitability