Unstructured accounting was discussed in January.
Now business management structure in relation to labor intensive management is the current topic.
Many such businesses often fail as a result of poor or no organization at all. Staff assigned to tasks usually cut corners at the expense of their employers.
Some are so disloyal that they deliberately make their employers loose valuable clients.
Some proprietors, when they find the management of such business difficult appoint managers to whom the proprietor's burden of sleeplessness is transferred.
In this edition, a car hire service is used as a case study to illustrate the problems a solo operator can face after a transition to a corporately managed business without adequate planning, a common occurrence in the third world, and surprisingly still found in the more advanced economies of the world.
The implications for other businesses in this category can be seen
Another video to illustrate how human resources should NOT be managed.
Many entrepreneurs understand that expertise in managing inventory and machinery does not guarantee success in managing people, especially employees.
Larger organizations therefore maintain directly, or through outsourcing a Human Resources department.
Some other organizations however, exclusively require managing people (human resources) for their operations.
Many of these are owner managed and compete with corporately managed outfits. Examples are-, medical services and care operations, maintenance and servicing of vehicles, car hire services, equipment, fixtures estate agencies and realtors schools, restaurants, and so on.
Highly skilled services such as Medicine, Law, Engineering, Accountancy etc. are not covered here as they are already governed by regulations of their respective professional bodies .
Whenever these labor intensive services are managed under a corporate structure, some of the common indications of failed human resourcemanagement are:
Poor customer service.
Impolite staff.
Inability to complete tasks satisfactorily.
Emergence of rackets and syndicates.
High staff turnover.
Frequent disputes with management.
Emergence of separate corporate culture resulting in fraudulent billing standards for clients.
Failure of services when the boss is absent.
Overburdened proprietor/manager.
The inevitable result:- poor client retention.
Many managers, in trying to avoid the above, burn themselves out with sleepless nights, especially when the services involve night and emergency shifts.
Rather than speak in abstract terms, the topic will now be illustrated with a case study:
A solo Limousine Hire Service started with Steve (purely hypothetical. Similarity to an existing limo hiring service proprietor is regretted) waiting around airports, to offer services to passengers heading downtown.
His service was so courteous and customer friendly that customers re engaged his services anytime they returned to the city.
Many recommended him to their friends and his customer base rose by the day.
His service came into such high demand that he engaged other drivers to work for him anytime he went for break. He eventually acquired more vehicles incorporated the business into a limousine hire company.
Now, he does not get up to 3 hours of sleep a day trying to ensure the same high quality service that characterized his solo hire service.
As if those were not enough, he now has to face some other developments
Poor customer service.
His drivers now engage customers frequently in shout outs. Some have, not only vowed never to use the company again but have gone further to sue them..
Some of his drivers have also gone to court to sue over arbitrary dismissal over cases of shoddy treatment or rudeness to customers brought to his notice.
One of his drivers made away with one of the newer limousines He had to commission the police to effect arrest.
Steve could not appear in court on the scheduled hearing date because he was on admission in hospital for a heart condition arising from high blood pressure he developed after incorporating the business.
Steve now acts under stress and extreme pressure when he gets to work or deals with managers and employees. Many had to quit in protest.
It is very easy to write off Steve's predicament as a consequence of bad management and organization, which in fact, it really is.
But the truth is that most businesses follow this model, as they usually start solo, and then grow at a rate which does not give sufficient time for careful planning and organization, especially in relation to human resources.
Some commonly accepted solutions to these problems have their inherent shortcomings such as :
External Auditor or accounting consultant.
Every business will eventually have to engage one while trying to file tax returns or fulfilling a statutory requirement by most countries as regards annual audit.
They usually point out areas of weak internal control as regards accounting and financial management. Managing a workforce of semi skilled employees however is not their area of specialization and one should not therefore expect considerable assistance in that direction.
Engagement of a management consultant
Good consultation requires careful study of procedures and the image or corporate culture a proprietor is trying to portray. This requires study and time which may not conform to this model's time frame. A prepackaged or hastily prepared solution may become unworkable.
Besides, the more reputable consultants are quite expensive to engage. It may constitute a considerable pressure on a razor thin profit margin.
Some may even turn down the consultation as not being cost effective as a result of its small size.
Small businesses may save on such consultation if the processes of the business are already laid out, along with the internal control measures for the consultant.
For the many businesses growing under this model, it is never too late to organize and re-structure.
Suggested sequence of structuring
Still using this same case study, we will go through a suggested sequence of structuring.
Every entrepreneur should first take a plunge and then fine tune the processes as time goes on. This implies involvement as the system is being built.
This should pay off in reducing sleepless nights and afford time to cope with new ideas that may benefit the business.
The processes involved in the operation of the limo service will be evaluated.
The engagement process of the limo service.
This should be through a phone number, a visit to the office, or through a website. It could also be through a reference by a travel agency, who should be entitled to a commission.
In the earlier times, Steve alone collected all the calls and determined the commission receivable by the agent, which may also be subject to a different price structure.
He may now decide on a profitable way of estimating charges: this could be by distance, or by the number of hours, each with a minimum distance or time units required as down payment, or by means of a meter.
Payment process
Will payment be made through cash, credit cards, checks or vouchers? Will the same method apply to payments by corporate clients? Should it be received by the drivers or sent directly to the office? Some would insist on drivers issuing only invoices, with the copy deposited in the office for formal billing of the client and estimation of additional incentive to the driver. Giving a driver an option for cash receipts could open an avenue for fraudulent limo usage.
Submission of completed forms
The driver now submits a form completed by the client which must include, in addition to the details of the usage, an email address from which an opinion of quality of the service may be obtained. It should also include the driver's comments.
Verification
Steve can now come into the office during the normal working hours to view the telephone log book to compare with the forms submitted by the drivers.
Currently available technology can enhance the process of verification
Rather than having the office workers manually enter caller logs, the whole telephone conversation can be recorded and a log printed out.
Trackers can now be placed in vehicles to record their movements, making driver-client collusion difficult, if not impossible.
Monitoring system in the driver's cabin can record conversations between driver and client to enforce courteous and customer friendly service.
The manager proprietor's work is therefore limited to verification during normal working hours.
He/she has time to focus on quality of service improvement and process fine tuning.
Driver compensation and incentive.
A decision would have to be taken whether the drivers will be under full time employment, or payable only when engaged (casual). A middle point, where a retainer is paid when on standby and a fixed or variable amount paid when engaged can also be explored.
The system to be employed will be based on the Steve's experience who has operated as a driver. It may turn out to be a combination of the three, applied to various categories of drivers.
Establishment of integrity and insight through interview questions.
When candidates are being interviewed for drivers, some direct questions should be asked such as
Do you see yourself as a boss here in the near future? If the answer predictably is “yes”, then the next question should be “How would you stem fraudulent and unethical activities by drivers?”
The candidate must be able to enumerate some fraudulent and unethical behaviors common among them and proffer intelligent solutions to such.
Find out what they expect of their employers.
Any candidate incapable of giving intelligent answers to such questions should not be considered for appointment. Many perpetrate serious misconduct and pretend to be ignorant of the gravity of such actions.
Candidates considered for employment can then undergo a period of training in good human relations and courtesy, as a human resource development policy.
As said earlier, the process should be reviewed and fine tuned if necessary on a regular basis..
Conclusion.
While Steve's case has been based on a limousines hire service, there are parallels with almost all other labor intensive services or operations: from health care services for the aged, where care assistants do shoddy jobs and fake the reports, to utility equipment maintenance and repairs to automobile repairs where all forms of unethical behaviors are possible.
In these cases, the quality of human resources in the businesses invariably determine their success.
