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【Highly Recommended: A Small Boss's Daily Management】Very practical and down-to-earth. Contents include: 1. How small companies retain key employees; 2. On delegation; 3. Some money cannot be saved; 4. On recruitment; 5. Bosses should play the good cop; 6. Relatives in the company; 7. Being a boss and driving; 8. Learn to say "no"; 9. Financial systems; 10. Policy formulation; 11. Dividends and year-end bonuses; 12. How to raise wages. A must-read for entrepreneurs!
1. How small companies retain key employees: Over the years, prices have risen, costs have increased, but company profits haven't grown much. Every employee hopes for a significant salary increase, but it's estimated that over 90% of small companies can't achieve this. Sometimes I, as the boss, wish I could just close the company and invest in stocks or real estate for peace of mind. Although in recent years, due to the mandatory social insurance and housing fund for each employee, the per capita cost has increased by several hundred yuan per month, employees don't appreciate it. They only count how much they take home each month, and the company's expenses are none of their business.
Since I can't satisfy everyone, I only aim to satisfy the 20% of key employees.
First, I develop key employees into shareholders: I sell company shares at half price, with a buy-one-get-one-free offer. If they withdraw within five years, they only get their principal back; after five years, I redeem at three times the price. Each year, I distribute 60% of profits as dividends. After all, if there's money, everyone shares, but if a shareholder does something against the company, they are doubly penalized, deducted from their share capital. This tactic has worked well; in the past five years, no shareholder has left, and key positions are held by shareholders, saving me a lot of effort.
Why not give shares to key employees for free? Actually, I don't care about the money, but people don't cherish what's given for free. Also, the money they invest serves as a deposit to prevent shareholders from doing outrageous things. Moreover, employees can recoup their investment through dividends within five years. No investment, no return.
2. On delegation I remember when the company had just over a dozen people, I was the busiest. I often took two or three sales calls simultaneously, arranged deliveries, settled accounts, and purchased goods. I arrived earliest and left latest. Once my younger brother visited the company, looked around, and remarked, "Brother, I feel like you're supporting everyone in the company!" At the time, I was proud. But the company didn't grow much in four or five years, staying at around a dozen people, and employees felt oppressed with no room for growth. Later, I realized I had to delegate, even if employees could only do 70% of what I could. Sometimes it's really frustrating; a salesperson just can't close a deal that I could easily close. I want to rush in myself, but I have to restrain myself, or how else will my subordinates improve?
In the development of a small company, 15 people is a hurdle, 50 is a hurdle, and 200 is another hurdle. Without improved management methods, further development is generally impossible. A company where the boss does everything personally rarely passes 15 people. A capable person can directly manage seven or eight people; an average one can only lead four or five. The most efficient organization in any country is the military. Look at the military structure: a squad has eleven or twelve people, with a squad leader and an assistant squad leader; three squads make a platoon, three platoons make a company, and so on. A regiment commander manages over a thousand people but may only know a hundred or so. If the commander sees a soldier with a problem, he won't scold the soldier; he'll scold the battalion commander, who then scolds the company commander, and so on down the line, until the squad leader deals with the soldier. So even with thousands of troops, the military can enforce orders and prohibitions.
Now when customers ask me to buy something, I often say, "Oh, I'm sorry, I don't know the price. Let me introduce you to a salesperson, and they'll contact you."
3. Some money cannot be saved When I first started, there were only one or two people. I did sales, purchasing, maintenance, and bank runs myself. At that time, I had no registered capital, so I borrowed a friend's business license. I studied accounting for a few months and then made random reports. At the end of the month, I went to the tax bureau to file taxes. When I submitted the reports, the tax officer glanced at them and started asking questions. I didn't understand the questions at all, let alone answer them. The officer looked displeased and asked, "Do you understand?" I forced a smile and said, "No, I don't." "If you don't understand, why are you here? Send someone who does." "Okay, okay, next time I'll send someone who does." The next month, I made another random report and went to the tax bureau. The officer clearly remembered me: "Why are you here again?" I had to make up a story: "The accountant is pregnant and can't come, so I came." "!" The next day, I hired an accounting firm for 300 yuan a month and never went to the tax bureau myself again. Even when the company had over a dozen people, I still used the accounting firm. The company only had a cashier, no full-time accountant or warehouse keeper. In the following years, business went well, and I made money, but at the end of the year, the company's account balance hadn't increased much. Later, I realized that once the company has more than ten people, the boss alone can't oversee everything. The whole company is like a sieve, full of holes; it's a wonder any money is left. Expecting employees to be like Jiao Yulu or Lei Feng is impossible. Even if you give employees 70% commission, they'll still covet the remaining 30%. Only a fool wouldn't embezzle. Only with a sound system, making it impossible for those with bad intentions to exploit, can you manage the company well. I thank my current accountant for being extremely responsible. If I ever start another company, as long as there are four people, it will be one boss, one accountant, one cashier, and one warehouse keeper. I'd rather die than save that money again.
4. Cross-industry doesn't make money This saying holds true for 90% of companies. Of course, if you think you're in the remaining 10%, feel free to try.
Generally, after a company survives three to five years and makes some money, the boss starts thinking about doing something else. Most people think their own industry is less profitable than others. Unfortunately, I'm one of them (I think my experience could compile a small business error encyclopedia). At the end of the last century, on a whim, I opened a restaurant, and my troubles began. At the time, I thought I had sales talent, so a restaurant would be a breeze. But the damn restaurant needed more than just sales; if the food wasn't good, customers only came once. I didn't enjoy eating or drinking, and I didn't have the patience to develop new dishes with the chef. Moreover, running a restaurant involved not just purchasing and accounting, but also hygiene, epidemic prevention, industry and commerce, and public security. It was exhausting, getting up early and going to bed late. It wasn't the same as running a company. I didn't have the patience, so I hired a department manager to run it. He managed it terribly, and within six months, I lost several hundred thousand yuan and closed it. Now, if anyone mentions opening a restaurant, I get angry. Eating at a restaurant is fine, but anything else is off the table.
If you're interested in opening a restaurant, think through the following points first: A: Can you endure the hardship of getting up early and going to bed late? B: If you're taking over a restaurant, find out why the previous owner is transferring (don't just listen to one side; stay at the restaurant for two days). C: Calculate the rent, personnel costs, etc., down to how much per table per day. Determine the restaurant's positioning, target customer level, how many seatings per day, average spending per table, gross margin, and whether you can make a profit (calculate carefully, even using your toes if necessary, or you'll lose everything). D: Can you handle the local industry and commerce, hygiene, public security, and local thugs? E: Parking issues. F: Find a chef. Once found, how to manage: contract the kitchen or pay a percentage of revenue? G: Is your wife willing to do purchasing, or can you find someone as loyal as your wife? H: Restaurant staff need room and board, and wages have been rising rapidly; budget accordingly. If you miscalculate, you'll end up exploiting yourself and your parents and wife.
5. On recruitment Over the years, I've done a lot of recruiting. A few years ago, at the peak, I interviewed fifty or sixty people in one afternoon. Initially, I had no experience and always hired the best. For a customer service position paying just over a thousand yuan, I often hired university graduates with CET-4 English. Later, I found they didn't stay. For simple jobs, a technical secondary school graduate is fully competent. Hiring a university graduate is unsuitable for both parties; it only helps when bragging in the company profile. Also, during interviews, you can't believe everything candidates say. Sometimes, after losing a job, they're desperate and will promise anything to get a new one. Once, we were recruiting for a business position with a salary around two thousand. A girl submitted her resume and interviewed. She had a bachelor's degree, three years of experience, and her previous salary was 2,500. I asked if she could accept a lower salary. She said without hesitation, "No problem." Since she was suitable for the business role, I hired her. Half a month later, after the previous business person handed over and left, she resigned the next day, citing the low salary, leaving the company in a difficult position. In the next recruitment, I hired a girl whose previous salary was 1,500. She's still in that position, doing well and satisfied with her salary. Most people can only go up, not down, in terms of new job positions and benefits. Those who can go both up and down are rare; Deng Xiaoping might be one.
My recruitment experience: Better to miss a thousand than hire one wrong person (based on a famous historical figure's quote). In my experience, it's better to hire one grade lower and pay one grade higher (i.e., hire third-rate talent, do second-rate work, pay first-rate wages. Of course, these grades are relative). During recruitment, don't be lazy; carefully verify candidates' identities. Last year, two new employees absconded with company funds. When we called, they were brazen: "My ID, diploma, and home address were all fake. The police won't bother with a few thousand yuan." And indeed, the police didn't. Now, for local hires, we verify everything; for non-locals, we require a local guarantor. Anyone caught falsifying is rejected. Since then, no such incidents have occurred.
I have some personal bias against laid-off workers. Most laid-off workers, especially older ones from state-owned enterprises, are full of complaints, feeling society has treated them unfairly. They bring their dissatisfaction and bad habits from their previous units to the new company, feeling entitled to benefits and that everyone owes them. They find it hard to integrate into a new company, and only a minority are hardworking. Perhaps private enterprises aren't suitable for laid-off workers. Also, use relatives and friends as little as possible; I'll touch on this topic later.
6. Bosses should play the good cop Every day, many things happen in the company; some should be praised, some criticized. Who should execute criticism and praise?
When I first started the company, I didn't feel like a boss and hated managing people, so I rarely said anything about employee issues. As a result, employees were undisciplined, no one respected anyone, and work couldn't proceed. Later, I realized this couldn't continue, so I started to put on a stern face and manage. But new problems arose: almost all conflicts in the company were between me and the employees. Employees often argued with me face-to-face about right and wrong. Being a boss was really depressing, and I didn't want to be a harsh manager. Later, after more contact with Japanese companies, I discovered some secrets. In Japanese companies, the general manager rarely scolds ordinary employees; he's very kind to them. But he often reprimands middle managers in front of employees. Mistakes by ordinary employees are handled by their direct supervisor. Of course, when paying wages at the end of the month, the general manager is not lenient. This way, the company is managed orderly, and employees feel balanced.
"Stones from other hills can polish jade." So I did it. Our company isn't big, but we have a few supervisors. I held a meeting to clarify responsibilities: whoever's subordinates have problems, they handle it themselves; don't push everything to me. Usually, I only praise good deeds and encourage. When supervisors make mistakes, I rarely criticize them publicly; I usually talk privately. Before long, company management became smooth, my image improved, and employees respected me more.
Sometimes I think a boss is like an emperor to the country. If the emperor is wise but ministers are incompetent, people still feel the country has hope; at worst, they'll remove the ministers. But if the emperor is incompetent, people feel the country is doomed and start thinking about rebellion. As a boss, I can't let employees rebel or leave. Since supervisors and department managers enjoy position allowances, they should share the boss's burdens and play the bad cop when necessary. The boss should maintain a detached attitude, staying out of events; the onlooker sees clearly. However, when department managers need support, as long as it's not a matter of principle, I usually support them clearly.
7. Relatives in the company On this issue, I have only lessons, no experience. Fortunately, my wife's job has always been good—at a Fortune 500 company—so she has no interest in my small company. When the company was founded, based on what I'd seen and heard, I decided to avoid using relatives and friends as much as possible. Later, when the company reached a certain scale, an elder from out of town called, saying her son (my cousin) had graduated a year ago and was working as a salesperson at a small company in our industry locally, with a modest income. She hoped he could come to Beijing to develop. This relative's family was struggling; one child couldn't work due to special circumstances. I had met this cousin before; he was now eighteen or nineteen and quite smart. At the time, the company needed people, and I thought, "Why not use him?" So I agreed readily.
When my cousin first arrived in Beijing, he lived and ate at my parents' house. The different lifestyles of young and old caused my mother to complain often. After a while, I arranged for him to stay in the company dormitory, which solved the problem. My cousin was sharp and good at socializing. Within a few months, he fully adapted to the company environment and performed well in his department, often ranking top in commissions. Later, I noticed he often flaunted his special status, bossing around colleagues, which caused resentment among other employees. I talked to him several times, and he promised to change, but with little effect. A year passed, and my cousin had become adept in the industry. Then he came to me saying he had several classmates back home who were smart and reliable, and he wanted to bring them to develop at the company. I thought it was a good thing, so I said, "Come on, I'll take them all." The trouble began.
My cousin and his friends lived and ate together, speaking only their hometown dialect, which no one else in the company could understand. Although they were in different departments, supervisors noticed they were colluding to make illicit money. My cousin was very clever; he spread rumors that there were conflicts among shareholders, and that he was on my side, warning his direct supervisor not to pick the wrong side or face endless trouble. Many employees were intimidated. After a while, the problem reached me. The company's policy for such issues was: first offense, a fine and warning; second offense, dismissal. I talked to my cousin once, and he swore he wouldn't repeat such mistakes. Within a month, another department supervisor reported that my cousin's clique was doing shady work, not even hiding it from other employees, and even encouraging others to join. I was really in a dilemma. If I didn't act, I'd be raising a tiger. I still hoped to make the company strong and ensure the founding shareholders had security in old age. Better to suffer short-term pain than long-term. I gritted my teeth and gradually let my cousin and his clique go. The company's business was shaken for six months.
My cousin, using the clients he took from the company, is still in this industry, earning a good income and even bought a car.
It's better not to use relatives and friends; otherwise, you'll lose both the relatives and the business.
I once heard another company president talk about how he treated relatives after the company grew. His five or six relatives helped him selflessly during the startup. After growth, they couldn't keep up with the company's pace and occupied high positions, making management difficult. He adopted a method of sacrificing money to preserve family ties: for the older ones, he gave a sum of money to help them start their own businesses; for the younger ones, he paid for them to study abroad, covering all expenses, and after they got MBAs, he helped them find jobs. This neatly solved the thorny problem. Impressive!
8. Being a boss and driving Last year, I went back to my hometown and rode in a car driven by a relative. He had just gotten his license and was a novice driver. The road was wide and straight, but his hands kept moving, left and right, and the car was swerving. I sat in the passenger seat, nervous, buckled my seatbelt, talked less, and pressed my feet as if braking. Cars in the next lane kept honking. Fortunately, we arrived safely. I recalled that ten years ago, when I first got my license, my younger brother, an experienced driver, had raised the same issue when riding with me. At the time, I was confident and didn't understand why passengers felt that way. Now I understand.
Summarizing my experience running a company, I often make similar mistakes. Policies change frequently. When I see a new regulation in another company, I might adopt it on a whim, only to find it ineffective and reverse it, leaving employees confused. Some existing commission and reward methods were already good, proven by practice and accepted by employees. But after listening to an expert lecture or reading a management book, I'd copy ideas without deep thought or adaptation to our situation, immediately redefining policies. Then accountants complained about difficulty, employees complained about unfairness, and after all the fuss, I'd revert to the original.
Now I often think running a company is like driving. The boss is the driver. As long as the car stays within the two white lines of the lane, it's fine. No need to constantly adjust the steering wheel; otherwise, the driver gets tired, passengers get tired, and the car swerves, risking danger. It's thankless. Similarly, as long as the company operates within controllable bounds without major mistakes, policies should be stable and consistent, giving employees a sense of security. In a small company, the boss has concentrated power and lacks oversight, so policy-making should be cautious. Otherwise, the company is always adjusting, employees lack stability, and they'll leave. Think about why Deng Xiaoping promised that Hong Kong's system would remain unchanged for 50 years after the handover.
9. Pay wages on time This is actually the most basic quality of a boss. I estimate every boss would agree (at least verbally), but in reality, many companies can't do it.
During daily operations, companies often face cash flow shortages. For example, at the end of the month or year, they might stock up on goods to get high discounts from manufacturers; in construction projects, the client withholds payment; bank loans come due and must be repaid immediately. All these are sufficient reasons for a boss not to pay wages on time. The boss usually thinks: "It's not that I'm not paying; it's just a few days late. The company is short on cash; employees should understand." The reality is: no matter the reason, employees cannot understand not being paid in full and on time. Wages are not a gift from the boss; they are hard-earned. Maybe they're waiting to pay rent, mortgage, or children's tuition. Not getting paid on time could immediately threaten their livelihood. Under normal circumstances, the boss has more financial flexibility than employees, so he assumes a few days' delay is fine.
So what to do when cash is tight? Generally, do business within your means; invest what you have to earn what you can. If not, borrow from the bank. If the bank won't lend, you can raise funds internally or from relatives and friends, explaining the purpose, agreeing on the loan period and interest. Most employees are willing to participate in business they believe in. If you really can't pay wages at the end of the month and want to continue the business, the boss should first use personal savings. If that's not enough, pawn the house or car, and redeem when cash flow recovers.
Delaying wages is like drug addiction: once you do it, there's a second time. Whenever cash is tight, the boss will delay wages to ease the pressure, and employees lose all trust in the company and boss. Surveys show that the most intolerable thing for employees is delayed wages, and this is often the main reason for turnover in some companies.
10. Learn to say "no" Chinese people care about face, so saying "no" is hard. But the boss is the company's last line of defense and sometimes has to say "no" despite the discomfort.
Our company has a rule: company money is never lent to individuals. Of course, in special cases, employees can get an advance on wages. Two years ago, a key employee came to chat with me. He asked, "If an employee contributes several times more than others, would the company lend him money?" I hesitated on this question, thought for a while, and said, "The company has a rule: company money is never lent to individuals." He wasn't satisfied and asked, "Even for key employees?" I said, "The company treats everyone equally. Key employees can get higher salaries and bonuses, and can buy shares at favorable terms, but no one is exempt from this rule." Then I asked if he wanted to borrow money. He admitted he wanted to buy a house and borrow 300,000. I was puzzled; he could get a bank loan. He said bank loans require interest and fees, and he thought borrowing from the company would avoid interest. Later, I learned he already had a house and wanted to buy another to profit from appreciation. A year later, he left for other reasons. If I had lent him money then, it would have been hard to get back. After refusing once, similar situations became easier to handle. Over the years, all shareholders, including me, have borrowed from banks when short on house-buying funds; no one uses company working capital. No matter how rich the company is, it can't replace the bank's function.
Sometimes company rules have special cases, but on matters of principle, the boss must stand firm. Equality before the rules. As the saying goes, "People don't fear scarcity but unfairness." There's no wall without a crack. Once you set a precedent, other employees become hard to manage. In recent years, the media has been advocating rule of law over rule of man; there must be a reason. When the boss should say "no," say it, no matter to whom. Although being scolded at the time is unpleasant, it's better than the company going under and suffering for a lifetime. Many companies have gone bankrupt because the boss couldn't refuse to guarantee or lend money to others. If the boss doesn't take responsibility for the company, no one else will.
11. Don't expect to make friends within the company When I first became a boss, I wasn't used to managing people. I thought everyone in the company should be equal, all friends, and everything could be discussed. After a while, I felt the company was chaotic, rules were ignored, the cost of mistakes was low, and everyone did as they pleased. At the end of the month, no one's wages could be short.
One day, a friend who worked at a large company visited for half a day. As he left, he said with feeling, "You need to strengthen your management. In half a day, I couldn't tell who the boss was. Employees neither fear nor listen to you." I thought he was right, but I didn't know how to fix it. Eventually, problems erupted: serious embezzlement, low efficiency, employees felt hopeless, and several key employees got together and started their own business, taking seven or eight of the dozen or so employees and half the clients.
Fortunately, I had another smaller branch company and hired a few new salespeople. After all, I started from scratch, so my psychological resilience was strong. I gritted my teeth and started over. This time, I learned from my mistakes, established strict rules, and enforced them. Business quickly improved, and within a year, the staff was back to over a dozen, with profits exceeding previous levels.
Looking back, my initial mindset was wrong. I thought the company should be like a state-owned enterprise, where everyone is the master, everyone is equal, and everyone works hard voluntarily. That's pure nonsense. In a company, interests and positions differ; where is absolute equality? Although everyone is equal in dignity, how can positions, authority, wages, and bonuses be equal? Why did most state-owned enterprises go bankrupt, except for monopolies? Because their management concepts and methods don't fit the current market economy and social environment. I think the education we received from childhood fundamentally doesn't align with human nature. In the past, the character Jiu Shan in "The Red Lantern" said, "If a person doesn't look out for himself, heaven and earth will destroy him," which was always criticized as a negative example. But now I think it seems to match everyone's natural first reaction. The world bustles for profit; even monks understand this. So be a boss. You can't have it both ways. I no longer expect to be friends with employees. Everything follows the rules. As long as I manage the company well, ensure everyone gets as much salary and bonus as possible, everyone has insurance, and key employees buy shares to share in the company's development, I've done my part. Being a boss is inherently a lonely profession; make friends outside the company.
As for rules and regulations, every moderately sized company has a big book, but management levels vary greatly. The key is whether the rules are seriously enforced and whether the boss himself recognizes and supervises them. If rules are enforced, personnel management follows naturally. Everything by the book, and the boss doesn't have to scold employees all day. Actually, from the start of the company to now, I've never scolded any employee. A few times, employees who left came back, and the reason was they couldn't stand their new boss's temper. Ha, but I feel I have authority now; at least friends won't say they can't tell who the boss is.
12. Avoid making decisions on the spot In movies, TV shows, and radio, there are often scenes where leaders hold on-site meetings or visit grassroots, and people, young and old, tearfully report problems that local officials have long ignored. The leader waves his hand, angrily denounces the corrupt officials, dismisses or prosecutes them, and solves in five minutes what couldn't be solved in years. It's satisfying!
Not long after I became a boss, as the company grew, my desire to lead expanded. I often made decisions on a whim. Once, salesperson A complained that salesperson B was viciously competing for his client, deliberately quoting a low price so the client didn't buy from A, causing the company to lose profit. I was furious; such selfish behavior couldn't be tolerated. So I posted a notice: for this deal, B gets no commission and is publicly criticized; all commission and rewards go to A. Later, B reacted strongly, saying he had been following this client for over half a year, and the price and model were basically agreed. A few days ago, while he was visiting another client, the client called the company to confirm details, and A answered. A didn't relay the message to B but instead told the client to contact A directly, promising more discounts, almost ruining the deal. I was shocked; it was completely different from A's story. I checked with other salespeople, and B's account was basically true. Oh no, the notice was already posted. What to do? I did some damage control and established rules to prevent similar situations. Reflecting later: why didn't I investigate before deciding? If B had been introverted, he might have left without defending himself, causing greater loss and what would other employees think? I recalled making many hasty decisions recently and regretted them. It seems the bureaucratic phrase "We need to consider and study this" has merit. In the past, the emperor's words were final and couldn't be changed. Today's boss also can't make decisions without thought and investigation; otherwise, with constant policy changes, he'll lose all authority.
Now when employees come to me with problems, I usually say, "Okay, I understand. Let me check and get back to you within a few days." This way, similar mistakes rarely happen. It seems you can't just act for momentary satisfaction; you must consider comprehensively. The higher the position, the more you should avoid on-the-spot decisions. That's why many people feel big companies are slow to respond. If big companies responded as fast as individual businesses, they'd soon become individual businesses.
13. Policy formulation After years of effort, the company finally obtained the Beijing agency for a famous brand. I was thrilled. To complete the annual sales task for this brand in Beijing, the company held a sales meeting. At the meeting, I assigned tasks to each salesperson in detail and set the annual sales target.
Three months passed, and the sales of the agency brand didn't meet the quarterly target. Why? The company's overall sales were good, but the products sold were diversified. Was it that salespeople weren't good at selling the main product? Or was sales training lacking?
I overheard a conversation between salespeople that solved the mystery.
After work, as I was about to leave, I heard two salespeople chatting outside the door.
Salesperson A: "You sold well today; one order was over 50,000. Why don't you push our main product?"
Salesperson B: "Customers are used to another brand. Besides, selling that brand gives me 500 more profit, so my commission is over 100 more."
So that was it. B was not only a key employee but also a small shareholder. If he thought this way, what about others?
I reflected for a long time. The mistake was mine. Selling the main product might yield slightly less immediate profit, but considering after-sales service costs and the manufacturer's promotional support after completing tasks, the benefits outweigh the drawbacks. The key is that employees don't care; they only care about their own gains. After all, human nature is selfish (ha, not in line with the mainstream, not harmonious). The sales policy wasn't well designed.
The next day, I redefined the sales incentive policy, favoring the main product. For selling the main product, not only profit commission but also turnover commission. Moreover, if the quarterly turnover target for the main product wasn't met, it would affect the quarterly bonus. The policy change had immediate effect; in the second quarter, the main product sales target was met.
Generally, employees' interests and the boss's interests are not aligned, and conflicts often arise. Expecting employees to sacrifice personal interests for the company is basically a fantasy. But the boss has an advantage: he makes the policies. He can use people's tendency to seek benefit and avoid harm to align employee interests with company interests, making them rise and fall together. This way, no ideological work is needed; employees naturally work in the direction the boss wants. Like ancient Yu the Great controlling floods: mainly by channeling, supplemented by blocking. A wise policy must conform to human nature; all empty talk should be discarded. Some leaders (including me, who used to think about reducing bonuses and lecturing employees on life philosophy) give grand speeches on stage, sometimes not believing their own words. Who's fooling whom? If there's no benefit and the policy is wrong, preaching is useless. In the last century, the rural land contract responsibility system worked because the policy finally conformed to human nature.
14. Choosing the best of a bad lot The sales department had no supervisor for a long time; I managed over a dozen salespeople myself. It wasn't that I didn't want to set up a supervisor, but I felt the key employees were similar in ability, with no one outstanding. Also, due to industry constraints and the sales policy, each salesperson basically worked alone, with little cooperation, and over time, they became selfish. Other employees were less capable and had high turnover, so the sales department had no head.
So every day, besides communicating with other department managers, I had to manage the sales department's dozen or so people in detail. It was driving me crazy. When the sales department needed coordination with other departments, since it had no supervisor, other managers often didn't cooperate. Status wasn't equal, so they came to me. Ugh.
Unable to bear it, I decided to promote a sales supervisor from the existing staff, even if not ideal.
I set promotion criteria based on performance, ability, and relationships with colleagues. Finally, I selected a supervisor. Although not perfect, I'd train him on the job.
A year passed, and the supervisor wasn't outstanding, but he managed daily affairs well. Previously, I had to personally assign tasks like unloading goods, cleaning the sales area, and holiday duty scheduling, often playing both good cop and bad cop. Now, with a supervisor, since he gets a few hundred yuan more in position allowance, he should bear more responsibility. "He who eats the king's grain should share the king's worries." I just tell the supervisor to arrange things. I also delegated tasks like contacting manufacturers for new product training and coordinating with other departments. No major mistakes in a year. It seems having an ordinary supervisor is better than none. People's abilities aren't innate; like bees, they're all the same at birth. If you feed them royal jelly and raise them as queens, they can become queens.
15. Some things are better transparent Bosses, when announcing sales policies, usually hold back on actual product costs, whether to employees, partners, or downstream distributors. They don't reveal the true bottom line.
In 2006, due to business expansion, we set up a branch in a city near Beijing. The branch was established by acquiring part of a local partner's shares, with our company sending key employees. The local partner, General Manager Ma, continued as GM, handling daily operations. Since it was a mature, profitable enterprise, we didn't worry about losses in the first two years. At the start of cooperation, we agreed: the branch would be the sole distributor for one of our agency products in the local area, enjoying the same bottom price from the manufacturer and the same promotional policies as us, receiving business guidance from headquarters, and at year-end, profits would be divided according to shareholding.
After everything was on track, I handed over the branch's business to Vice President Lao He, who managed the channel. Until year-end, things were fine.
The second year, conflicts arose. Since the branch needed VAT invoices for purchases from headquarters, and each time headquarters had to send a vehicle to pick up goods from the manufacturer's warehouse, deliver to the freight station, and then to the branch city, this incurred significant logistics and tax costs.
Lao He, considering the costs had no source, quietly kept 2% when sending product quotes and manufacturer policies to the branch. Walls have ears. Branch GM Ma, with years in the industry and contacts with distributors nationwide, saw through the policy within a month. At a manufacturer's sales meeting, Ma confronted Lao He, who tried to cover up, and they almost fell out.
Ma lost all trust in Lao He and came directly to me, saying if this issue wasn't resolved, cooperation couldn't continue.
I calmed him down, showed him the original agency agreement with the manufacturer, and detailed the costs of picking up goods, shipping, capital occupation, storage, and taxes, calculating that they amounted to about 2% of turnover. After seeing this, Ma was appeased and admitted that as long as I didn't hide the manufacturer's bottom price and policies, he could understand and accept the 2% cost. I then promised to leverage the combined sales volume to apply for more promotional support from the manufacturer, ensuring the branch enjoyed better prices and policies than if it operated independently. Ma left satisfied, and the dispute dissipated. I thought: what partners ask for is just the right to know, the right to equally understand the manufacturer's true sales policies.
In today's highly connected world, it's hard to keep secrets. The days when the south side of town knew about a two-cent discount on cloth half a month later are gone. As long as it doesn't involve personal privacy or affect the company's fundamental interests, our company's affairs are basically transparent. The bottom price of goods is disclosed to all salespeople, with explanations of how logistics, storage, taxes, and other costs are amortized, and a minimum sales price is set. Everything else is up to the salesperson. This not only enhances mutual trust between employees and the company but also simplifies many intermediate sales steps and improves response speed.
16. Distributing labor protection supplies When the company was first established, I was used to the state-owned enterprise practices, occasionally distributing labor protection supplies like beverages and cooking oil during holidays. Each time, the company sent a vehicle to purchase them, causing a commotion. Employees took them home by bike, taxi, or in bits and pieces. Later, as the company grew and business got busy, we gradually stopped distributing such supplies.
Last year, before the Spring Festival, I visited a friend's company and happened to catch their holiday distribution. Each employee got two bundles of toilet paper, a small barrel of cooking oil, several large bottles of cola, and a box of tangerines. A dozen or so employees each had a small pile, and many were worrying about how to take it home. Taking a taxi wasn't worth it, and taking the bus was impractical.
I entered my friend's office; he was doing calculations. Seeing me, he grinned and said:
"See how lively our company is? We're distributing holiday goods."
I asked, "Why distribute those things? They're hard to carry."
My friend said with an air of wisdom:
"You don't understand. When employees take these home, their families see that our company has good benefits. It gives employees face. These items cost only about a hundred yuan per person but look like a lot. What a deal."
I then asked, "Your employees have been asking for social insurance, right? Why not use the money to provide insurance instead?"
"Who wants that? It costs the company several hundred yuan more per person per month."
After the holiday, many key employees left my friend's company.
In March, when we were recruiting, one applicant had previously worked at my friend's company.
I asked, "Why did you leave? The original company seemed good; they even distributed holiday goods."
He said disdainfully, "Those things, totaling about a hundred yuan, who are they fooling? They didn't provide social insurance, didn't honor year-end bonuses. The boss was too calculating."
Hearing this, I felt ashamed. In the early years when I distributed labor protection supplies, I also secretly hoped to save on bonuses. Employees must have been complaining privately.
In today's society, who's fooling whom? The boss knows toilet paper isn't worth much, and so do employees. Goods are in oversupply; supermarkets have everything, clearly priced. When making decisions, the boss should consider things from the employees' perspective to avoid low-level mistakes. Otherwise, thinking you're smarter than others will eventually lead to a fall.
17. Financial system: signatures and vouchers A few years ago, one day I was at my desk editing an ad, when I heard arguing from the finance office. Soon, cashier Xiao Li and salesperson Xiao Ma came to me, red-faced. Xiao Ma said:
"Last Friday, I handed a 3,000-yuan check to Xiao Li. Today, the accountant asked me to pay the goods amount. I said I gave it to Xiao Li, but she denies it."
Xiao Li, in tears, said, "I never received that check. I just searched all the folders and checked the bank statement; it's not there."
Xiao Ma said, "I clearly put it on Xiao Li's desk. How could it be missing?"
Xiao Li said, "Manager, you can ask the finance office staff; they can all testify that I never received Xiao Ma's check."
A confusing dispute, giving me a headache.
I said, "Go search the finance office thoroughly, including corners, behind cabinets, and under desks."
Ten minutes later, cheers came from the finance office. The check was found in the gap between two desks.
This incident deeply affected me. There were loopholes in the financial process. If the check hadn't been found, whose responsibility would it be? Even I couldn't decide. The company had always been strict with cash: when salespeople returned cash, the cashier on duty would receive it, verify authenticity, and issue a cash receipt to the salesperson, stating the amount, payer, customer name, date, and signed by the payer. The salesperson gave one copy to the accountant for bookkeeping, and the accountant daily reconciled cash based on receipts. Cash had never had issues. But check management was lax; salespeople just handed checks to the cashier.
After this incident, the company immediately changed the process: when the cashier on duty receives a check from a salesperson, they must sign the salesperson's work order to confirm. The salesperson must also note the check number and amount on the work order beforehand. In case of disputes, it's easy to check. This chain of responsibility clarified accountability and made similar disputes unlikely.
Summarizing years of lessons, I think a company must have a sound financial system that is strictly enforced. As the company grows, staff quality varies. If there are loopholes, someone will exploit them for illegal gains, harming the company and setting a bad example. Other employees might feel they're at a disadvantage if they don't exploit the loopholes, and the company culture deteriorates. The boss will be crying too late. A thousand-mile dike collapses from an ant hole; any small financial loophole should be plugged. Also, original vouchers are crucial. A good memory is worse than a bad pen. No one can remember every expense detail from a year ago, but a standardized original voucher can. Financial systems and standards have their reasons; sometimes they even limit the boss's freedom. But whether financial staff are complete and the system is sound is one of the key differences between running a business and being an individual operator. When we grow from a solo or family business to three or five people, this link is unavoidable. Unfortunately, I was ignorant of this and had no mentor, so I took many detours in the early days. Otherwise, I'd have gotten rich sooner.
18. On shareholding, dividends, and year-end bonuses Different companies have different shareholding methods. I don't fully understand how listed companies calculate and transfer share prices. I guess everyone considers fixed assets, working capital, annual profitability, intangible assets, price-to-earnings ratio, debt ratio, etc.
In my company, when employees buy shares, we don't calculate intangible assets or P/E ratios. The boss gives up profits, and employees get real benefits. We only calculate net assets. At year-end, the accountant produces a report listing fixed assets, working capital, receivables and payables, deferred expenses and depreciation, annual profit, expenses and taxes, etc., clearly. This is open to all key employees interested in buying shares. Since employees usually trust me, most don't even look at the report; they're satisfied knowing the net asset value and the approximate annual dividend and appreciation ratio. Of course, the proper method would be to have a third-party accounting firm assess assets and issue a report, but employees think it's unnecessary, so I'm happy to save the trouble. After employees buy shares, the company gives each a receipt stating the investment amount, and signs a shareholding agreement with each shareholder, detailing the actual investment, percentage of total shares, annual dividend plan, rights and responsibilities, and share redemption method. Both parties sign and seal, each keeping a copy. That's it. As for employees wanting to redeem shares after five years, we set either redemption at the current net asset value or at three times the actual investment. Now, the first batch of shareholders has long passed five years, and since the company is doing well, no one has redeemed.
When buying shares, I noticed a phenomenon: sales department employees are most eager to buy shares, while finance department employees are the least. This probably relates to the nature of their work and how they view things. Salespeople are proactive and impulsive, often focusing on the positive and ignoring the negative. Finance people are cautious, tending to see the negative and ignore the positive. So when making major decisions, I often listen to both departments and balance their opinions.
Mengniu's boss Niu Gensheng said well: "When wealth is gathered, people scatter; when wealth is scattered, people gather." Giving employees a share of the company not only retains talent but also motivates them to work better, because giving shares also gives responsibility. When a boss gives away more than 50% of the company's shares to employees, he must feel the burden on his shoulders lighten by more than 50%, and he can relax on vacation with his family. Actually, a controlling shareholder doesn't need to own more than 50% of the shares. If each small shareholder owns less than 5%, then owning 20% to 30% makes you the absolute largest shareholder. You wouldn't be so bad that all small shareholders unite against you.
In the early years, I distributed 30% of annual profits as dividends. Although the total was significant, for small shareholders, it was somewhat negligible. In the past two years, following advice from wise people, on one hand, the company's own funds are sufficient for daily operations; on the other hand, inflation is high, so I raised the year-end dividend ratio to 60% of net profit. When the news was announced, small shareholders were overjoyed, and some hesitant employees came to ask about buying shares.
Year-end bonuses used to be allocated by me personally. Now that the company has more people, I can't know every employee's work details. So the company sets a total year-end bonus based on annual performance, then I allocate it proportionally to departments based on their contributions and headcount. Department managers and the HR manager then distribute to each employee according to assessment criteria. Finally, I only need to assess department managers' year-end bonuses based on their department's annual performance.
Previously, year-end dividends and bonuses were treated as expenses amortized monthly in the following year, which wasn't scientific. Now we accrue monthly in the current year, setting aside these expenses from monthly profits. This way, when distributing bonuses at year-end, we know exactly how much we have, and each department has a basis for calculating its total bonus.
19. On raising wages Thinking about this problem gives me a headache. In the past two years, prices have risen sharply, inflation is high, and monopoly industries and civil servants have loudly raised wages. Company employees also discuss it, often asking, "Boss, when are we getting a raise?"
I'd like to raise wages, but the products we sell in this industry are constantly being discounted, squeezing profit margins. Also, due to the mandatory social insurance and housing fund, the cost per employee has increased by nearly 10,000 yuan per year compared to a few years ago, but this increase isn't in employees' hands, so they don't see it. Alas, even the landlord has no surplus grain.
Management books often say: give employees lofty ideals, create development space, plan personal careers, analyze the company's current situation and long-term plans, inspire team spirit, and boost morale. Through years of practice, I've found it's really hard to do all this perfectly. I'm not good at speaking, and giving pep talks isn't my strength. Besides, spiritual motivation without material rewards only works temporarily. The wage issue can't be avoided.
Most ordinary employees, except shareholders, aren't interested in the company's operational difficulties. They think if the company isn't doing well, it's the boss's incompetence; their wages should still rise. If they don't get a satisfactory raise, they'll vote with their feet and leave for a higher-paying job.
Since this issue can't be avoided, I need to solve it. According to the Pareto principle, 80% of the company's profits come from 20% of key employees. So the primary task is to retain these 20%. The company can afford to raise wages for these 20%. For the other 80%, adjust wages modestly based on years of service, do more ideological work, and if that fails, let it be. In recent years, 85% of key employees have been stable, and the company hasn't had major upheavals.
There's a department with three employees: Master Zhang, Master Wang, and Master Li. All three were laid off from state-owned enterprises. Master Zhang has been with us for six or seven years and is hardworking; Master Wang has been here four or five years and is steady; Master Li has been here two years and sometimes slacks off and complains. One day, Master Li came to me and said, "Manager, our department's wages haven't been raised in a long time. The masters work hard. Could you consider a raise? Otherwise, it might affect morale. I've discussed it with the other masters, and we'd like to have a meeting with you."
I understood immediately: Master Li had likely rallied the others to confront me. This trend must not be encouraged, or everyone will follow suit and chaos will ensue. Besides, the department's average wage was already above the industry average. So I replied:
"I'm busy these two days. How about a meeting after work the day after tomorrow?"
"Great," Master Li smiled.
The next day, I found an opportunity to call Master Zhang into my office. After some small talk, I praised his daily work, then told him that given his consistent hard work, starting next month, he'd receive an additional quarterly bonus, but this extra reward was only for him, and I asked him to keep it confidential. Finally, I asked his opinion on the department's current wages. He said:
"Manager, I think the current wages are about right. Of course, for long-serving employees, it's a bit low. With the quarterly bonus you've given me, I'm satisfied. I promise to work hard!"
Near the end of the day, I called Master Wang into my office. Similarly, after small talk, I said to Master Wang:
"This year, the company's profitability is difficult, so we may not be able to raise everyone's wages. Due to declining business volume, your department may need to reduce one person soon. The other two will be busier, and the company will consider increasing their year-end bonuses. Do you have any suggestions?"
Master Wang thought for a moment and said, "Manager, I understand. I think the current wages are fine. When profits increase, you'll naturally consider raises. I have no complaints; I'll work as usual."
On the third day after work, the meeting was held as scheduled.
First, Master Li spoke: "Manager, the three of us discussed it, and we all feel the current wages are low. Could the company consider a raise? Otherwise, it might affect morale, which isn't good for the company."
I said, "Your department's wages are already relatively high in the industry. This year's market is tough, the company is adjusting, and we've launched new projects. Profits will likely be lower than last year. I hope everyone can bear with it. When profits increase, everyone's wages will rise."
Master Li was displeased: "Manager, company profits are the manager's concern, not ours. If profits decline, it's the boss's incompetence. Employee wages shouldn't be affected; they should still rise. Besides, we work for money. We do as much as we're paid. Right, masters?" Master Li turned to the others.
Master Zhang and Master Wang showed no expression and said nothing.
The meeting continued for twenty minutes, with me explaining a bit and Master Li making impassioned speeches. Suddenly, Master Zhang said, "Manager, I just remembered there's a job that must be finished today. I need to leave now."
"Okay, thanks for your hard work. Go ahead," I replied.
"Manager," Master Wang took the opportunity, "I have a stomachache; I need to use the restroom."
"Go, go. How can I not approve a restroom break?" I said.
In an instant, only a stunned Master Li remained at the meeting table.
20. Fully utilize technology for management Modern technology advances rapidly and solves many management problems.
When the company was first established, attendance was recorded by an attendance clerk. But this had many problems: first, there was no guarantee the clerk would be on time; second, when the clerk was on leave, no one replaced them; third, the clerk had varying relationships with other employees, so impartiality wasn't guaranteed.
In the late 1990s, time clocks became popular. We bought one and placed it at the company entrance. Employees punched in and out, and at month-end, HR could easily tally. But soon, proxy punching appeared; employees with good relationships punched for each other. Although we severely punished those caught, it was hard to stop.
In the new century, fingerprint technology matured. We bought a fingerprint attendance machine for a few hundred yuan, completely solving the problem.
So far, no employee has borrowed another's finger to punch in.
As sales outlets increased and offices became more dispersed, management became more troublesome. Sometimes a product would be overstocked at outlet A for half a year, while outlet B would reorder it for a customer order, due to poor communication between outlets.
Four or five years ago, we spent a significant amount on a network-based financial software, enabling real-time communication between outlets, the Beijing headquarters, and the branch. All inventory was visible at a glance, each salesperson's transactions were traceable, receivables and payables were clear, and reports were available on demand. I no longer had to ask the accountant: "What's the current inventory? How much is in the account? What's so-and-so's sales this month?" With a computer connected to the internet, anytime, anywhere, I could get the data I needed with a click.
Recently, to improve the quality of after-sales service calls and reduce customer disputes, we installed a recording card on the company's phone system. All incoming and outgoing calls are recorded. Customer service staff regularly listen to recordings, analyze each person's strengths and weaknesses, and discuss improvements. After a while, I noticed not only improved phone skills but also reduced phone bills. Probably because employees were embarrassed to make personal calls when they knew calls were recorded. Killing two birds with one stone.
Using technology to manage the company not only greatly improves efficiency but also avoids deviations caused by human factors. With labor costs rising, purchasing advanced equipment to replace manual work is a good way to save costs.
21. From result management to process management For a long time, the company used result management. At the beginning of each year, we set annual task indicators, then allocated them down to departments, then to individuals. Each person broke down the annual task into monthly targets based on historical data. The company set assessment standards based on each person's monthly tasks. At the beginning of each month, finance summarized the previous month's completion, submitted reports to department managers and the GM, who studied them and formulated new policies, providing individual coaching or adjustments for those who didn't meet targets. This traditional method was systematic and feasible, but with increasing competition and faster market changes, our management method lagged behind competitors. If a problem occurred at the beginning of the month, it wouldn't show up in reports until the next month. After the manager revised policies and deployed them in meetings, 40 days had passed. Sometimes 40 days is enough to turn a small problem into a big one.
Recently, I learned about Dell's management of its sales department. Dell initially assessed salespeople monthly, then weekly, and finally daily. Every evening, sales supervisors collected and analyzed the day's sales reports. Those who met targets were fine; those who didn't were kept behind for individual coaching, analyzing failure reasons, formulating new action plans, and planning the next day's tasks. The next evening, they reviewed the previous day's plans and set new ones. After this improvement, Dell's sales performance greatly increased. Of course, salespeople were nearly driven crazy; it's said few can endure more than three years in Dell's sales department.
"Stones from other hills can polish jade." Although daily assessment is still unrealistic for us, weekly assessment is feasible. So we changed the business department's reports to weekly summaries. Every Monday, we must summarize and verify each person's business activities and task completion from the previous week. We take immediate action on anomalies and have one-on-one talks with underperformers to understand and solve problems. After implementing this for a while, I felt the company's response to the market greatly improved, and managers at all levels had a better grasp of actual business conditions. Problems in the current month no longer had to wait until the next month to be discovered and solved.
I've been pondering whether non-business departments could also adopt process management, which would greatly improve the company's overall response speed, promptly surface and solve problems, and strengthen execution. However, since non-business departments lack hard numerical indicators, achieving process management might be time-consuming and labor-intensive.
Source: Maicang
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