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Edition 208 – Stupid Corporate Management Philosophy

Today’s edition of Growth is an example of something that most family business owners and managers would consider stupid – and have probably experienced themselves at some stage.

I was with one of my great clients early in the New Year. They’ve been in business, successfully, for a long time. They’re experts in their field and are known industry wide for their incredible knowledge and product range.

We were talking about their business performance when one of their customer’s names, a large Australian corporate, popped up.

This large Australian corporate, whose customers must pay for their purchases before they leave the premises, owe my client close to $200K. For a family business, that’s a lot of money to be owed, particularly over the Christmas period.

Upon spotting this, I asked the question I’m prone to asking in lots of these situations. Why?

My mantra for a long time has been “numbers are numbers until you drill down on them – then they are reasons”. Well, here’s a reason from the Stupid Corporate Management Philosophy handbook.

The close to $200K was made up of a number of items – some bigger, some smaller. I can’t remember, but maybe there were 20 separate purchases in amongst this amount.

One of the purchases was for $860. It was a part for a machine that my client had not been able to source until the New Year. Every other item ordered by the large Australian corporate had been delivered. In other words, of the close to $200K, $860 of the order had not been filled.

So, in their infinite wisdom, the large Australian corporate say to my client “we’re not paying you any of the outstanding amount until you can supply the item that’s on back order”! Period!

In other words, whilst you’ve filled almost $200K of our order, because there is a  back order for $860 that you can’t yet fill, we’re not paying you anything. Sorry, that’s our policy with suppliers!

If that’s not Stupid Corporate Management Philosophy, then I don’t know what is! If it’s also not unethical business behaviour towards small and family business from a large corporate, then I need to start lowering my standards.

Whilst we’re talking about a large Australian corporate, I’ve seen this sort of attitude pop up in family businesses in the past, sadly. So, here’s the lessons for today:

  1. What seemingly rigid policies do you have in your family business that could be singling you out as inflexible to your suppliers or customers?
  2. What are you doing to encourage a common sense approach amongst your team when they’re engaging with your suppliers or customers?
  3. What processes are you forcing those interacting with your business to partake in to make it easy for you – and in the process, make it frustrating for them?
  4. How easy is it to do business with your family business?
  5. What are you doing to find out, from your customers and suppliers, what their experience of dealing with you is like?

What are you doing to encourage common sense amongst your team to ensure that customers and suppliers are treated with respect and decency in the modern business world.