Don't be blinded by Management Speak

Don’t be blinded by Management Speak

The most successful sales motivator is FEAR.

Therefore everyone will try to put the fear of death into you. So how do they do it?

Their most popular method is to use words or acronyms you don’t understand or to use words in an unusual meaning and then to make you feel ignorant that you don’t know them. As you think you may indeed be ignorant and that you should know these words, you are fearful that something dreadful will befall you.

Let me try to debunk some of the mysticism, but let’s be fair - you do it yourself as indeed sometimes even we do. If we really used straight-forward English and explained everything absolutely to the fullest degree then possibly some clients could do the work themselves, without needing those services:

- Activity Sampling, a valid statistical method to enable you to measure work-load for a complete department just by sampling their activities. If it is done with discipline and over a sufficiently large sample the results can be trusted. It therefore saves a lot of time and effort.

- Bad Debts, the unpaid invoices where you have evidence that they are not going to get paid, a total write-off, genuine unadulterated NET LOSS

- Bank Overdraft facility and Business Plan, it would appear that normally bankers want a Business Plan because that’s what it says in their Standard Operating Procedures. The real problem is that they don’t normally understand a Business Plan unless there are lots of people doing the same thing, whereas you want to be unique.

- Broadband, a common phrase, to describe the power of the telecom supply. Most broadband adverts only specify the maximum they can deliver, what they actually deliver is something like a 640 baud modem.

- Business Activity Monitoring, is the use of computer software to trawl through your business data to monitor, as defined by you, your business activity and to report it to you by email. It may relate to ‘exception reports’, or summary performance or to Key Performance Indicators
- Business process re-engineering, (BPRE) to change how you handle things in the office, whether it’s who does it, how it’s done, what sequence is it done in, etc. the classic who, what, why, when, where and how

- Change Orders, are required, when the customer changes part of their requirements, in order to cover both a changed specification (and therefore of sign-off) and a change in the costs payable by the customer. It needs to be signed by an authorised official of the customer

- Continuity Planning, this is very real, at its worst level you’re not here to worry about it. You are deemed to have taken action to protect your business, your customers and your staff, to provide cover for anyone unable to fulfil their role in your business, whether for a short period or for a longer period. Actually it’s very useful for handling holidays (a good practice for testing the plans) and then you can cope with illnesses.

- Credit control, trying to ensure that the amount of money you have lent to people and companies, who you’re not sure will pay you, is not excessive, rather than trying to ensure that they pay you on the due date

- Credit management, to pay a third party to recover the money you didn’t want to lend in the first place

- CRM, Customer Relationship Management software, the term has the right objective but has been devalued by the poor quality of some of the original software and by the minimal design of some modern software. The objective should be to ‘enable you to deliver an exceptional service.’

- Debtor Days, the total of the outstanding invoices divided by the average daily sales last year. This should be in line with your terms of business, but don’t forget thirty days from end of month after date of the invoice is actually 45 days on average before you get to the due date. Is this what you really meant?

- Depreciation, a word designed to confuse, it’s the notional amount set-aside from the trading profit each month, to spread the cost of a capital item over the profits arising during the expected life-time of the equipment or over the expected life of the product it is used for. Unless the asset is leased I am of the opinion that the whole cost should be written off in the month it is purchased. After all the primary decision was that you’ll make extra profit as a direct result of the purchase and you do need to replace the cash you used as soon as possible

- Disaster Planning, this is real, but just frightening and it’s about any external happening that’s outside your control SLERPT, Social, Legal, Economic, Religious, Political and Technological matters plus floods, fire, Acts of God etc. You are deemed to have examined and taken action to protect your business, your customers, your staff,

- Document management software, seems to be for big organisations and relates to converting paper documents into digital documents which are then kept in digital filing cabinets. It doesn’t seem to be integral with the business process as a whole, but rather is separate from it.

- Doubtful Debts, those outstanding invoices which are months past their due date and your customer is not paying and won’t take telephone calls. You need to decide whether there is any merit in spending any money on trying to get the money in

- How to understand a Balance Sheet, it’s dead easy, please refer to my screencast

- Invoice factoring, to lend you some money against the value of your sales invoices, for three months with a limit on the overall level advanced, and sometimes without making any effort to get your money in earlier than the three months

- Organisation and Methods, very similar to BPRE, a formal review of the methods (and equipment) of organising your routines and running your business coupled with how you organise your people. Most operational change is triggered by more advanced technology becoming available. Early adopters have the opportunity to steal a march on their competitors, late adopters may have to be classified as ‘Me Too’ people now frightened of being left behind.

- Pareto Rule, 80/20 Distribution, shows that with few exceptions everything fits this standard statistical distribution. I think it is another way of looking at the bell-shaped distribution where the main bulk of the results are within ‘twice the standard deviation.’ By ‘everything’ we can be talking about IQ levels in the population, the distribution of wealth, besides looking at product categories or deciding on stock-taking policies

- Qualified Prospects, those people you meet who business and needs fit the criteria of ‘your most likely customer’ regarding type of business, their perceived needs, their probable decision time-frame, their ability to authorise the work

- Royalties, the amount paid to the people who had the original idea and charge you for using the idea, so named as they now live like royalty

- Sales Opportunity Management, the control of the process from a person being a Qualified Prospect through to becoming a customer; that is the control and motivation of sales people

- Self-billing, an organisational device to enable you to have accurate profit reports at the earliest opportunity. We still face the problem that suppliers are poor at sending in their invoices (normally we don’t complain as the delay helps us cover the funding need caused by people who don’t pay us), however if we have issued a purchase order, including the price, and if we are satisfied that the work has been completed to our standards and we have signed it off, then we know how much needs to be paid and it is correct that we should pay it. Therefore we can self-bill and pay the precise amount shown on the purchase order. We then process the ‘self-billing invoice’ as a purchase invoice, transfer the funds and send a remittance advice informing the supplier that the payment has been made for the work contracted for.

- ‘To measure profitability you need an accountant,’ well not really. You buy something for £1, add 10% and then sell it for £11. Provided you bank the £11 then you’ve made £10, that’s measuring profitability. (OK so I ignored the maths.)

- TQM, total quality management, I think it means the same as ‘fault-free’, certainly they both mean a change in the mindset of the organisation, because you need to put all the extra effort and management thinking into getting it ‘right first time’ rather than expecting problems to occur later which then they have to be sorted out. Let’s design ‘totally fault-free’ into all our systems, products and services.

- Work-in-Progress, the value of materials purchased and the manpower content for products and projects not yet invoiced to customers, whilst it may be necessary for the profit and loss account, I think you’ll get levied for Corporation Tax on it this year rather than when you’ve received payment on selling them.