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How a Compelling Organizational Purpose Enhances Creativity

FEATURE

How a Compelling Organizational Purpose Enhances Creativity

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by Mark Marone, Dale Carnegie Training

In Start with Why, Simon Sinek points out that “Happy employees ensure happy customers. And happy customers ensure happy shareholders—in that order.” How do we inspire happy employees willing to look for new and better ways to make customers happy? Start by giving them something purposeful to work toward.

Importance of An Organizational Purpose In Motivating Employees

An organizational purpose answers the question “Why do we do what we do?” A meta-analysis from the Harvard Business Review led them to declare unequivocally that “why we work determines how well we work.” And there are plenty of case studies to prove this. LEGO, Apple, Starbucks, and Schwab were all famously reinvigorated by their CEOs recommitting to the organizational purpose.

In a McKinsey report, 82% of responding employees said it’s important to have a company purpose and 72% said that purpose should receive more weight in decision making than profit. That’s because organizational purpose is a great motivator for employees.

Employees with strong intrinsic motivation are more engaged, take more initiative, and are more creative than their counterparts. More importantly, people’s innate creativity is more likely to become useful innovation when it is focused on achieving the organization’s purpose. The reasons for this become clear when we consider the journey a creative idea takes to become an innovation.

From Creativity to Innovation: How Organizational Purpose Affects the Idea Journey

Not all creativity is useful in business. It can even become a distraction, if it isn’t focused on achieving the organization’s purpose more fully or in a faster, more efficient way. A potentially useful creative idea is born when an employee recognizes an opportunity. But it’s tough to get inspired by work that exists only to turn a profit. It’s a compelling organizational purpose that feeds people’s intrinsic motivation to come up with novel ideas and solutions that can become beneficial innovations.

In the second phase of the Idea Journey, the creative idea is shared with others. This requires a high level of psychological safety where employees feel safe bringing up and responding to challenges to the new idea and suggestions for improving it. Nonetheless, there is always some level of risk in sharing a new idea with others, and viewing the idea as connected to something bigger (i.e. delivering on the purpose) gives people an incentive to take that risk. The organizational purpose at this stage also keeps feedback focused and people aligned as they shape the idea further.

When the creative idea is ready to share more broadly with people who have the authority to give it the go-ahead, the organizational purpose is also important. An idea that is aligned with the company’s purpose naturally has an advantage in overcoming the inertia of the status quo. It makes it easier to express the idea’s relevance, show how it is aligned with priorities, and justify the allocation of resources.

Finally, people must work together to turn a creative idea into an innovation. During the implementation phase, seeing the connection between the new process, practice, product or service and the organizational purpose engages employees, increasing the likelihood they will put forth their best efforts.

Why Do We Need to Write Down Our Organizational Purpose?

A written-out purpose is the first step in communicating the organizational purpose and inspiring intrinsic motivation within employees.

Leaders at every level of the organization are key to bringing the purpose to life by consistently incorporating it into their communication and by clearly connecting people’s tasks to achieving that purpose. They can’t do that if they aren’t completely clear on exactly what the purpose is.

Crafting a Purpose that Promotes Creativity in the Workplace

A great way to start is to involve employees directly, even if you think that everyone in your organization already understands the purpose. In fact, one way to test that hypothesis is to simply ask people to write down what they think the organizational purpose is. You may be surprised at the variation in responses.

You can also start by asking workers at all levels what they find meaningful in their work. Together, also try answering some of the following questions: • Why does the company exist – what problem does it solve for people? • Who are we helping by doing it? • Why does it matter? • What values does the company and/or its founders believe in?

As you gather responses, the organizational purpose should begin to emerge. With the “what” and “why” clear, employees will be inspired to find better answers to the question of “how” – using their creativity to drive the innovation that can help organizations achieve and sustain success.

About the Editor

Robert Graves, MBA, is a Dale Carnegie Certified Trainer for Rick Gallegos and Associates. His focus is Relationship Sales and Customer Service. He is the author of “Making More Money with Technology.” He often speaks on the evolution of Marketing, Sales, and Service. Robert can be reached at robert.graves@dalecarnegie.com or call/ text 813-966-3058.

About Dale Carnegie

Dale Carnegie is a global training and development organization specializing in leadership, communication, human relations, and sales training solutions. More than 9 million people around the world have graduated from Dale Carnegie training since it was founded in 1912. Dale Carnegie Training can help an organization build effective interpersonal skills that generate the positive emotions essential to a productive work environment and that lead to increased employee engagement.

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FEATURE

How To Stop Buying Into Projects With Your Own Money

by Duane Craig, Writer

When you first saw the project, you thought the scope was too optimistic for the budget. But, you wanted to work with the owner, so you let the optimism take over. You started doubting your best estimate and began gradually convincing yourself it was probably too high. You signed the contract, but now, a few months into the work, you find yourself buying into the project with your own money. The money you’re losing on work that should have cost more. While it might be too late for this project, here are some strategies to keep it from happening again.

Stay Pessimistically Realistic

Optimism sinks more projects than anybody wants to admit. There is a place for realistic optimism, but only if it’s tempered by realistic pessimism. To understand why you should be pessimistic about any project, just consider the risks. You can’t control the weather. You can’t control the local zoning or approval authorities. You can’t control the material sources. You can’t even really control the labor force you’ve got. So why be exuberantly optimistic about finishing on time or coming in under budget?

But, with a realistically pessimistic outlook, you can see the risks clearly. This allows you to plan for them or mitigate them. That can get you to realistic optimism. That’s the best place to be when talking with a potential client, when estimating, and when imagining a schedule.

Be Very Thorough in Your Estimating

Don’t give “best guess” estimates, or put it in writing that the estimate is only preliminary and state clearly that it will definitely change. Don’t say “may change.” Say it will definitely change. While starting out wishy-washy might get you the contract, it also sets the tone for the rest of the project, signaling to the potential client that you are flexible on everything.

With client expectations set, go to work on the best estimate you’ve ever done. Factor the variables, account for unknowns, test the work breakdown, confirm your costs, and verify the methods. While you’re at it, try to line up alternate sources for specialized components and equipment. Finally, test your subcontractor bids against the proposed scope to confirm they are realistic and complementary to the overall project budget.

Then, put on your pessimistic hat, and ask yourself what could possibly go wrong. Adjust the estimate accordingly.

Stand Firm

Once you have a well-defined scope, an estimate you’re confident about, and a signed contract, resist changing the scope or price without a change order or a contract change. Some clients see the budget as just a starting point, hoping for it to get lower as you get more invested. But you’re already deeply invested at this stage.

Some clients talk about doing some of the work themselves or hiring others to do it while chipping away at your portion of the scope. If you go along and adjust your price, you’re in for a rough ride. This is simply changing the contract terms without actually changing the contract. Remember that clients can also grow to expect favors.

Make sure your team knows where the contract ends and favors begin. If your sub, a crew leader, or a super starts doing favors for the client, that’s the same thing as scope creep, but you’re paying for it. Your team should know the rules of engagement so when a client goes behind your back, they can politely ask them to check with you or whoever you have in charge.

Don’t Over Promise

It might make the potential client’s eyes light up when you promise them to hit their unrealistic deadline, but it’s a foolhardy move on your part. Instead, it’s much better to work with them to adjust the scope or the deadline so the promises you make are promises you can keep.

Don’t Under Deliver

It might be tempting to cut corners once you see you’re investing your own money in the project. However, new problems show up in rework or warranty issues later on. A well-worn phrase is quite accurate: If you don’t have time to get it right the first time, where will you find the time to get it right later?

Using change orders to make up for poor management or sub-quality work creates a double-edged sword. This approach will eventually have you fighting with the client over every change, and when the project’s over, your reputation will take a hit. You’re better off figuring out creative ways to deliver what the client wants without sacrificing quality.

Can you get more efficient by adopting new or different technology? Can you improve the mix of labor so your highestpaid employees can reach maximum productivity? Can you use a different type of equipment to speed up work or to allow moving workers to better-suited jobs? Can you convince the owner to make a scope change that provides equal or better benefits while saving you cost?

There are many ways to lose money on projects. When you eliminate inadvertent investments of your own money, you open the door to better profitability.

About the Author

Following roles as photojournalist, education director, landscaper and residential project manager/ superintendent, Duane Craig moved to writing for a less stressful life. For the past 14 years Duane has covered the construction, food, finance and tech industries. This article originally appeared on Procore’s blog, on Mar 6, 2022.

FEATURE

Lowering DSO: Best Practices to Get Invoices Paid Faster

by Patrick Hogan, Handle.com

In construction, finance and credit managers know how crucial it is to keep a pulse on their DSO. Daily Sales Outstanding or DSO is a critical metric that provides a snapshot of how long it takes to collect on credit sale invoices. A higher DSO means significant work needs to be done to get invoices paid faster. A low DSO can indicate a healthy clientele that pays on time but can also indicate conservative selling and the prospect of extending more generous credit terms to increase sales.

DSO is typically measured regularly –monthly, quarterly, and annually. The DSO for a definite period is calculated using this simple formula:

Strategies to Lower DSO

Improve customer experience

Getting invoices paid faster requires a multi-pronged approach. One primary strategy you must consider is improving the overall customer experience around payments. Delivering a great experience to customers doesn’t end with product and services. For payments, there are several ways to ensure that the process is as seamless as possible for customers.

Providing preferred payment methods

Ensure that you know what payment methods your customers prefer. In the past, most construction transactions were made through cash, checks, or wire transfers. These days, more and more buyers prefer to pay via digital channels. They may also want to have a way to pay directly from the electronic invoices you send. Credit cards remain popular, and there are many ways to integrate credit card payments with digital invoicing and billing.

Regular billing and invoicing

To stay top of mind of your customers’ accounts payable teams, it’s best to ensure regular invoicing and billing. This allows your customer to make timely payments and not have invoices stacked together for each payment cycle. Disputes and discrepancies can also be discovered earlier when invoices are sent regularly.

Itemized invoices and statement

Ensure that your invoices have all the information customers might need to process payments. Some customers will have their own A/P software that will require specific data to process payments–it’s best if your team finds out about these details early on. Inquiring about their invoicing preferences at the beginning of the customer relationship is a best practice.

Incentivize early payments

In construction, late payments are almost the norm. Most customers are used to getting slapped with late payment penalties, and some may have even incorporated these fees into their internal budgets to hold on to cash for longer. However, late payment penalties carry a negative signal for customers. Incentives have the same function but are seen as a positive signal. Late payments cost money, and it’s better if you’re able to get paid earlier and avoid the added work of chasing invoices while also giving customers a great experience.

Accounts Receivable balance/Credit sales x Number of days in the period = DSO

• Accounts receivable balance is the total dollar amount of outstanding invoices, including overdue accounts • Credit sales is the total dollar amount of unpaid sales

For example, the DSO for a particular month for a company with $40 million in collectible invoices at the time of computation and $20 million in credit sales for the entire month is 60 days.

Lowering DSO is always a goal for many credit departments in construction businesses. Industrywide DSOs in construction are reported to be around 60 days on average compared to 45 days for various business sectors in the United States.

In an industry rife with payment issues and where most sales are on credit, getting invoices paid faster is ideal.

Strengthen your credit approval process

Vetting new customers and prospects

Lowering DSO is not all about chasing payments--it begins with ensuring that your clients are of good financial standing and can pay. Vetting new customers and prospects,

especially for larger projects on credit, can save you a lot of resources–in time, personnel, and money–in the longer run. Looking into credit records and if they have liens on the projects they’ve worked on can help you paint a complete picture of prospects’ and customers’ financial positions. For bigger projects, it’s not unusual to request a copy of financial reports that can prove they are creditworthy.

Regularly updating credit files for all customers

Financial positions for businesses change, so credit reviews for your customers must be done regularly and not only once at the beginning of the relationship. If their situation has changed, you can adjust accordingly per your internal credit policy. This allows you not to overextend credit and strategize around how to keep payments updated.

Following credit policy

Your credit policy should be the chief guide in navigating collections for credit sales. Ensure that your sales teams are adhering to the credit limits set for customers based on the criteria on your policy. Ensure that the collections process is being followed. For any overrides and special cases, it’s best to keep everyone on the same page and update your credit policy if needed. Ultimately, your credit policy is your primary tool for minimizing credit risk and promoting timely payments for a lower DSO.

Completing credit applications for all customers

In order to apply your credit policy well, getting as much needed information as possible is vital. Credit applications at the beginning of client relationships are paramount to ensuring that you have the records to reference as you make credit and collections decisions related to a customer. Handshake deals are not unusual in construction. However, that doesn’t mean that you have to skip over protocol, which can cost you significantly, especially as contract sizes increase.

Firing customers

Sometimes, the relationship between you and your client is just not working out. Their capacity to pay or internal payment protocols are costing you resources. There, of course, is a sting whenever you end a relationship with a customer, but in the end, it’s business. Making difficult decisions for the company’s best is what will pay off in the longer run.

Protecting your payment rights

Payments have always been a sore point in construction, and as a response, specific laws were created to protect all parties in a construction project in case of payment issues.

Mechanics liens are one of the best tools in your payment arsenal that could come in handy if you need to recover payments from non-paying customers. They also help promote timely payments as customers are well aware of the risks of non-payment.

However, mechanics liens come with responsibilities. There are preliminary notices that you must serve for many states to ensure that you preserve your lien rights. In many cases, failure to serve a preliminary notice or serving an inaccurate one can invalidate your lien, and you only find out when it’s time to enforce that lien. Using lien services that ensure the accuracy of the information included in preliminary notices and that notices are delivered on time and in line with delivery methods required by law is a great way to protect your rights and save time and money.

Lowering DSO is a companywide effort that credit departments can spearhead. By promoting smart business practices in your company, you can get invoices paid faster while keeping customers happy.

About the Author:

Patrick Hogan is the CEO of Handle.com, where they build software that helps contractors, subcontractors, and material suppliers with late payments. Handle.com also provides funding for construction businesses in the form of invoice factoring, material supply trade credit, and mechanics lien purchasing.

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