There are many metrics to consider when monitoring business performance, but perhaps none is more vital to the long-term success of a company than customer satisfaction and loyalty. Savvy executives know that the best customer is the one you already have. Those who are most satisfied with your products or services will not only remain loyal, but they will also tell others. Both of which are good leading indicators of future business success.

By measuring customer satisfaction on a continual basis smart businesses gain a real-time visibility into the performance and health of their organization. Measuring satisfaction is often done in highly transactional environments; these are usually business-to-consumer types of businesses. In my experience it is less common for professional services firms to measure their client satisfaction and loyalty levels. This observation is ironic given that professional services companies rely on the strength of their relationships and the results delivered for their continued success.

A major ingredient to the success of M Squared Consulting has been our commitment to client and consultant satisfaction. We have created a company culture that aims for client success and loyalty rather than a singular concentration on sales volume. In addition to actively monitoring and managing our relationships, the best way for us to maintain and improve this focus is to actively measure satisfaction and loyalty at the conclusion of each consulting engagement.

Taking the Pulse

As a consulting firm we are only as good as the results we deliver for each client. These results are delivered by our expert consultants and managed by our staff. We measure our performance for all three of these major constituencies - the clients who trust us to deliver results, consultants who do the actual consulting work, and our staff employees who serve both. To do this we use the following instruments:

1. At the end of every engagement we measure client satisfaction via our Client Satisfaction Index (CSI) tool
2. At the end of every engagement we measure consultant satisfaction via our Consultant Satisfaction Index (CSI) tool
3. Every year we survey our staff via an Employee Engagement survey.

We use a third party research firm to administer this research. As each project is completed we invite clients and consultants to take a short online survey. From this survey (roughly 10 questions scored on a 1-10 basis) we compile scores for each individual question and also calculate three important metrics:

• CSI - which is a quantitative score derived from all the survey questions
• LP² - which measures our commitment to Listen, Partner and deliver on our Promises
• Loyalty Index - which measures the overall loyalty of our clients and consultants. (Note: this is sometimes called the Net Promoter Score.)

Becoming a Learning Organization

These reports have become a vital management dashboard giving our team a much richer view into our consulting engagements and the value we deliver. Each month we not only look at our financial reports but also our satisfaction surveys, which represent the voice of our clients and consultants. Taken together they allow us to see how we’re doing across all the important dimensions of our business.

By adopting this rigorous methodology at M Squared Consulting we have gained not just a scorecard but a very useful diagnostic tool to improve every facet of our business. We use these assessments as guideposts to how we can enhance our service offering and value proposition to both clients and consultants.

Conclusion

It has been said that most problems in business boil down to “people problems” - which means most opportunities are also centered on people. As consultants we are in a people business. Long-term success comes from creating and sustaining strategic, mutually beneficial, relationships and delivering value on each engagement.

Satisfaction surveys are a direct feedback tool between your company and those you serve. They help to create open communication and collaboration between all the vital constituencies. Making the commitment to measuring satisfaction allows you to focus on what your clients want from you and how you deliver against those requirements.

If you would like to learn more about how we measure satisfaction with our CSI program, or explore how direct customer feedback can drive your business to new levels of success, we would welcome the conversation.

Companies are considering many strategies as they come to grips with the slowing economy. Towers Perrin recently surveyed human resources executives and staff asking what they’re likely to do now that the economy is clearly less rosy than it was. The survey was conducted from October 15 to 24 at more than U.S. 450 companies, seventy-nine percent of which have more than $1 billion in annual revenues.

We have heard from many clients of M Squared Consulting that they are focused on cost-control and some have even instituted hiring freezes. However, one thing is clear: the wheels of commerce are still turning in the U.S. Across the board, companies continue to invest in their futures. Strategic initiatives, especially those which hold the promise of increasing revenue or reducing costs, are almost always funded.

An interesting dynamic about our business is that the value proposition to clients stays the same regardless of whether we are in an expanding or a contracting economy. Our ability to deliver targeted expertise, when and where it is needed, is very unique. Forward-looking companies often choose to bring in project professionals from the M Squared Consultant Network who can quickly and cost-effectively deliver results so that their corporate staff can focus on their day-to-day responsibilities.

The Sarbanes-Oxley Act (SOX) was enacted on July 30, 2002 in a reaction to the last financial crisis we faced in the United States. It was a classic case of a knee-jerk government action that, in the final analysis, probably did more harm than it did good. The goal was to reform public company accounting rules to avoid future scandals like those which had played out at Enron, Tyco, Adelphia, Peregrine Systems and WorldCom.

Unfortunately, despite its good intentions, one practical effect of SOX was to severely wound the initial public offering market in the U.S.

Former Speaker of the House Newt Gingrich and David Kralik are now calling for the repeal of Sarbanes Oxley. In an Op-ed piece the San Francisco Chronicle, they outline the many problems created by SOX:

• It didn’t prevent insolvencies and accounting shortfalls in companies such as Bear Sterns, Lehman Brothers, American International Group (AIG) and Merrill Lynch.
• The average company will now take 12 years before it can successfully issue an initial public offering (IPO) (up from 5 years pre-Sarbanes-Oxley) because they do not have enough capital to cover the estimated $4.36 million hidden tax in yearly compliance costs (The initial estimate from the Securities and Exchange Commission was approximately $91,000 per company on average).
• Many smaller public companies went private or merged: “In 2006, the law firm Foley & Lardner LLP conducted a survey of 114 public companies on the effects of Sarbanes-Oxley. Twenty-one percent of companies were considering going private, 10 percent were considering selling the company, and 8 percent were considering merging with another company”
• U.S. companies are going public on foreign exchanges to avoid the Act: “In 2005, a report by the London Stock Exchange cited that about 38 percent of the international companies surveyed said they had considered issuing securities in the United States. Of those, 90 percent said the onerous demands of the new Sarbanes-Oxley corporate governance law had made a London listing more attractive.”
• They also quote Representative Michael Oxley, one of the original sponsors of the bill, who said “Frankly, I would have written it differently…Everyone felt like Rome was burning.”

This is particularly relevant to California because Silicon Valley may be the hardest hit region by the above mentioned effects. In the second quarter of 2008, there were no public offerings of Silicon Valley venture capital-backed companies, a phenomenon not seen since 1978. In the third quarter there was only one. Although the meltdown in the financial services industry did not help matters, it is clear that Sarbanes-Oxley has negatively impacted many companies. It has also had a direct effect on venture capital. Gingrich and Kralik argue that, if Sarbanes-Oxley is not repealed, we could see Silicon Valley’s status as a hot-bed of innovation erode and begin to see more and more of the future invented outside of the United States.

For business leaders it will be interesting to see if the next adminstration agrees with this assessment and chooses to pursue deregulation or if, after the latest financial crisis, they instead choose to tighten financial reporting and add more government oversight.

Last week I wrote about the convincing research that’s proven the value of having more women among the corporate management ranks. The data showed companies that had a higher percentage of women managers and executives outperformed those with a lower mix.

The logical follow-up question is: “Great idea, but what steps can my company take to make it happen?”

Many companies have succeeded in hiring, retaining, and promoting more women. The research suggests there are some basic steps any business can take to enhance its odds of closing the gender gap.

Rethinking HR

Oftentimes corporate HR policies can unintentionally hold women back. Internal processes for identifying high-potential employees, for example, often focus on managers between the ages of 28 and 35. Broadening the parameters to include total years of employment at a company (which would take into account time spent on maternity leave, or family leaves of absence for example) can ensure that the evaluation processes don’t overlook qualified women who have elected to leave the workforce for family reasons.

Some companies have gone so far as organizing training for their recruiters and operational managers on the importance of diversity and on identifying prejudices that might affect their hiring or promotion decisions. Together with the senior leadership team’s commitment to retaining and promoting women, this training can generate powerful results.

Other simple approaches can make a dramatic difference. For example, at one European company in a technical, sales-oriented line of business, only 5 percent of the job applications that a specific ad generated were coming from women. By replacing the ad’s stock photo of a man with one of the company’s senior women and by focusing the text on enthusiasm and innovation instead of aggressiveness and competitiveness, the company raised the rate of applications from women to 40 percent.

The Role of Mentors

Corporate coaching, mentoring, and networking programs have proved quite successful in helping female executives succeed-for instance, by encouraging them to seek out new positions more aggressively. Internal research at Hewlett Packard showed that women apply for open jobs only if they think they meet 100 percent of the criteria listed, whereas men respond to the posting if they feel they meet 60 percent of the requirements.

Other companies have found that although female employees are often more likely than men to meet or exceed performance expectations, they tend not to apply for promotions. To address this issue, these companies direct their managers to encourage talented women to move up, making sure that they receive the necessary training, encouragement from mentors, and developing succession plans that include them.

Sometimes mentoring comes from outside the corporate walls. For example, in the United Kingdom, the FTSE 100 Cross-Company Mentoring Programme pairs chairmen and CEOs of the largest public companies and their public-sector counterparts with female executives who hold positions just below the board level elsewhere. Thirty-three chairmen and CEOs act as mentors, helping the mentees to manage their careers, giving them advice and guidance, introducing them to other senior executives and to headhunters, and generally preparing them to be credible candidates for positions as executive or nonexecutive directors. Since the program began, in late 2004, a number of mentees have been appointed to public bodies and to the boards of national charities, and seven participants have been appointed to the boards of companies.

Measurement and Accountability

Clear and explicit diversity indicators allow companies to monitor their progress and to define priorities for action. Frequently used indicators include the proportion of women in a company’s business units at each level of employment, the pay levels and attrition rates of men and women in comparable positions, and the ratio of women promoted to women eligible for promotion. Companies seem to promote and retain women most successfully when senior executives monitor those indicators and incorporate them into regular reviews.

Leadership Support

In order to succeed any gender diversity and equality program must have the unequivocal support of senior leadership. When the CEO reviews the progress of women with the managers of the business units and functional heads, you can bet that the proper care and attention will be given to the program! In addition, following the mantra of “what gets measured gets done”, leading companies tie incentives to their diversity goals.

Work/Life Balance

Recruiting and promotion of women to management and leadership positions is the lesser half the battle. Frankly, the more important part is keeping them once they are in leadership positions. This equation is all about work/life balance. Companies can raise their retention rates by offering flexible hours, maternity and child-care leaves, and coaching to ease women’s return to the workforce. Such programs can have many other positive productivity and recruiting benefits as well.

Clearly none of these approaches comes without cost. Whether it is the time needed to implement change or the actual monetary costs, the obvious conclusion is that the effort is worthwhile. Companies can reap many tangible benefits by retaining and promoting more women. The fact that they will be gaining access to a larger talent pool and drive stronger financial performance are conclusive proof that that making gender diversity a goal is well worth the investment.

I’ve written before about the importance of presentation skills. And how even a great visual can’t overcome poor delivery.

Last Tuesday night, the night of the Presidential election, we had the privilege to hear two amazing speeches. Whether you voted for John McCain or Barack Obama, the speeches given by both men were examples of them in their best form. McCain’s was full of heart and conviction and Obama’s was full of hope and inspiration. Both had grace and humility - and neither marred the occasion by trying to attack the other at a time when they had the world’s ears. Both speeches were truly epic.

Regardless of your political views, I think we can all agree Barack Obama is an incredible communicator, the likes of which this country has not seen since perhaps Ronald Reagan or certainly Martin Luther King Jr. We witnessed a rare moment of opportunity and execution which came together with his victory speech. Obama has an incredible ability to move people with oratory - and he took complete advantage of that when he had the world stage in front of a 100,000+ crowd in Chicago and several 100 million more people around the world via television and the internet.

A few observations:

• He looked and acted Presidential: Obama looked and spoke like the President of the United States of America. Whether you voted for him or not, if you weren’t impressed you were not looking and listening. He did all the right things, under incredible pressure.
• It was all about us: He talked about the people of his campaign, the people of his country, and the people who did not vote for him. He did not gloat, but he spoke as one who wanted to unite. This speech was not about him.
• He was on point: He had a point of view, and stayed on message - just as his campaign did. It was all about change. Change from a country of slavery to a country where a black man could be elected President. Change from a broken country to a healing country. It was a disciplined speech, just as he ran a disciplined campaign.
• He was likable: This is one of the most important factors in communicating - and determines most audiences views on a speaker, and certainly impacts elections by influencing those who are un-decided. Barack Obama has the quality of being both Presidential and likable. He is measured in his speaking, easy going, yet also youthful and energetic. He smiles, has an open face and appears thoughtful. His personality and ability to connect with eyes, gesture and voice is impressive, and certainly helped him influence the vote in his favor. He exhibited all these behaviors in this memorable speech.
• He told an epic story: He used his usual picturesque language, and had a great story to share about Ann Nixon Cooper, a 106 year old woman from Atlanta who waited to vote for 4 hours. She was born a generation after slavery was abolished, and when women couldn’t vote, couldn’t drive and couldn’t fly. Powerful contrasts to today, and the task at hand. Hope and promise overcomes adversity!
• He had a memorable hook: He punctuated his story about Cooper with a powerful phrase: “Yes, we can.” He used this simple catch-phrase to capture the promise of his candidacy, and said it repetitively for emphasis. Truly a powerful speaking device, and something I’m sure will become a rallying cry for change in the United States as his administration takes office and begins the task of leading our country.

He took advantage of the opportunity to bring others along with him. That’s what a great speech does. To me the last two bullet points are the most memorable. If you witnessed his speech it was impossible to forget. Here is the part of the transcript where he told the story and used the “yes, we can” catch-phrase:

This election had many firsts and many stories that will be told for generations. But one that’s on my mind tonight is about a woman who cast her ballot in Atlanta. She’s a lot like the millions of others who stood in line to make their voice heard in this election, except for one thing: Ann Nixon Cooper is 106 years old.

She was born just a generation past slavery; a time when there were no cars on the road or planes in the sky; when someone like her couldn’t vote for two reasons - because she was a woman and because of the color of her skin.

And tonight, I think about all that she’s seen throughout her century in America - the heartache and the hope; the struggle and the progress; the times we were told that we can’t and the people who pressed on with that American creed: Yes, we can.

At a time when women’s voices were silenced and their hopes dismissed, she lived to see them stand up and speak out and reach for the ballot. Yes, we can.

When there was despair in the Dust Bowl and depression across the land, she saw a nation conquer fear itself with a New Deal, new jobs and a new sense of common purpose. Yes, we can.

When the bombs fell on our harbor and tyranny threatened the world, she was there to witness a generation rise to greatness and a democracy was saved. Yes, we can.

She was there for the buses in Montgomery, the hoses in Birmingham, a bridge in Selma and a preacher from Atlanta who told a people that “We Shall Overcome.” Yes, we can.

A man touched down on the moon, a wall came down in Berlin, a world was connected by our own science and imagination. And this year, in this election, she touched her finger to a screen and cast her vote, because after 106 years in America, through the best of times and the darkest of hours, she knows how America can change. Yes, we can.

America, we have come so far. We have seen so much. But there is so much more to do. So tonight, let us ask ourselves: If our children should live to see the next century; if my daughters should be so lucky to live as long as Ann Nixon Cooper, what change will they see? What progress will we have made?

This is our chance to answer that call. This is our moment. This is our time - to put our people back to work and open doors of opportunity for our kids; to restore prosperity and promote the cause of peace; to reclaim the American Dream and reaffirm that fundamental truth that out of many, we are one; that while we breathe, we hope, and where we are met with cynicism, and doubt, and those who tell us that we can’t, we will respond with that timeless creed that sums up the spirit of a people: Yes, we can.

Thank you, God bless you, and may God bless the United States of America.”

Wow! Now that is epic storytelling.

There are many lessons for business leaders and professional communicators here. The power of hope, the power of perseverance, the power of people. There is no question that as we continue our pioneering path at M Squared Consulting - telling the world about our unique company and the incredible value proposition we offer both clients and consultants - these points are well worth remembering. How will you apply them to your business?

I’ve written a number of articles about the war for talent, and the many variables that create the enormous gap between talent supply and demand that will continue to unfold over the next 10 years.

One of the interesting variables is women in the workforce, specifically the large gender gap that exists among U.S. corporate managers and executives. The primary challenge is that professional women want a career but many also want to have a family, which necessitates a level of work/life balance that has heretofore been unanswered in the U.S. workplace. As a result, many professional women drop out of the workforce entirely. Recent research on the gender gap in the workplace has concluded its positive resolution can have positive implications on company performance.

Women in developed economies have made huge gains in career advancement in the past 20 years. Unfortunately, the truth is that as you examine corporate organization structures, the higher up you look, the lower the percentage of women. Some companies have made significant efforts to increase the hiring, retention, and promotion of female executives. Their initiatives have included efforts to ensure that HR policies aren’t unintentionally biased against women or part-time workers, to encourage mentoring and networking, to establish (and consistently monitor) targets for diversity, and to offer ways to create work-life balance.

Research conducted by McKinsey Consulting in Europe and the United States suggests that companies with several senior-level women tend to perform better financially. Hiring and retaining women at all levels also grows a company’s overall pool of talent, which will yield positive benefits as the war for talent continues to unfold.

The Gender Reality

The simple fact is that a small percentage of women in the workforce become executives. This observation is not limited to the U.S. Across the European Union, women account for only 11 percent of governing bodies such as boards of directors and supervisory boards. In the United States, less than one third of the largest 1,500 companies had even a single woman among their top executives in 2006, according to research from Columbia University and the University of Maryland. Globally, the numbers are even more discouraging: in South Korea, for example, 74 percent of the companies surveyed in 2007 had no female senior executives.

The Talent Gap

Most countries and regions are already facing talent shortages, and those talent gaps are projected to grow much worse over the next decades. By 2040, Europe is projected to have a shortfall of 24 million workers. Simply by raising the proportion of women in the workplace to equal that of men would cut that projected gap down to 3 million. In the United States, the retirement of the baby boomers and many other factors means that companies are going to lose large numbers of senior-level employees in a short period of time. Nearly 20% of the working-age population (those 16 and older) of the United States will be at least 65 by 2016.

Impact on Corporate Performance

Extensive research was done on the relationship between organizational and financial performance and on the number of women who are managers at the companies. It was based on a survey conducted on 115,000 employees at 231 private and public companies around the world. It found that companies with the highest scores on nine dimensions of organization (leadership, direction, accountability, coordination and control, innovation, external orientation, capability, motivation, and work environment and values) are likely to have higher operating margins than their lower-ranked counterparts. Among the companies for which information on the gender of senior managers was available, those with three or more women on their senior-management teams scored higher on all nine organizational criteria than did companies with no senior-level women.

These findings conclude that companies with higher numbers of women at senior levels are also the companies with better organizational and financial performance.

Separate research done by the business schools of Columbia University and the University of Maryland supports this conclusion. Using data on 1,500 US companies from 1992 to 2006, they demonstrate the strong positive association between return on assets, return on equity, and female top-management participation rate. Greater female representation in senior-management positions leads to-and is not merely a result of-better firm quality and performance.

Management consulting is one of the more enlightened industries in terms of gender diversity. In addition to the intellectually stimulating and rewarding work, the inherent work/life opportunities built into project-based work create a powerful career value proposition for women. M Squared Consulting is certainly representative of the industry: we are very fortunate to have a high percentage of women executives on our corporate staff and within our Consultant Network. That gender diversity is no doubt a key part of our strength and a cornerstone of the firms longevity and success.

In recent weeks, as the economic downturn has continued to unfold, a number of Silicon Valley venture capital firms have issued dire warnings and gloomy forecasts to their portfolio companies.

While financial and managerial prudence is always good counsel, the instructions to prepare for a nuclear holocaust are a bit alarmist. I think most companies would benefit from more balanced advice. As in all stories, I think we’ll find in retrospect that the truth was actually somewhere in the middle.

The observation that financing has become much tougher is spot-on. The cost of capital is likely to increase. That businesses should focus on their burn rate, reducing it where possible is also good advice. For a new business venture you can’t argue with preserving capital and getting to cash flow positive.

At the recent VentureBeat Downturn RoundTable, a panel of Silicon Valley ’s Venture Capitalists offered a roomful of startup CEOs their advice for weathering the economic crisis. The general consensus was mostly optimistic: Money will be tight and many companies will endure painful cost cutting, but it’s cheaper than ever to run a startup, innovation will continue to thrive, and ultimately many growth companies will emerge from the carnage.

John Doerr expressed his concern that we are in an economic crisis of confidence, and that startups must enact effective cost cutting. Kittu Kolluri of New Enterprise Associates emphasized the need to cut burn rates, and to figure out how to generate revenues as quickly as possible. Early Google investor Ram Shriram said that we would likely be seeing company valuations shrink and expressed that it would become difficult to get money. Benchmark Capital’s Matt Cohler agreed that it is essential to be conservative with spending, but emphasized that an important part of being conservative is to refrain from panicking.

Of all of the investors the most optimistic was angel investor Ron Conway, who said that we are in much better shape than we were during the last bubble. He recalled that during the dot com bubble 70% of the startups his angel funds had invested in during 1998/1999 went out of business within a year. In contrast, only 13% of Conway’s current portfolio is facing shutdown. He attributed this in part to the burn rates for companies, which have gone from an average monthly rate of $750k in the first bubble to around $200k now.

Kittu Kolluri of New Enterprise Associates said that some of his firm’s best investments came during the last downturn, and that it continues to invest at a regular pace. It may be more selective, but he believes there will certainly be innovation to be found.

John Doerr polled executives from his portfolio companies for some tips and compiled the following list:

1. Act now. Act with speed, and raise more money if possible.
2. Protect the vital core of your business. When cutting costs be careful to use a scalpel instead of an axe.
3. Get 18 months or more of cash in the business, against conservative revenue forecasts.
4. Defer facilities expansions. Instead of buying more PCs or more software, use web-based solutions. There are many tools, services and marketplaces that are free/low cost and flexible. You can turn them on/off, dialing your spending up and down.
5. Negotiate with all your supplies and vendors, get more favorable payment terms.
6. Everybody in your organization should be selling and/or evangelizing. You need everyone to be selling the ideas and the organization. This is about increasing revenues.
7. For people with bonuses, offer equity instead of cash. Doerr noted that he once had a voluntary salary deduction program for people who remained during the downturn - Investors will be on board with this idea.
8. Pay attention to where your cash is, and keep it secure, in a place fully backed by the government. Doerr said that he’s been putting money into treasuries.
9. Make sure that for the revenues you plan, you have leading indicators that tell you 90 days in advance whether you’ll be getting revenues or not.
10. Over-communicate with your employees, investors, and customers. Let them know your resolve. Don’t sugarcoat it.

There is nothing new or terribly earth-shattering about this advice. Any CEO or business leader who finds any of this to be insightful should probably consider a new career. It is generic. What it neglects to mention is the fact that every company is unique. The advice that applies to one, may not fit the situation of another.

Being financially prudent as a business leader doesn’t mean you stop spending. You should cut out the fat, but don’t cut to the bone. Smart leaders realize that market turmoil can level the playing field, sometimes creating market opportunities. They invest strategically in their core business in order to build market share and solidify their competitive position.

Many of our clients at M Squared Consulting are taking advantage of this downturn to review their strategies and accelerate key strategic initiatives in order to better position their companies for the recovery.

The message from all of this is simple: be wary of generic advice that may neutralize your competitive advantage. Don’t be paralyzed by fear and doomsday scenarios. As a business leader you are accountable, nobody else. Be prudent, analyze the situation, trust your instincts and capabilities. Then act swiftly and definitively.