November 2011
focus profile

Sometimes a business owner needs to talk to another owner who will understand. David Binning looks inside one peer review group that’s made support its business

Founder and director of Sydneybased integrator Nortec solutions David Norris had been agonising over how to deal with staff whose negative attitudes had been eating away at company morale and performance.

“It was a poison pill. These two staff were always very negative; I didn’t realise the effect it was having on the rest of the staff,” he said.

The solution came from an unlikely source. A few years back Norris came across a little known peer group for technology companies called HTG Group.

The group was formed by US technology entrepreneur Arlin Sorensen in response to the April 2000 tech crash. Initially made up of users of the Connectwise software program, HTG has been growing from its US origins to now operating in several countries including Australia where there are two groups, each with 12 member companies: HTG20 and HTG21.

HTG meetings are somewhat like community help groups in which members share intimate details in the hope of solving problems together. Members must deliver a presentation at each meeting, with many recounting that the experience is often quite daunting, especially if the group learns that promises have been broken.

But when Norris finally admitted the problems he was having with his staff he was left in little doubt as to what course of action to take.

“The HTG members said they wouldn’t put up with what I was describing,” Norris said. He then went home and the following day at work he sacked the two staffers. “It was the best thing I ever did; it totally changed the culture of the business.”

Subsequent HTG meetings led Norris to fine-tune his recruitment processes too, with staff churn now down to almost nil.

“I won’t recruit someone who I think is like that at all – I have changed the interview process – I always have a woman in with interviews now – ‘women generally have a better idea about a person’s cultural suitability.” Managing director of Perth-based Leap Consulting Zaun Bhana (pictured left on the right) is the facilitator for HTG in Australia and he says the group has proved to be an invaluable source of support and information for those Australian resellers fortunate enough to be involved. In particular it has helped companies to understand why they got into business in the first place and where they are going.

“Are you in to business to sell, maintain cash flow and life style? This is different to creating a business for wealth creation.”

Bhana is fond of the quote from Lewis Carroll’s Alice in Wonderland: “If you don’t know where you’re going any road will take you there,” and stressed that HTG has helped many companies to see the path ahead.

The group meets for quarterly meetings each year with each event focused on one of four plans: business plan; leadership plan; life plan; and legacy plan.

The first plan is probably the one that most resellers need the most help with Bhana says. “Most IT guys understand their knitting but ask them to look at a balance sheet between three companies and identify which ones are healthy they couldn’t tell you. With HTG many are learning what’s important on their balance sheet. What levers to pull. What means what in their business.”

Director and co-founder of Digital Armour Corporation Maria Padisetti said HTG had given her a much better understanding of the financial side of the business. “It teaches you to keep an eye on key financial metrics – knowing what to look at and tracking it quarter to quarter.”

She says HTG has also helped her to deal with HR issues, including meeting the challenge of finding quality software engineers. “Every one of us has HR issues at some point or another. We have all either replaced or recruited somebody as a result of being in the HTG group.”

Bhana has had his share of personnel issues which he says is probably one of the biggest challenges for resellers today. “It’s not just Xboxes, Apples and coffee. Staff need to know they are on a journey, that there is a challenge.”

A specific strategy Bhana says he learned from HTG Group, which has proved successful in boosting staff morale at his company, is providing staff with a degree of insight into the company’s financials. “At any time staff [at Leap Consulting] can see exactly what’s going on with the company.”

Padisetti also notes that within HTG there are people with specific areas of professional expertise which can help expedite the resolution of problems within any member’s company. “For instance, someone in the group is brilliant at commercial property.”

Boss of Correct Solutions Ryan Spillane was involved with HTG for several years before its launch in Australia. Now he is happy not having to get up at 1 am to phone in to participate. Spillane says being a member of HTG has helped him to be far more accountable for the financial side of the business.

“If you want 10 percent growth or plan to increase EBIT numbers in a certain month – you don’t want to go to that board of directors to say you haven’t done it. In HTG there’s 11 other companies on your board.”

Norris said it took some getting used to sharing his most sensitive business information with the group – “There was always the fear factor of sharing all our figures” – but he soon came to realise the benefits.

Unsurprisingly Spillane added that the group is an invaluable source of information and advice on IT matters, which came in handy recently when his company was building its private cloud offering. “When you’re the boss you don’t always know whether you’re making the right decisions,” he says. “It’s good to be able to use some of those people as a sounding board and good to know some of things we’ve been doing for years are the right type of things.”

Andrew Smith, director of integrator cool Chili, says HTG has been particularly helpful in spurring him into action, quoting the HTG mantra “Vision without execution is hallucination”. In particular, he says it has helped him with setting the right prices for his company. “Financial management includes financial rates and whether companies are charging enough.”

Yet many resellers just haven’t figured out what to charge. “Under charging is quite common across sections of the IT world – we tend to undervalue our services – which is reflected in poor margins,” Smith says.

One of the key reasons Smith explains is that customers will often “price shop” their suppliers.

“In some cases there’s recognition that some customer will price shop you,”. Which leads to the issue of whether resellers have the customers that are best for them. “If you’re a solution provider perhaps they’re not the customers you need. Not all customers are a good fit – it’s a difficult reality to come to – I certainly haven’t come to it.”

But having fewer customers isn’t necessarily a bad thing.

Spillane says one of the most important lessons he has taken from HTG is the importance of tempering the growth of one’s business lest it get out of control. “We made a conscious decision to slow down; we won’t take clients unless we can provide same level of service to all clients,” he says.

Slowing down is also important for achieving work-life balance. “Sometime you can grow your business but your work-life-balance is the worst it’s ever been,” Bhana says. “There’s no use having great businesses if your family gets left behind in the process.”

Padisetti recalls that during a recent meeting of her HTG peers it was decided members would try to take up a hobby as part of their goals of striking a better work-life balance. She is now enrolled in a Bollywood dance course.

It’s a key priority of HTG Group that members succeed both in business and in life. Padisetti sees the group as akin to a family network where there’s a lot more than practical support. “HTG is an amazing and giving group – people give without hesitation. The biggest takeaway is that the generosity of everyone in that group is spectacular.”

When Norris revealed to the group during a meeting this year that a number of his family all suffered from a rare form of cancer all of the members urged him to go and get the necessary tests. “They told me one quarter ago when I should get a check up and when I didn’t they called me on it.

“I was also told to take some time off every month. I feel guilty for not being at work but I do feel better spending more time with family and friends.”

Probably the less pleasant of the quarterly plans is legacy, Bhana admits, but stresses it is critical for any business that is dependent on key individuals. He cites as an example the wife of one of Leap Consulting’s business partners dying of melanoma. “He has had to adjust to the new reality of bringing his kids up on his own. If your business can’t support something like that you’re in a world of trouble.”

Of course baring all in the way that HTG demands may not be everyone’s cup of tea, however as Digital Armour’s Padisetti points out there can be a lot of gain from just a little discomfort. “As daunting as it may seem it is very useful when you come out it with specific things you can implement in your business immediately. I’m a strong believer that if you are comfortable you are not learning.”