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How Bad People Rip Off First Nations

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By Andrew Leach, MBA

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Some First Nations are still getting ripped off by bad people. They may be bad business partners, bad lawyers, bad consultants―sometimes even our own leaders.

Having worked for over 150 First Nations, I recognize a pattern in the way some Bands get ripped off. In this article, I will describe three common mistakes Bands make, and offer suggestions for avoiding them.

Mistake #1: Negotiating Bad Deals 

Some First Nations are still selling their resources for beads and trinkets. The classic example is a resource company coming to your traditional territory and offering a few short-term, entry-level jobs. In exchange, they get access to millions.

The worst deal is when the Band puts up all the risk (i.e. capital) and hires an outside “managing partner” to handle its day-to-day operations. Whether your business succeeds or fails, the managing partner still gets his fees. Where is his incentive to cut costs, work extra hours, etc. to make your business succeed?

Structure your business deals so your partners have a real, vested interest in the success of your venture. And in writing up these deals, be assertive to add/frame the appropriate agreement terms. Often, companies have their own self-serving template agreements ready for you to sign. Don’t let them drive the terms by controlling the drafting of agreements.

In summary, remember the adage, “You don’t get what you deserve, you get what you negotiate.”

Mistake #2: Not Managing Your Contractors

Lawyers, consultants, engineers―make sure you effectively manage these “big three” contractors. If you don’t, you may get ripped off.

Some Bands spend a disproportionate amount of scarce resources on legal bills. No doubt some legal bills are unavoidable. For example, if you have a tough labour case in the office, get a good labour lawyer. If you are starting a new company, get a good corporate lawyer.

Some lawyers come in for one reason and seem to find a hundred other reasons to stick around. At $250/hour, make sure you really need them!

As well, many Bands seem to have a pack of consultants prowling around. A few are good. I especially like those who are too busy to stay very long. They complete what needs doing and then they’re off. However, many consultants have a vested interest in making more work for themselves. They turn over rocks and say, “Oh here’s another problem … I can help you with that.” Don’t wait for your consultant to say, “I think it’s time for me to go.” You will probably wait an eternity.

Finally, engineers are indispensable in certain cases, especially those who are skilled with stick handling AANDC funding processes. However, some engineers evolve into policy writers, business advisors and, before you know it, are doing much more than getting your water lines and roads built.

To manage your contractors effectively, first and foremost, control the information flow. As a rule, anything contractors produce on your dime is your product. So get it, store it and organize it. The more you control your own information, the less likely contactors will be wagging the dog.

Finally, don’t be scared to question estimates or invoices. Some contractors test their limits and if you don’t question them, it will lead to higher costs.

Mistake #3: Not Keeping Your Leaders Accountable

Most First Nation leaders have limited power and authority within their communities. More often than not, our members keep our leaders in check with seemingly endless criticism. Being a First Nation leader often means having to wear a bull’s eye target 24/7!

How can it be, then, that a few communities end up with highly centralized leadership which, by the way, can be just a short hop away from corruption? In reality, bad community leadership doesn’t happen overnight. Rather, it occurs when community members forego their responsibility to set up effective checks and balances.

Show me a corrupt community leader and I will show you a community with weak financial and accounting systems, limited management capacity, and a poor ability to resolve community conflicts. Deal with these issues and you will tackle your leadership accountability issue.

 

Andrew Leach is from the St’at’imc Nation (Lillooet, BC) and has a Master’s degree in Business Administration (MBA). He also operates a successful management consulting business (www.andrewleach.com), and welcomes feedback to his articles. Email or call him at 604.868.4004.

Managing Up, Down and Across

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By Andrew Leach, MBA

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Many managers focus on managing subordinates only. But this is not the only way to manage. This article will discuss the concepts of managing from above, managing from below, and managing across, and how these concepts can be applied to First Nations organizations.

Managing from Above

For years, most management textbooks focused on managing as the supervisor bossing the subordinate. This is often referred as managing from above, and is a very direct and explicit way to manage. For example, when you give your subordinate a work-related task, he should clearly understand he is obligated to follow your direction.

Although managing people from above is explicit and direct, often it’s not easy! Indeed, many managers find they spend too much time managing problem employees. Usually, 20% of your employees will give you 80% of your headaches (this is known as the 80-20 rule and can apply to a number of other issues, as well).

The first step in managing the 20% of employees who create headaches is to accept the 80-20 rule. Next, make the 80-20 rule work in your favour by taking proactive steps to manage these difficult employees, including:

  • Focusing on their behaviours rather than their personalities
  • Being respectful even when disciplining, and
  • Finding creative ways to motivate

Managing from Below

As a subordinate, you also have some ability to manage your boss. Really! The basis for this assertion is the boss-subordinate relationship is interactive, with communication flowing both up and down. Managing from below is also expressed in the saying, “You cannot manage without being managed.”

Now before you start telling your boss what to do, know that managing from below is more subtle than managing from above.

The first step is to understand and appreciate what motivates your superior. For example, as a band administrator, you probably have at least one Chief and several councillors who are senior to you. Each elected official has his or her personal motivations for sitting on council. You can learn what motivates them by asking each individual why they accepted a council position. Listen closely to their words and cues to their motivation.

Once you know what drives your superiors, you can start framing your own goals and motives to reflect your supervisor’s goals and motives. For example, if your superior is committed to increasing employment, find a way to show how your proposed project will create jobs.

Some of your needs and goals may not fit with all of your superiors’ interests. That’s okay and to be expected. But if you can capture enough of the right people, you have a better chance of having your needs met. Still, be realistic. You may have to adjust your aims to more closely align with the aspirations of key superiors. However, if you are diligent and creative, you should be able to meet both you and your supervisor’s needs.

Managing Across

Managing across involves managing people in similar-level positions as you. For example, a social director and an education director are often at the same level in a First Nations administration office.

Compared to managing up or down, most managing across situations are indirect. Indeed, similar-level positions often have no formal reporting relationship between them. So why should we try and manage across? Because you often share similar challenges and can join forces to meet both of your needs. For example, regular interfacing with your peers can generate a lot of good ideas and opportunities.

Similar to managing from below, you need to understand what motivates your equals when managing across. With this in mind, it is important to learn as much as possible about your peer’s area of responsibility. Look for similar issues you both face―often these will be the issues that bind you.

Managing across is not always an indirect relationship. Consider Chief and council positions, for example. Each of these positions usually has one vote on council. Thus, every elected position, including the Chief, will often need the support of other councillors to get a “pet project” off the ground. In this situation, the ability for councillors to affect each other’s interests is very direct. It’s key to discuss each other’s concerns before major decisions are considered, allowing you to establish ties and find common ground.

Now some people may think managing down, up and across are manipulative. These skills certainly can be abused and some people do misuse them. Watch out for them! But in reality, you are trying to create win-win situations with colleagues. And, frankly, that is the bottom line with managing people, up, down or across.

 

Andrew Leach is from the St’at’imc Nation (Lillooet, BC) and has a Master’s degree in Business Administration (MBA). He also operates a successful management consulting business (www.andrewleach.com), and welcomes feedback to his articles. Email or call him at 604.868.4004.

First Nations Shouldn’t Run Mom & Pop Businesses

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By Andrew Leach, MBA

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As a management consultant, I have seen too many First Nations lose money trying to run mom and pop businesses. In this article, I will present some key ideas for Bands to develop and execute a viable economic development strategy. And the process starts with this: stop running those mom and pop businesses!

Mom and pop businesses are typically owned and operated by an individual or couple. Their main features are:

  • Small revenue base, usually less than $200,000/year
  • Small staff, usually less than four employees
  • Long hours required to develop and sustain

Small convenience stores, retail outlets and small motels are classic mom and pop businesses.

Bands should not run mom and pop businesses. For starters, why waste your time on small returns when opportunities to make serious money are available in your area?

As well, you’ll have to pay whoever you hire to manage your mom and pop business the 14-18 hours a day needed to establish and grow the business. Moreover, mom and pop managers will not treat the business like their own, because it isn’t. For instance, purchasing and human resource decisions can be very costly. And if the business isn’t yours, what motivates you make the best decision?

Thus, Bands owning mom and pops contradict the small business model of owners working long, unpaid hours and acting in their own best interest. First Nations often pay lots of wages for the mom and pop businesses they own. Look at the financial statements for yours. Where are all the expenses? Are they controllable?

I have seen too many Bands lose their shirts sinking money into fledging moms and pops. Sometimes they end up using their AANDC operating dollars to fund the operations. It’s not long afterwards that remedial management kicks in.

Another interesting phenomenon is the emotional attachment some Bands have to their mom and pop businesses. Even when it becomes clear the business is running them into the ground, some leaders are reluctant to let go. I hear comments like, “It provides us with employment.” “We are counting on things to turn around.” But that’s denial. The writing is on the wall and we often do not want to read it.

There has to be a better way.

For starters, First Nations need to develop a sound business strategy that matches its strengths and weaknesses with the regional economy’s strengths and weaknesses. In addition, Bands should go after only those businesses that can justify hiring a full-time manager and still have enough left over for some profit to the Band.

As a rule, if your Band business has less than $300,000 total investment, it may be too small to run effectively as a Band-controlled entity. You should probably turn these smaller businesses over to Band members. Let them run these businesses for themselves. Like the way they should be―as moms and pops.

Instead, focus your energies on bigger, profitable projects.

Band-based tourist projects can do well, but be careful: a lot of tourist projects should be run as moms and pops. I have worked with many First Nations that have done quite well in the resource sectors, and some construction projects can be profitable too.

 

Andrew Leach is from the St’at’imc Nation (Lillooet, BC) and has a Master’s degree in Business Administration (MBA). He also operates a successful management consulting business (www.andrewleach.com), and welcomes feedback to his articles. Email or call him at 604.868.4004.

Economic Development

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