Management

Recruiting reimagined.

Albert Einstein’s definition of insanity: “doing the same thing over and over again and expecting different results” is oft-quoted. Using this as a benchmark, many small business owners fail the sanity test again and again.

To me, the most blatant example is found in recruiting – business owners continue to fall for the trick of hiring for skills and experience and leave alignment with values as an afterthought. (That is, if we give it any thought at all.)

Over my 14 years of business coaching, when the subject of recruiting arises, a similar pattern of response is evident: Job Description (sometimes), consider attributes required for the job (sometimes), advertise (without much of consideration of the medium or the content), interview (comparing the skills and the relevant experience of applicants), select and offer the position.

This is an inadequate, inappropriate and flawed approach to one of the most important aspects of business management. Consider for a moment – you have a small team to which you’re either adding or replacing and the culture, the environment of the workplace and how you serve your customer base will very much depend on the performance of your team. In this case, your new team because, as it’s been observed, when you have a new member of the team, you don’t have a new team member, you have a new team!

The cost of a poor selection in recruitment varies wildly with estimates for operational staff, up to and over $100,000. For higher level staff, it can be far more. Furthermore, an HBR study showed that 80% of staff turnover can be attributed to poor hiring decisions. The effects on existing staff of a poor selection are disastrous.

However, most of the small businesses I see continue to recruit in the same manner – with the same extremely poor success rate.

What if we looked at this process with a new set of eyes? Instead of the skills the applicant possesses and the relevant experience they may have had, looking at what type of people they are? How they are likely to fit in with the existing team culture – assuming it’s a good one? (Another subject for another time.) Are they nice people? Do they align with the Core Values of the business? (You have established those values, haven’t you?)

These people might not score as well as others in competency, but they’ll be easier to work with. And, because they’re easier to work with, they’ll be eager to learn and respond to training programs. (You do have them, don’t you?)

I’ve glossed over my preferred recruiting process here, because it requires development and careful implementation. But surely, it’s worth the effort?

Recruitment based on the best people – rather than their level of competence – is far more successful in the longer term.

To revert to the same (unsuccessful) methods looks, to me, very much like stupidity.

A Positive Approach is Right for All Conditions

 

Small business owners are experiencing a range of situations just now. Are we, in Western Australia, at the tail end of a boom, is business activity as strong as ever, or did the so-called boom never help at all? The answer is “yes”, depending on to whom you are speaking. Arguably, this range of responses is the same throughout any period; they are just weighted differently.

One of the responses I get over recent times is that some business owners do not believe that they should be thinking about growth, when they’re doing their best just to keep their heads above water.

I ask them to think about the alternatives; surely, they are twofold only – wither grow or contract. Staying still is not an option; sink or swim. That is a good analogy; when you are in water out of your depth and stop swimming, you sink. Yes, you can tread water, but that is a finite option and literally, does not get you anywhere.

There have been instances where companies have had to take stock and to re-evaluate where they stand in the market. I have spoken to business owners who have said that, in doing so, they used that time to look at other appropriate market segments or to become more effective by developing their internal  systems and processes so that can deliver an improved service.

This is not standing still. From whatever “downturn” these business are experiencing, they come out of it stronger, more resilient and better-placed to take advantage of the upswing, when that eventuates. This is effective business leadership as it should be.

It could be argued that busy market conditions are the very worst times to be considering growth, expansion and internal development. This is when customers are demanding services and demanding them at increasing rates and in shorter time frames. With all of this frenetic business activity, how can there be an effective focus on internal growth?

On the other hand, there is often a temptation for business owners to “batten down the hatches” and “retreat into their shells” when business activity slows. This becomes a self-fulfilling prophesy and demand slows even further as a result of business going to more proactive and progressive competitors.

The sad fact remains that, in times of economic downturn, the two areas most likely to be cut in the budgets of small businesses are marketing and business development. The business owners who commit to this fateful strategy are confining themselves to a worse situation than they would experience had they showed more confidence. This is not to say that such times do not call for caution and prudence; of course, careful judgement is required. However, it is far too easy to deem “advertising” and “business advisory” as unaffordable in these circumstances.

 

 

Times of uncertainty and even downturn are, in fact, opportunities and it is the mindset of the business owner – the leader – that will determine how the business comes out at the end. The true leader will look at the opportunities for business development and have a laser-like focus on implementing for the longer term benefit. This is the difference between seeing the bigger picture and being overwhelmed by today’s apparently negative conditions.

The fact is, the attributes for business growth no not change, irrespective of conditions. The long term vision for the business should be relatively stable, while being brutally honest about the reality of the day; the strategy could well change, but its goals not change; there is even more reason to tap into the intelligence of the workforce; also more reason to fully understand the needs of customers and to communicate effectively with them; engaging with employees, recognising accomplishments and appreciating effort is just as vital to be displayed.

 

Having true faith in what is possible in the long term, but at the same time, being totally aware of the brutal facts currently being faced is a necessity for business owners. On the one hand, if there is not a total belief in what the business will achieve long term, what’s the point? On the other hand, blind optimism in that vision without confronting today’s reality is as equally pointless.

 

If times are tough, true leadership is required to make the right decisions and to retain belief in the long term; if business conditions are good, it should be realised that they will, in all probability, have turn for the worse at some point. Whatever the case, the same consistent approach to good management and leadership should be maintained.

Systems are a must; but common sense should override them

 

Before discussing how and when systems should be overridden, let’s revisit the need for systems in the first place.

As I wrote in my book, “The 10 Seeds You Must Plant to Grow Your Business”, “……… Small business owners often ask why the documentation of policies and procedures is relevant to them.

The answer lies in what they want for their business. If they want to create an enterprise that can grow, is efficient during its growth phases and is a saleable asset when the owner has finished with it, this documentation is essential. Furthermore, I would contend that it will not attain that status without documented systems, policies and procedures.

Without written systems, there is greater potential for chaos, as the people who are engaged to carry out certain tasks often clash (or tasks remain incomplete) because there is no certainty as to who should be doing what, when.

Furthermore, all of the processes that do exist within the business lie between the ears of the people responsible for those processes. When they leave for whatever reason, the process goes with them, leaving the business vulnerable. On the other hand, if everything is documented a new employee has complete details of their job and the tasks required for successful completion of the job and how individual tasks should be carried out.

At this point, the business is reliant on its systems and processes and not on individuals who come and go. Michael Gerber in The E-Myth Revisited contends that we should aim for a business that is systems-dependent, not people-dependent. “The systems run the business, the people run the systems,” he says.

This is not to say that individuals are not important – far from it. After all, we need the right people who are prepared to be accountable for performing the tasks that make up the systems and processes. Furthermore, as we discussed previously, it is the people who will be relied upon for innovation, for contributing to the business growth and for its improved efficiency.

It does mean, however, that the business has a solid foundation for growth through its systems. Individual Position Agreements should refer to the company policies and procedures and there should be an understanding from day one that the various tasks should be completed according to those processes.

What you will get from documented systems include, but is not necessarily limited to:

  • a business where people are clear about what needs to be done – and they do it
  • a business where your customers expect – and get – a consistently high level of product and/or service
  • a process for resolving problems
  • set methods of doing all of the major tasks required in the business’s operation that can be followed by almost anyone, without relying on individuals
  • a solid basis for growth
  • a business that will be attractive to a buyer or investors when the time is right for exit or a new structure.”

 

Assuming now, that the principle of a systems-based business is agreed – and systems have been implemented into the business – we need to look at exceptions to those systems or policies. Because there will be times when unforeseen circumstances arise that conflict with our policies or procedures.

Very recently, I had to collect a parcel from the local Australia Post office. When I got there, I was asked for ID, which I had not brought with me, having left home in a hurry. When I could not produce ID, I was told I could not collect the item. Since I am in there on at least a weekly basis, common sense should have prevailed over the procedure requiring ID. (Thankfully, finally it did – but not before I had to, unnecessarily strongly state the obvious.)

Unfortunately, instances such as this are commonplace. Sure, there must be a procedure; but common sense should prevail.

The frontline people who are most likely to be confronted with these situations need to be trained and trusted in decision-making. How often do we complain about bureaucratic procedures that stand in the way of common sense? The last thing we need in our business is to be tarred with the same brush.

So how do we find the balance between the necessity for systems, policies and procedures on the one hand, and the need for common sense when those processes need to be overridden?

  • Our core values, at some point, are bound to refer to the need to provide outstanding customer service.
  • The recruitment policy that has been have introduced should ensure that the people who are employed align with those core values.
  • Furthermore, if you have faith in your recruitment processes, you will have employed people who have your complete trust; as such, they can be trusted to make the right decisions.
  • Engagement with our people will provide a forum for discussions where the need to override systems will be discussed.
  • Ongoing staff training will ensure that people know the circumstances where they have the authority to make a common sense decision that might, at first appear to conflict with procedures.

If all of the above elements are present in the workplace, people will be entrusted to make decisions based on common sense, even when those decisions conflict with existing policies or procedures. And that very exemption may lead to the adjustment of that policy or procedure – and employees, customers and the business itself, all gain as a result.

What is empathy and why is it important in business?

The definitive salesperson is one who can anticipate a customer’s requirements.

It has been said that sales, in these times, is not about meeting a customer’s requirements, but rather, finding a solution to their problem. Some have even gone further, saying that sales is about anticipating a problem, articulating how that problem might affect the customer, getting an agreement with the customer and then creating a solution.

To be that definitive salesperson requires the interest and ability to walk in the customer’s shoes, to “get inside their heads”. This is called empathy. And it’s reached a point where anyone involved in sales (aren’t we all involved in sales?) requires that characteristic to succeed.

So is empathy an inherent characteristic – one we’re born with – or can it be leaned as a skill? The answer, of course is “yes” – both are true. Some people are born with great degrees of empathy is their make-up, some have developed it via their upbringing and others have taken the time and effort to hone these skills.

In a “Management Issues” article last year, Jerry Pounds made some interesting observations. Empathy may be innate: toddlers seem to relate to the happiness or sadness of others. However, we also learn empathic ability through socialization. For example, most of us are coached to feel pain or guilt when we inflict suffering on others.

Conversely, people who continually engage in anti-social behaviour, such as narcissists and psychopaths show little or no evidence of real empathic ability. Psychopaths are seemingly able to demonstrate the appearance of sensing the emotions of others - but only use their skills to charm or manipulate.

So do we need to recondition managers to feel the emotions their employees are feeling (and that's a good thing), or simply train them to behave appropriately in a wide range of emotion-provoking situations?

In his book Emotional Intelligence, Daniel Goleman's identifies five emotional competencies. Among them are four that appear to be necessary to manage others respectfully:

  • The ability to identify and name one's emotional states
  • The capacity to manage one's emotional states
  • The capacity to read, be sensitive to, and influence other people's emotions
  • The ability to enter and sustain satisfactory interpersonal relationships”

 

Empathy is defined as…. “The ability to understand and share the feelings of another.” So, given that the purchaser of a service or product nearly always has some degree of emotional attachment to the outcome, it is vital that the salesperson understands how the purchaser feels about the problem (frustration) and how this feeling will be overcome by the solution (relief).

In sales empathy is a no-brainer. If it’s not within the sales person’s psyche (remembering that we’re all in sales, now) then it should be learned and practised as a matter of urgency, because it could be costing the business in spades.

But, in business, does empathy stop at sales?

Of course not!

To ensure people are fully engaged in the workplace, managers, supervisors and employees should all practise empathy, so that the reasons for behaviour and opinions are better understood. Empathy is a characteristic required to be practised by everyone in the workplace to ensure there is trust, respect and positive outcomes. Under these conditions, the business will thrive and its people, along with it.

Business “Growth” – Good, Bad or Both?

A colleague was recently assisting me with some ideas about a presentation I was preparing.  He asked me about the subject for my talk and I told him that it would be a summary of my workshop and book, “The 10 Seeds You Must Plant to Grow Your Business”.

He looked doubtful and said that, in his case for example, he was not looking to get more customers, as his business had been in operation for many years and had built a client base that produced recurring activity. His point of view was that not all businesses were interested in growth for the sake of growth. This got me thinking about the subject of “growth” in business; is all growth good and beneficial? Is it, in fact, a worthwhile ongoing and continuing goal?

In an article in Business News WA last year, News Editor Mark Beyer wrote about the problems within Forge Group which largely came about as a consequence of its aggressive growth strategy. “….it has achieved extraordinarily rapid growth in a market where many of its peers have been battling to achieve any growth,” Beyer says in his article, and follows up with “...But bigger, clearly, is not better.” He goes on to relate how the Forge share price slumped from its peak of $6.70 early in 2007 to $4.18 before entering a trading halt. The most recent news of its liquidation is the final chapter in this particular story of a misplaced growth strategy.

The article reminded me of a statistic from somewhere in my distant memory that business growth was, in fact, the single major cause of business failure.

I tackled this issue in my forthcoming book, which has the same name as the workshop and the following is an extract:

“Up to this point, it’s all been about business growth and it would be fair to ask “So, if we plant all of these seeds, nurture them and ensure that the soil remains fertile, does that mean we’re guaranteed success? Can we be assured that nothing can go wrong?”

No. And, NO are the answers.

Let’s continue with the garden analogy.

If we overplant, apply too much fertiliser or overwater, we will often get growth that is too lush and there will be too much vegetation for the soil in which the plants are growing. What happens is that the fruit is affected and productivity reduced.

Unrestrained growth in a business can have similar consequences. In fact, in some areas of the western world statistics have shown that the greatest cause of business failure is, in fact, growth itself. So, here is the paradox: we have no option but to ensure that our business grows, but, at the same time, we need to control that growth so that it does not become its eventual downfall.

Just as growth in the garden will put a strain on all of the components if we attempt for too great a harvest in one season, so will business resources be stretched to breaking point. For growth comes at a cost; more capital, more physical resources and more people, most of which will be an expense well before there is a return on that investment.”

 

If we were to have any further reservations with regards to growth, we need look no further than the duopoly that has developed within the Australian retail grocery market. While the “big two” boast about their success in delivering lower prices to buyers, there is ample feedback from suppliers to indicate the cost at which these “low prices” have been delivered. Whole industries and small family businesses have been threatened as an outcome of competition between the supermarkets.

This cannot be good for our community and come as a consequence of two businesses that just had to grow bigger – obviously, at any cost.

So, plan to grow by all means, but not by any means. Define what growth means to you and your business then plan to grow within that definition.

Growth in numbers is good, but growing as individuals, as leaders and as honest contributors to the greater community good is far more important. The development of solid values and then living and dying by those values places business at the forefront – and in a much higher place than those who boast about “Down, Down”.

My eventual response to my colleague was that growth does not necessarily refer to more revenue, more customers and greater profits. It can mean getting better at what we do; making the workplace a better environment; doing more good things in our community; providing more opportunities; creating a business that is enjoyable on all fronts for all of the people involved.

Focus on the known constant, not the unknown variables

Over recent times, I have found myself challenging business owners to look at the amount of change that has occurred in their industry over the last five years – and then the five years before that. In doing so, I am trying to have them understand the rate of change and to be prepared for that exponential rate of change to continue. Further to that, I am challenging them to guess at what is likely to change in the coming five years.

While this is a worthwhile challenge, in many cases, it might be impossible to see what impacts and consequences change could have on their business in the coming period. Who would have guessed at the impact the internet was going to have on business 10 years ago? Did we see online shopping being what it is today? 3-d printing? You’re kidding!

However, a recent article quoting Amazon CEO, Geoff Bezos, throws that challenge on its head. A little online investigation shows that his comments have almost gone viral; being re-quoted by a number of business commentators. Rather than trying to guess what might change, why not try to look at what is unlikely to change? This is his take on the subject:

“I very frequently get the question: 'What's going to change in the next 10 years?' And that is a very interesting question; it's a very common one.

I almost never get the question: 'What's not going to change in the next 10 years?' And I submit to you that that second question is actually the more important of the two -- because you can build a business strategy around the things that are stable in time. ... [I]n our retail business, we know that customers want low prices, and I know that's going to be true 10 years from now. They want fast delivery; they want vast selection.

It's impossible to imagine a future 10 years from now where a customer comes up and says, 'Jeff I love Amazon; I just wish the prices were a little higher,' [or] 'I love Amazon; I just wish you'd deliver a little more slowly.' Impossible.

And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now.

When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.” ― Jeff Bezos Amazon

So, by all means look at what is likely to change in your business and in your industry, but more importantly, look at what is not likely to change and focus on those areas. Just as with Amazon, the seed of service delivery is probably going to be an ongoing issue with most businesses.

If this is the case with your business, how can you deliver more quickly and more efficiently than you are doing now? The second question would be: What other constants are you able to address that are likely to be of growing importance to your customers over future years?

Systems warning!

There is often a perception that a procedures manual is something that must be “done”. That is, it is somehow like a project with a start and end date.

 This is NOT how it should be approached.

Systems should have a life as long as they are effective – and that effectiveness should be challenged and tested at every opportunity. Systems are, in fact, the single best opportunity to improve the way the business operates – provided there is a culture of challenge to existing systems.

Over time, there are all kinds of circumstances that will require a change in the way the business operates. They may be external factors, such as a change in the way a supplier invoices or delivers stock; they may be internal resulting from new technology; or they could be simply a better way that someone has come up with, for improved service delivery to our customers.

Systems and procedures are always a work in progress.

So the process should be a commitment to complete a procedures manual AND a process that ensures continual review of the systems contained within the manual.

Business owners sometimes  question the necessity for documented systems and processes. For a start, every business has systems; in small businesses, they are unfortunately, rarely documented. Where this is the case, the business owner often complains that “people do not do as I want” and “whenever I am away, the place falls to pieces”.

The reason for systems needs to be explained:

  • So that the customer can be assured of a consistent level of service
  • So that several, rather than a single person can carry out tasks
  • So that people can take holidays and the business continues to offer that consistency of service.

Then the people who have the primary accountability for a process need to have major input into designing those systems. If systems are imposed on them from above, they have plenty of “wriggle room” when things go wrong. On the other hand, if they are given responsibility for systems design, they have ownership and therefore, accountability for the outcomes.

Think of the benefits from a complete set of systems and processes:

  • Improved customer service
  • It is easy for other people to take over unfamiliar roles
  • The business has improved operational efficiency
  • The asset value is improved as a result.

OK, there is value in having a complete procedures manual however, as is pointed at the beginning, it is never finished. There will always be a need to refine, adjust, add to even delete systems over time. For further support of this principle, I suggest a Google search of the business guru Tom Peters who has an excellent YouTube video “Go to War on Your Systems”.

Stand out!

 

“It’s not what you do – it’s what you do differently that counts” (Patrick Mahan)

 

A trades-based business client has improved and grown their business (they are a husband & wife partnership) over the past two or three years. It’s been a pleasure working with them as, in most cases, they have grasped good business principles and have implemented them with beneficial effect.

Recently, we were discussing the fact that they were in the process of reviewing their data base, with the main aim of checking the status of accounts and the business that had been transacted – all meaningful activities aimed at understanding the commercial nature of the various relationships. The major principle involved here, is that of measurement. (US management guru, Peter Drucker coined the phrase “you can’t measure it, if you can’t manage it”.)

However, in discussing the data base itself, it became evident that there were almost 1000 names on the data base – either current or past clients – and this in a regional town in Western Australia. It struck me that there was a real opportunity for this client to further differentiate themselves (beyond providing a great service) by introducing a regular newsletter. It could comprise recent successes, new techniques, government legislation affecting clients’ operations and environmental considerations, as applicable.

My question was “How many of your competitors would bother about considering such a move?” Answer: “None”. Think for a moment about the effect that such a communication would have on clients in the data base; brief and to-the-point interesting and informative subject matter delivered regularly - I would suggest every 3 months as a starter. Surely, recipients could not be anything other than super-impressed.

Many city-based mainstream businesses take a strategic approach to communicating with their target markets. Other businesses work in an environment where this is not the norm. By making this move, I suggest, the business offers a real point of difference and the market is quick to pick up on those that are making an extra effort.

Do you want to be average – or to stand out, and above, the competition?

The buck stops at the top!

Many business owners don’t like to think about, or accept this principle, but no matter which way you look at it, it’s a fact.

However, some owners will say, “That particular issue is beyond my control.”

The reality is there are many issues external to the business that are indeed, beyond the control of business owners. (And even external issues can be dealt with in ways that limit negative impact.)However, all internal issues are totally within their control.

It is the owner’s choice to accept these situations. Once accepted, it becomes the owner’s responsibility to do something about it.

So, how does a business owner assume control of situations that he/she believes is beyond control?

The first thing is to sit down with the employee who is accountable for the situation in question and with that person, develop a written process for implementation. This provides the ideal opportunity to discuss why it is currently being handled in the way it is and to introduce the concept of a different (better, your) way of doing it.

There are probably only four reasons that an employee is not doing what is expected of him or her:

1                     Because they are not clear on exactly what those expectations are

2                     Because they do not have the necessary skills or experience to carry out required tasks

3                     Because they do not have the necessary resources to do them, or

4                     Because they simply don’t want to!

The fact is that, in each of these scenarios, it is not a people (person) problem, it is a management problem. The business owner has not provided a crystal-clear picture of the expectations (results) required from the role; not ensured the person has the required skills; has not provided the resources; or has recruited poorly, ending up with an employee whose values do not fit with those of the business.

No matter what is happening in a business; that behaviour is a direct reflection of the business owner.

Sorry, but the buck stops at the top….

Ears to success!

Tom Peters, the American Management guru states that he believes that it should be mandated for every single person in every organisation to undergo a course in strategic listening! (No-one has ever heard of such a course, but it would be great to know about one.)

 Peters was also the one to coin the phrase “management by walking around” or MBWA; this involves taking time every day to chat to your staff. Just chat. Take an interest. Take an interest in them as people. Not just an interest in what they’re doing at that point in time and how they’re doing it.

With regard to this concept of “strategic listening” - I would contend that it’s going to be difficult to get an outcome (you’re not going to hear) if you’re not asking the right questions. Many business owners don’t get this at first (some never do) but it’s a matter of thinking about the types of questions that you will ask. It’s the next stage that will determine the level of your real interest – and that is the second and third question.

How often have you been in a situation where someone has asked you something, you’ve answered only to see a cursory, nod-of-the-head response and the person has moved on? Why bother asking in the first place? And the real danger is that the next time you ask a question, the staff member thinks “Why are you asking – you’re not really interested?” You may well have lost them forever.

On the other hand, a real interest in individuals and a strategy of carefully posed questions will provide real dividends for positive management outcomes. 

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What John Matthew believes about small business

That the owner has risked many things that others take for granted;

That there is no guaranteed income or reward for the considerable effort that is required;

That often, the family home is on the line to support the business and its constituents;

That there is a dignity and self-respect that is earned;

That entire communities would be better places if there was an increased appreciation and respect for small business.

About John | Send me an email