The #1 issue for most businesses is almost always people/HR issues. We are covering it after finances, though as you usually need to be in a strong financial position to attract and afford top talent in the first place.
People are of course essential for scalability, and there are very few business models in the world that don’t need great staff to succeed.
“People are definitely a company’s greatest asset. It doesn’t make any difference whether the product is cars or cosmetics.
A company is only as good as the people it keeps.”
MARY KAY ASH
As you can see in the graph below, on average business owners earn significantly more a) after employing their first staff member and then b) once they get their staff numbers to six employees and beyond. Don’t worry about the small averages shown there either – we’ll be aiming to get your remuneration a lot higher!
We all know it’s not easy finding great staff, but the alternative is that if you take shortcuts and hire average people, you are likely to have an average business. Unfortunately, that’s exactly what most owners do, ignoring the recruitment motto they know is so very true:
“Hire slow, fire fast”
So why are so many ambitious businesses employing so many average workers?
- The first reason is that most businesses have a very poor recruitment process, or did have a good one but then got lazy. The Spring Quick Wins sheet lists over a dozen best-practice techniques that you can start today.
- The second reason is that too many business owners and managers employ people just like them. We all like people who think like us and agree with us, but usually, they are exactly the people you don’t need to addto your team. You can do that thinking yourself, plus employing the same type of people leads to dangerous groupthink, and ostracises the few who can see a different way. What you need are people who bring something different to the table. Only recruit those who share your values and vision of course, but also only recruit people who will complement your weaknesses, see other ways, and challenge your thinking.
- The final possible reason is that you’re simply not an attractive employer, which if true, is one of those brutal facts that need to be met face to face. It could be the pay, the reputation, the industry, the roles, the office/ factory, the location, or all of the above. Whatever the challenge, there are always solutions, and the second Purpose module, in particular, will be an essential starting point to fixing many of these issues as it gets to the core of why people turn up to work each day. Recruitment is only half the problem though as most underperformers are already in your business. This begs the question: if it’s so easy for owners and managers to identify underperformers, why do they act so slowly to move them on?
- The honest answer is that most people are either
afraid or ill-equipped to confront human conflict situations, especially if the person on the other end is too nice or too intimidating. Due to the nature of our national psyche, Kiwis are particularly poor in this area, especially when compared to our American counterparts who are far more commercial in business.
- We always advocate being a nice person, but ultimately you need to remember that you’re not a charity and their underperformance is exactly why you’re not earning anywhere near what you want to each year. Underperformers are almost always unhappy too, so “freeing up their future” is probably the best thing you could do for them.
- In short, when it comes to underperformers most business owners and managers need to toughen up and face the brutal truths front-on otherwise they will always hold your business back.There are two key elements we consider in the Spring BAR with regards to the value individuals bring to the business (we’ll cover culture shortly which is more a collective measure).
Ability is made up of a mix of natural characteristics and learnt skills. There are five key factors within this:
- Intellectual knowledge (IQ).
- Social knowledge (EQ – very important in order to read others and work in a team).
- Learned knowledge (specialist skills).
- Life experience.
- Industry experience.When it comes to developing new strategic ideas, industry experience is particularly important and you want a mix of people from inside and outside of your current industry.
- People with inside knowledge hit the ground running fast, bring contacts, and often bring competitor insights on how they do business.
- People with other industry experience are more likely to bring fresh new perspectives, and challenge the way things are done (especially any ingrained management paradigms which might be unknowingly holding your business back).
Your greatest source of IP (intellectual property) are your trade secrets and you have to be able to trust your staff to guard these. You also need to know that they treat the businesses money as they would their own, and you want people completely aligned with your business values. Many businesses will reject top talent on this basis alone.
Integrity isn’t a one-way street either. Surveys consistently show that one of the greatest sources of employee unhappiness is surprises. Having the transparency and integrity to involve staff in key decision-making processes goes a long way to ensuring that they continue to offer you integrity in return.
“If your culture doesn’t like geeks, you are in real trouble” BILL GATES