How to Keep Key Employees - an Ingenious Turn-key Organization pt iv

This is the last of a four-part series of articles on Developing a Self-Running Organization.  In the last post we discussed how to develop the leadership skills of your mid-managers.  By involving them in strategic planning, you can prepare your company to run in your absence even during a crisis.

Turn Line Workers into Managers

Okay, you're regularly involving your senior execs in planning and confident they're participants in your company succession plan. But how do you provide for succession of your line workers?  These may be senior people without any formal managerial responsibility but they know the ins and the outs of the organization.  Tenured employees who might be topped out in pay and marginally challenged, they are highly at risk for leaving.  They may have special skills that would be difficult, if not impossible, to replace. If they see themselves in a dead end position the threat of departure can be great.

You realize you could fix this if you could offer them upward mobility.  Unfortunately because of the structure of the organization or their particular role, while you recognize their value, they're unpromotable.  So what can you do to prevent losing these key employees?

There is a way to provide your line employees leadership responsibility in a manner that achieves a number of benefits to the organization:

• increased productivity
• cheap labor 
• clone irreplaceable employees 
• an extended interview of new employees to determine cultural and skills fit within the organization

Can you guess what it is?  It's offering internships!

Work with the local University

By working with the career center of your local college, you can offer internships to students in undergraduate and graduate programs.  Done properly, you can achieve all these benefits and more.

Assign a new intern to a senior line employee you think may need a new challenge.  Your seasoned vet gets an additional role and becomes a manager by virtue of their supervisory role over the intern.

The company benefits from the productivity of an additional employee at a fraction of the cost of a regular worker and this intern gets to learn your business during this time.   Your labor output increases and you can assess how well a potential employee would fit your organization and perform their assigned job.

Most interns won't prove a fit, but that's fine.  Most employees don't either and end up leaving.  But by utilizing interns in your employee screening program, you won't have the expenses of a new employee.

Executed properly, an intern program can relieve you of many costly burdens.  Think of the typical expense and upheaval when an employee- even a brand new one - departs:  initial training costs, training salary, benefits, incidental issues.  Often you worry about the impact on sympathetic coworkers.  Rarely, you may have legal issues based on discrimination or other matters.

With interns, you won't have all these expenses and you don't have to worry about the affect on coworkers.  Interns are typically temporary so if they don't work out you just don't invite them back.  And done properly, you invest only time.  Regardless of the outcome, your senior employee will still have reaped the valuable experience of managing and training the intern.

Extend a Job Offer to a Promising Intern

When one of your interns proves a good candidate, you can offer them a position upon graduation.  Since they'll already know the job, they'll hit the ground running and require less supervision.  Their retention probability will be much higher than if you had hired someone without a trial period.  After all, you already know they're a cultural fit.  They'll probably get to know their direct supervisor. Since a poor relationship with the boss is the top reason an employee leaves you'll have a better chance of holding onto them.

Bonus: since your new hire interned under a seasoned employee with a valuable and possibly critical skill set, you'll have taken a giant step forward to shoring up that gap.  If you had the foresight to instruct your grizzled vet to train the intern to do their job, you have another employee on their way to adding that skill to their toolkit.

There's a lot more to structuring a successful internship program - how to supervise, how to manage the project, what to stress to all parties, how to ensure your line workers are enthusiastic and competent to manage interns, how to measure results, etc. etc.   It's way too much for this short article.  If you are interested, the author is available for consulting on how to best implement this strategic advantage.  The benefit far outweighs the cost.  For additional help, feel free to contact the author.

This is the final article of this series.  You now have the tools necessary to set up your company to become self-running.  You can add any number of staff for free by using interns; your line employees will view the upward mobility and you'll lock in retention of your key employees; your senior and line managers are practicing strategic planning and delegation which lowers the costs of the company; and you and every other leader can be content the organization will run smoothly in your absence.

And isn't that what every business leader wants?  To set up a business that throws off cash without demanding a lot of time?  Now you can take that trip around the world, right?  Write in the comments and tell me what you think.  Have you used interns?  What was your experience?

Next I'll share another Ingenious Sales Technique.  Have you ever tried to reach a top executive at a company but you were simply unable to reach them?  I used this technique to reach Warren Buffet's administrator at Berkshire-Hathaway Corporation.  It's a fantastic skill from a book that I tweaked.  Stay glued.  I'll share it in the next column.  Until then,

profitable business All!

Instituting a Learning Culture - an Ingenious Turn-key Organization pt iii

Act Strategically by Training Tactically

In the last post I wrote about delegation. Teaching your executives this one skill can increase their effectiveness measurably. I also asserted that to be a great leader you should train your employees to replace you. We'll continue talking about what it takes to develop a turnkey organization: a business or department that you run, not a job that runs you.

To achieve your ultimate goal - that of creating a self-running entity that doesn’t require your constant supervision - requires you to implement long-term strategies, not rely solely on short-term tactics.  To define the two: a tactic is giving a man a fish; a strategy is teaching him how to fish. The tactical approach requires you to perform the task yourself each time you need it done. The strategic one allows you to leave and it will continue to happen without your involvement.  Your objective is to set up as many tasks as possible so they will happen without your direct involvement.

Delegation is a tactic. Instructing your managers how to train their people in delegation is a strategy. By leading your people in top-down delegation and instructing them to copy your training methods, you encourage them to think and act strategically. This is the essence of creating a turnkey organization, one that functions in your absence.

What’s the #1 Reason an Employee Leaves?

Many research firms have studied why employees stay or leave a company. In fact, pay isn’t even in the top three reasons and often not even in the top five. The number one reason surprises most leaders. Do you know what it is?

Poor management.  

It's well known among human resource professionals that Employees leave managers, not companies. For further reading on this topic, pick up a copy of The 7 Hidden Reasons Employees Leave by Leigh Branham.

So what’s the implication? Can you keep your best people if you provide good leadership, upward mobility, challenging work, and praise? The data suggests it. Guess what? These are all things you can provide your people without added expense to your organization.
As a recent McKinsey white paper shows, larger companies are also adopting more non-monetary strategies to attract and retain the best employees.

How to Cultivate Employee Loyalty?

At the consulting firm when starting a job, we routinely surveyed the senior management of our clients. One series of questions that always drew similar answers had to do with employees.When we asked why employees departed, almost all managers listed inadequate compensation, poor or inappropriate benefits, and lack of upward mobility. When asked how they were able to retain those employees that remained, these same managers reported: good pay and benefits, good company culture, and challenging work. The managers were always very confident in the accuracy of these answers.

Why Involve Subordinates in Strategic Planning?

Here's a way to forge intense bonds of loyalty in your subordinates even if the company is small, pays below market salary rates, has high turnover, and the job and industry are very difficult.  You can continue building your direct reports’ critical thinking skills by having them practice strategic planning.

Give each subordinate a copy of your business plan and have them read it thoroughly.  Then brainstorm What If? scenarios with your people and have them devise solutions.  Write down all the scenarios and their proposed solutions in your business plan. Institutionalize critical thinking in your organization to develop action plans that your team can instantly implement in a crisis.

There’s a natural gravitas, an air of stuffiness that arises when a company starts to practice strategic planning. Many executives think that only the highest ranking employees should be let in on the future view, that the whole process should be approached ultra-seriously, ultra-secretively, that everyone should walk on eggshells, and all that failure to design the right plan equals corporate death.
Balderdash! Make it fun. Be as outrageous and childlike as you can. Encourage your people to devise their own what if? scenarios and make a game of it. Give cute prizes for creativity. The best way to cement knowledge it to play with it.

By enabling your subordinates to brainstorm and solve scenario problems, you're giving them the absolute best leadership training you could.  They'll be ready to think and act on their feet when they encounter real-world problems. They won't act paralyzed as do so many managers when confronted with a problem they haven't encountered before.

A manager confronted with a crisis is a more effective leader when s/he has a plan.  And either they'll already have solved a similar problem and have a ready action plan which they can apply or modify.  In the rare event they confront an entirely new problem, they'll be so accustomed to brainstorming because of your scenario training that they'll proceed to solve it.  Eventually you won't even need to manage the process!

If your direct reports are themselves managers, encourage them to run strategic planning groups with their people. By doing this you get everybody on the same page and start to develop a turnkey organization.

Compile all the contingent scenarios and their respective solutions into an annex of your business plan to develop a truly comprehensive strategy that can serve as a future action plan - or a great starting point during crisis.  Imagine having the wealth of brainstorming when you most need it, codified into your business plan.

Having your teams brainstorm What If? scenario planning can be a terrifically valuable and enjoyable aspect of a corporate retreat.  Employees become distant when they’re disengaged and out of the loop. By having them participate in future planning, you invite your people to see the longterm objectives of the company and encourage them to help plan its future. They’ll feel they belong to the company and their work will take on renewed meaning.  What is your most prized management technique to develop subordinates?  Comment and let me know.

In the next article, the fourth and last in this series, I’ll share a way to offer upward mobility to anyone within your organization, even your line workers who might be stagnating. This Ingenious TechniqueTM will increase your productivity while saving money.  It will also develop management skills in these workers giving them leadership responsibility. Do you have a guess what it is? Stay tuned next week to find out. Until then,

profitable business All!

Time Management for Managers- an Ingenious Turn-key Organization pt ii

Developing Leadership Ability Within a Company

Just as you need to acculturate your entry-level hires, you must also train new managers.  If you hire a seasoned manager from outside the firm (a practice I strongly discourage) you will need to acculturate your new hire too.

Your strongest practice is almost always to promote from within.  The reasons for this are numerous.  Most importantly, you'll sap employee loyalty and dull the edge of your most ambitious leaders if you give a senior role to an outsider.  But your newer managers are already acculturated to your organization; why would you want to throw away that training?  Your current employees already know your current policies and the way to do things within the company.  And they already have existing relationships that will help them do their job.  Further, an insider is always more loyal to the company than an outsider.

The only reason to hire outside the firm is if your culture is weak and needs to be shaken up badly.  Occasionally a large company board will hire from outside the company.  It weakens morale but sometimes a board feels desperate.  The strategy is tremendously risky and most outside hires leave after a short time.

Best Methods of Training Subordinate Leaders

As a manager, it's my job to train each of my subordinate managers to perform my job.  Similarly, my instructions to my direct reports is to train each of their subordinates to take over their job.

Too many managers prefer to perform a task because they claim it's easier than handing it off.  But this deprives subordinate leaders of learning and growing within the company.  The first thing I drill into my subordinates is that they must delegate.  I want them to give their subordinates the opportunity to learn as well.

A leader quick to delegate is an effective time manager.  And an effective time manager effectively manages their workload so rarely experiences burnout.  As a result they can remain calm and unfrazzled in a crisis.  This is a benefit of good leadership.

To teach delegation I issue my subordinates one instruction. For every piece of paper that arrives on their desk, or every task they're handed, I insist they ask themselves: "Who of my direct reports can I hand this off to?  Who has responsibility for or is affected by this?" 
How do I do this?   By modeling this desired behavior.

Grooming a New Leader

Assume you're the CEO of your company.  You've just hired a new sales and marketing VP.   This role oversees a sales manager and a marketing director.  They both have direct reports as well.  You need to get your new hire up to speed quickly to lead their department.

Had you promoted from within, your new VP would already know and practice these techniques I'm explaining.  But let's assume you've hired outside the company.

To emphasize the need for rigorous delegation, I assign this new manager every task and swamp them with every piece of paper related to sales or marketing.  I scan a letter or email, or review a task only enough to determine the department head directly below me to whom I can send it.  Ultimately, I want each task to be delegated down to the lowest rung that can perform it, and for that procession to happen one rung at a time.  Only after I am unable to further subdivide a task, will I own it.  I instruct her to act the same way.

If my new hire tries to keep a job that a subordinate could handle, for instance a sales-only task, then I will reinforce my instructions.  She should have delegated that task to her sales manager who then further tries to subdivide it.  Similarly, she will delegate anything related solely to marketing directly to her marketing manager, bypassing sales entirely.  I will also tell her to immediately return an item back to me if I've erred and the item is broader than her department and is thereby my responsibility.

I will continue to deluge my new hire until she gets it.  Then I can start copying her on items I send to people farther down the chain of command obviously the responsibility of that billet.  For instance, I will send a question about a California sale directly to the Western Sales manager.  And she can then start leapfrogging too.

I guide my people to act rapidly on each task to prevent bottlenecks.  They will learn to speed read emails and make quick critical judgments, they learn to divorce emotion from content.

Handling assignments in this manner, the only thing on your new hire's calendar will be those items that directly affect both sales and marketing but not either one or the other.  This means the only thing on your list will be tasks that affect more than one division of the company but not a single division.

If you train yourself and your subordinates to act this way, you will discover your daily calendar freeing up tremendously.  Delegating in this manner will end up moving responsibility and activity down the chain of command.  Let's look at what this accomplishes:

• By training your people all the way down the line to delegate, they become effective time managers.  Ensuring everything runs through your new hire temporarily will also strengthen the chain of command allowing your leaders to forge stronger bonds with their people.
• For each task, the employee on the lowest rung possible will handle it.  This empowers everyone down the line, preventing information from being sequestered, and frees up the time of senior management.  This will make the organization efficient and everyone will be learning.
• If the lowest paid employees do each task, your cost of labor will decrease.
• You free up your senior people's time to react to and plan for unexpected challenges and crises.  You essentially take your managers out of crisis manager mode empowering them to become strategic planners.
• You create a company-wide delegating culture where nobody is irreplaceable.  This means anyone can get sick, take vacation, leave the company, telecommute as needed, or get promoted.  All without throwing the organization into chaos.

In the next article we'll discuss how to develop virtually bulletproof strategy while empowering your employees.  And later I'll disclose a way you can provide upward mobility to every employee in even the smallest organizations while sharpening your peoples' skills.  It's all coming your way in the next few weeks.  Until then,

profitable business All!

P.S. One of my favorite books on time management is Morgenstern's "Organizing from the Inside Out"

Acculturate your new hires- an Ingenious Turn-key Organization pt i

New employees must be acculturated

Last week I explained how to lead your customers.  This week we’ll explore how to lead your new employees and fold them quickly into your company culture. 

What is some of the scuttlebutt that employees grumble about their managers around the water cooler?   They’re overbearing, indecisive, lazy, oblivious, etc. If you sift through all the criticisms, you’ll likely discover the complaints fall into two piles: micromanagement and failure of leadership.  Both of these traits stem from fear: fear of losing control, or fear of appearing too militant.  And they're each sides of the same coin. 

Very few employees realize the difficulty involved in being a manager until they become one.  Management if often considered a thankless, arduous, and vilifying role within a company.  But approached the right way, it can be a motivating, energizing, satisfying responsibility.  With a few tools, any manager can become expert at unobtrusive supervision and grow their position into a highly respected billet within the company.

Recognizing the challenge of leadership, many companies have tried to banish the concept, flattening their organizations, or in a supreme pacifying effort, chosen to label each individual a manager… even if they manage equipment, resources, or just their own workload.  In this article we're concerned with personnel management.  Whether you manage a department of individuals or other managers, this article is for you.

You can usually determine a manager's satisfaction by gauging how they view their job.  Do they perceive the role as mainly keeping people in line, ensuring they do their darn job so they don’t have the chance to slack off?  If so, their corporate life will be bleak.  The best managers empower their subordinates – consisting primarily of getting out of the way – and ensuring they have the support necessary to do their job.

Great Managers

Do you want to be a great manager?  Then flip the hierarchical organization chart upside down and view the true essence of leadership: that you as a boss support your people; your boss supports you; his boss supports him; and so on.  You each empower your subordinates, not preside over them.

Surprising to most managers, your job is not to ensure that your employees do their job.  A boss is not a kindergarten teacher.  Your two tasks are making sure your employees have the tools and support (including training) necessary to accomplish their job; and ensuring each employee is a good fit for the company culture.

It’s more important for an employee to be a good fit culturally than be skilled at their job.  As a manager, your first priority is ascertaining whether your new hire will fit in with and preserve the company culture.  We're assuming you hire individuals with the best ability, especially in today's job employer-skewed market.  So assuming you did a decent job of hiring, if an individual is a good cultural fit for your organization, she can always be taught or, if necessary, be transferred to a more suitable billet within the organization.

Let’s take the example of a customer service rep.  He’s dynamite on the phones and gets results.   However, it turns out your new hire is a maverick, not a team player, and your organization embraces team culture.  You’ve just discovered the disconnect after hiring him.  What should you do?

If he doesn't fit in with your culture and you’re sure you can’t indoctrinate him, terminate.  Conversely, a customer service rep who is struggling with the skills of the job but has the right attitude you must continue to train and support until he progresses enough to do the job.  Will he become a star?  Maybe not, but the question is will he become better than your least competent employee?  If the answer is yes, then keep him and terminate the least competent or find another place for them.  If the answer remains no after a suitable ramp up time, then consider a related position within the company where he will be a better fit.  Do your best to retain an employee who is a cultural fit with your company.

A manager is like the captain of a ship.  It's easier and less chaotic when everyone's rowing the same direction.  You can individually upgrade each person's rowing skills over time.  But it would be bedlam to make a dramatic course correction because one guy's rowing the wrong way, no matter how strongly he rows.

Netflix has a hiring slogan: “No brilliant jerks!”  It’s more important to have the right attitudes in your people than the right skill sets.

Next week I’ll discuss how to correct an employee's behavior so neither the manager nor the employee wind up with hurt feelings.  And we’ll continue exploring the market plan.  Until then,

profitable business All!

An excellent tool that discusses cultural fit: "StrengthsFinder" by Gallup 

Power Negotiation for Superstars

In the last two posts I explained how you're leaving money on the table by refusing to raise prices and how to raise them without incurring dissent.  In future posts I discuss how and when to raise prices to achieve maximum profit by improving your brand while keeping your clients happy.

For now, let's explore another way many proprietors leave money on the table: by reacting to pricing pressure by indulging haggling.

In pure negotiation, neither party knows the other's expectation.  The first person to name a figure loses because the other person now knows their boundaries.  The counter-party can then move their own figure closer or further away from the figure as it benefits them.

Information has value, and the one who possesses more of it is better positioned.  When neither parties know the other's limits, the seasoned negotiator strives to get the other party to name a starting price.  When as in retail sales, the seller publishes the price, buyers are forearmed with the seller's expectation but the seller is not similarly equipped.  Thus a retail seller who demonstrates flexibility on price puts herself at a disadvantage because her buyer starts with more information.

Sometimes a prospect pushes for a discount.  What is their underlying motive?  Do they truly demand a reduction to buy?  Contrary to popular myth, a customer will almost never engage you in the buying process without being able to afford the product.  Price objections from customers arise when they're probing your confidence level.  If they sense you wavering, they may interpret it as a lack of confidence in your product or service.

Believe it or not, your clients hope you’ll stand firm.

To bear this out, imagine you're looking at a vehicle on a dealer’s lot.  It sports a ten thousand dollar sticker but you really want it.  The salesperson sidles up and you low ball him.  "I like this car but I didn't want to spend more than eight thousand dollars."  You expect your utterance will preface a lengthy negotiation.  But instead of negotiation the rep replies "$8000?  Sold!"

How do you feel now?  Confident?  No, you’re seriously reevaluating your decision, anxious you may have just made a huge mistake.
 
To contrast, imagine the same scenario but instead of giving in the rep smiles assuredly at your inquiry and begins outlining the value of the vehicle.  He stays firm on the price, explaining the value of the car.

As a consumer, which experience would you rather have?

In this same way, your customers expect you to demonstrate confidence in your offering.  If you exhibit conviction in the value you provide, your client will feel the validity.  When a qualified client reconsiders a purchase at the last minute or brings up price, the culprit is usually uneasiness.  Often this is because they sense a lack of confidence in the salesperson.  Your savvier consumers (often salespeople themselves) may opt to push for a discount if they feel you're unconfident.

If a customer starts to haggle or seems to question the value, realize that it is probably because you have opened the door by failing to demonstrate your conviction.  To recapture lost momentum, express confidence in the value.  Whatever you do, don't let their inquiry make you defensive.  Build trust.  Reiterate the value and assuage your client's anxiety.  Confidence is the secret to POWER negotiation!

Have you ever printed a huge run of printed material only to discover a typo after the fact?  I'll show a way to avoid that in the next article.  Look for it in the next couple of days.  And please keep your comments coming!  

Until then,
profitable business All!

P.S. For further reading on negotiation, I enthusiastically recommend Getting to Yes.

Your Prices Are Too Low!

Would you rather earn $100 each on ten customers or $10 each on one hundred?

If you answered ten customers, you’re an efficient businessperson.  Why expend extra effort dealing with ninety more people for no extra income?  You are in business to make a profit, right?

In the same way, you might be leaving money on the table, charging less to sell more volume but earning a lower net profit if your prices aren't high enough.  Ultimately, you want to charge as high a price as your most price-sensitive customers will pay.  So if everyone can easily afford to buy your product, your prices are too low.  Your most price-sensitive customers should feel the pinch.  If you never encounter any price resistance, you’re leaving money on the table.

If it’s your job to set prices, I understand you don’t want to deal with customers endlessly grumbling over increases.  But there’s an equilibrium between too high and too low, and it’s the manager’s job to determine where that point lies.  Learn to justify your value.

If the last time you raised prices was during the Bush administration – especially the first one – it’s time to do it again.  In the next post I’ll explain how to increase prices painlessly using a technique I named the Grandfather Technique.

You should raise prices each time your supplier does, and every time your market improves.  In the next post, I’ll discuss exactly how to do this.  Learn how to earn optimum profit without irritating or losing customers.  In the next few weeks I'll share how you can design advertisements that work; avoid high printing charges; learn how to calculate your clients' value to your business, and much more.

Until then,
profitable business All!

If you like the blog, please subscribe at http://bizdoc.us.