The Training Paradox: How We Rationalize a Failure to Drive Engagement
Competition vs. Synergy. Which is it? Does training hold production back or does it lead to increased production? This is a common issue at nearly every company. “We don’t have time to train our people now, we have to meet the production results.” How often have we heard this, and said this, at our companies? Every organization struggles with engagement issues. Many business leaders have this utopian idea that we can get our workforce, should get our workforce, to 100% engagement and nothing less will do. Regardless of your belief, what is undoubtedly possible is that organizations can improve the engagement level from where it is today to something higher in the future. But how do we do this and what is the best way? There are many paths on the journey to increased engagement. The first question, before you begin the journey, is to ask, “what is the outcome I desire by increasing the engagement?” Again, there may be many answers. Almost assuredly there will be a combination rather than only one to meet the needs of any organization. In those desired outcomes is almost assuredly an increase in key performance indicators (KPIs): production output, quality output, or both. The Hidden Truth The single most important thing that an organization can do to improve engagement is to invest in and implement the training of its people. Here is the crux of the issue… Intuitively, we all understand that it is important to train our people. However, when it comes to meeting the results to which we are all held accountable, training is among the first actions that we resist with the rationalization that, “I don’t have time to train, I have to meet my production expectations. Training will just slow us down and make us miss our timeline or production levels.” So, if we rationalize away the investment in training, how can we meet the outcomes we desire: production increases? I am sure we would be amazed at the most common solution that occurs to nearly all organizations— Recruit trained talent! Unfortunately, though this was a pretty good response at the bottom of the recent recession, when the talent needed by so many companies was unemployed and readily available, today, as with most economic circumstances, this is far more challenging, outside of a spot position here or there, than such a flippant solution would suggest. In addition, when you hire outside the organization as opposed to promoting from within (which an organization might have done if it had the talent it needed) or training the current workforce, how do you think the employees feel? The Message Training Sends Numerous studies over the last decade indicate that employees want to know their company cares about them. Employees want to feel like they belong, that they have a future and a career path. So, when employees see that the positions they want are handed over to outside talent, and they remain in their roles with no professional growth opportunities available to them at their employer, how engaged do you think that workforce becomes? What happens to turnover, retention, succession planning and production? Add to the mix the fact that, as part of strategic planning, more organizations are developing powerful and energizing mission, vision, and value statements and propositions to focus the organization on a common purpose — a shared vision if you will. When you review enough of these values espoused by organizations, employee satisfaction or something similar signifying how an organization cares for its people is in almost every one of them. But, when the actions of the organization contradict these statements because they don’t adequately invest in and implement the training and development of their people, what message is actually sent to the employees and what is the impact of their engagement? “The company lies!” “Management will say anything to get what they want and does not really care about you!” “We are just cogs in a wheel.” “Employees are just numbers.” Does this sound familiar? Does this sound like an engaged workforce to you? Training and development is critical. As the Baby Boomer generation exits and Millennials enter, how will knowledge transfer happen without training? How will succession planning happen without training and professional development? Isn’t it easier and less costly to the organization to recruit entry level than to recruit middle and upper level skilled and management positions? And when your teams receive the training and professional development, what impact does that have on the attainment of your objectives— improved production and/or quality? Training and development of your people needs to be a strong component of the organization. Nothing an organization does says it cares about their people more than when they invest in them through training and development. It should not, and cannot, replace the need to recruit. Sometimes the time it takes to get an employee to the skill level needed immediately is far too long, and in that situation external recruitment will be required. But this should be the exception and not the rule. Further, external recruitment is always going to be important to bring in new ideas and innovation to an organization, but it cannot replace the need to train and develop the current workforce. Recruitment does not drive engagement. Parties, prizes, recognition are all important components of driving engagement in many organizations, but they are short lived. Only training and development provides the long term and lasting rise in employee engagement, and with it the attainment of desired production results. Do drive the engagement of your people through training and development. Avoid rationalizing it away. You will be amazed at the long-term production results achieved. If your company is ready to strategically address, improve and invest in the hiring of the most important part of any company – it’s people— please contact us today!
Organizational Success? It’s the People
Jeff Bezos, the wildly successful Founder and CEO of Amazon.com, recently shared his “three-step formula for success” with INC magazine. According to Mr. Bezos, “Success is going to require talented experts, a beginner’s mind, and a long-term orientation.” His first and most important tenet: “Surround yourself with the right people. If you’re going to accomplish great things, you need a team of great people.” Unfortunately, the reality today in most organizations and leadership mindsets is far different from Mr. Bezos and likely the reason he keeps on winning. We have sat with leaders of companies of all sizes, industries and demographics to listen to their hiring and human resource needs. An integral first step of this process is to gain a 360-degree understanding of their business and culture. These leaders share and show with great pride and passion their innovative products, mind-blowing services, new equipment, new software initiatives, new buildings, forward thinking R&D and more. However, what we find time-and-again is the most important part of a company’s success – its people – are not shown off with this same excitement or even worse – grumbled about. Their 80/20 Rule: 80% of their energy and investment in “things” and only 20% in the right people and talent that are critical to driving their success. We hear you Jeff, but look at my shiny new toy! The conversation then turns to the reason we are meeting: hiring a strong performer. Yet the leader or hiring manager is hesitant to do so. They want to pay below market and demand unrealistic productivity results in too short of a time span. They then complain about being burned in the past with new hires and want others to do this for FREE as “contingency” headhunters. Wow! This is a major disconnect. You just showed off your shiny new and expensive “toys.” You beam with pride at your new building and all of the high-level consultants you paid to help you with these capital expenditures or process decisions, and all the potential results these fancy “things” can potentially do for the company. Yet, you now want to hire a critical role that turns that investment into profit as inexpensively as possible? We are not talking about just paying below industry compensation. We are referring just as much to the process of hiring that person, the continued professional investment in that person you are prepared to make, or even taking time to properly transition a new professional into the organization. The “people” part can get messy We get it. People are the most mercurial part of a company, and our personal life for that matter. They have a mind of their own. I can control my machine or software, but I can’t control the day-to-day decisions of my employees. I can’t just build them or set my “specs” into them and walk away (robots and AI aren’t there yet). Now I have to manage (note the keyword should be “lead”) their motivations, behaviors and actions constantly. People are a lot of work. We’re not sure how to put the question to leaders or hiring managers more bluntly than this: Why do you try to get the best professionals to fit your company and culture on the cheap, but you will pay through the nose for a capital expenditure? Why are you taking time out of your busy schedule to talk with us, but you want us to “consult” and run the process for free until you “might” hire someone we present? You pay your software or your capital expenditure/process consultant hourly rates of $150-$500. You are paying your lawyer $600-700 an hour for legal advice. You may be paying your own executive coach $750+ an hour. Yet you are not going to invest in the process of hiring the best cohesive professional(s) to help your company win? Again – we get it. The “people” part of a company is a challenge and it can be messy. But all the more reason to properly invest in them from the very beginning of the hiring process. What to do? Now that we have identified some of the problems with this approach— here are some proven solutions we see working today… Invest in qualified professionals who partner with you to lead your hiring processes. You get what you pay for. What quality level of hiring advisory do you think you are going to receive back by throwing contingency recruiting firms at an important hire, while all the while doing all you can to hire someone using your overworked internal team to identify that hire properly? Hire a professional executive recruiting advisor NOT a “headhunter” or contingency recruiter. Know who and what your company is and stands for. You cannot begin to fit a person into a company unless you are fully self-aware the of positives AND negatives of your company and culture. Identify more than a job description for the role. A job description is important, but it only provides the semantics and bare minimums. Take the extra time with your Retained Executive Recruiting Advisor to clearly identify at least (3) metrics or Key Performance Indicators (KPIs) of what that person must achieve in their first year of employment. Be sure to make them reasonable. A qualified advisor will know how to help you do this. Be transparent in the process. No company is perfect, and no person is either. Be proud of your strengths and communicate how you achieved them. However, do not BOAST or oversell them to candidates. Be equally proud of your shortcomings and share them with humility when interviewing a candidate. After all, if you were perfect, you wouldn’t need them to address these challenges. Don’t blindside them when they are on board by NOT telling them where the skeletons are during the process. Have a real Transition Plan. Don’t refer to onboarding or transition as “babysitting.” Or say, “That’s why I am paying that person— they can figure it out.” An Onboard or
Employee Retention Issues? How to Keep Your BEST (Part 2)
Part 2 of 2-Part Series on the Important and Timely Issue of Employee Retention In Part 1 of Employee Retention Issues you took that long hard look in the mirror and realized you have a serious employee retention problem, and more than likely it is your fault as a leader. Just as you realize this, your bad employee retention dream becomes a nightmare. Your best salesperson resigns out of the blue. In a blink of the eye what you finally identified as a top strategic concern is now a raging fire you need to put out, even though you have a busy schedule and other initiatives underway. Now you not only have to find a replacement for this talented employee, which is incredibly difficult when skilled professionals of this caliber are currently in high demand, but you also have to temper the impact their departure will have on the rest of your team— who may be already exploring other career options. Whenever someone walks out the door, people notice, especially when they are good. Morale takes a hit, and it will push those not already looking for a way out to begin doing so. This is exactly why employee retention and job satisfaction should be placed at the top of your priorities list, and why finding unbiased professional advisory to do this so is critical. Why do I need an unbiased and independent advisor? Have you ever walked into the same room many times without seeing that someone left trash on the floor? Have you failed to notice that your significant other or a daily coworker got a haircut? These oversights are natural for us all. We get too close to our daily environment to see it objectively or with clear eyes. You may have extremely bright HR leaders on your team, but they may also be too close to the situation to provide the objectivity and tough honesty necessary to define retention strategies. Remember, you have already identified leadership as the culprit. Now asking that current leadership to figure out the answers treads on egos, fear of telling you your wrong, or concern of losing face with other employees. What retention strategies do I look for with an advisor? Before identifying a strategy with an advisor, you will be asked to begin looking at things from the employee’s point of view. It is imperative that you get out of your own way! All professionals are different with unique sets of behaviors, desires and goals. Yes, employees want to know they are being properly compensated at or above market rates. More importantly, employees want to feel they are appreciated and treated fairly. They want to be challenged and excited by their job. They then want the autonomy to do it. Provide full transparency to your advisor(s) in every area of the employer-employee relationship within your company. Only in approaching the situation in such an open and honest manner will you be able to embrace the key strategies that will improve your organization’s employee retention and boost employee morale. How? The BEST Employee Retention Process An effective employee retention program addresses all of these concerns and beyond. In fact, your efforts should start with the HIRING PROCESS… HIRE: Your recruiting and interviewing process sets the tone for an employee’s tenure at the company. Provide full transparency to candidates about the pros AND cons of your company, culture, products and their role. Clearly identify the role expectations with specific metrics they will be held accountable for. Doing so dramatically lessens the potential of a new employee feeling disenchanted that they were sold a “bill of goods” when being caught by surprise by something that should have been shared up front. TRAIN: Onboarding — Every new hire should be set up for success from the first day of work through 90 days and beyond. Develop an onboarding process where new employees learn about the job, the culture, how to contribute and thrive. Create an environment which fosters ongoing discussions, goals and opportunities to address questions and issues. Having something as simple as their business cards and workstation ready is a small way to show your commitment to their success. Mentorship — Pairing a new employee with a mentor will increase their ability to learn the ropes from a veteran with a wealth of resources and experience. Reverse mentoring is equally as beneficial in this process as the new hire offers a fresh viewpoint to an experienced staff. Training and Development — Ask each of your direct reports about their short- and long-term goals to determine how you can help achieve them and invest in appropriate professional growth opportunities for employees. MOTIVATE: Communication and Feedback — Keeping open lines of communication is essential for employee retention. Your direct reports should feel that they can come to you with ANYTHING and likewise, they expect you to be honest with them about improvements they need to make in their own performance. YOU need to proactively connect with your people and not vice versa! Work-life Balance — What message is your company culture sending? Burnout is very real. A healthy work-life balance is essential, and people need to know that management not only understands the importance but supports it. Dealing with Change —If your company is going through a merger, layoffs or other big changes, keep your entire team informed as much as you can to avoid feeding the rumor mill. Getting out in front of it, and accentuating the positive, will keep morale and motivation strong. Promote Teamwork —Foster a culture of collaboration that accommodates individual’s working styles and lets their talents shine. Clarify team objectives, business goals, roles, and inspire everyone to contribute ideas and solutions. REWARD: Employee Compensation — It is essential in this competitive labor market for companies to offer attractive compensation packages. That includes salaries, of course, but also bonuses, paid time-off, health benefits, retirement plans and all the other perks that can distinguish one workplace from another. Recognition and Rewards Systems: Make it a
Employee Retention Issues? Look in the Mirror (Part 1)
Part 1 of 2-Part Series on the Important and Timely Issue of Employee Retention There is a saying that employees don’t leave companies, they leave managers. Today they are leaving more than ever. According to recent U.S. Department of Labor statistics, the average tenure of an employee in the U.S. is now only 1.5 years. We have ample statistics that clearly indicate money is NOT the reason for employees leaving a company. They do not resign on impulse, or in a “Jerry Maguire” moment of anger, delirium or a personal epiphany. When they decided to join your company, they initially saw the opportunity as a great fit for their career and wanted it to be a successful long run. Unfortunately, somehow the wheels they thought fit came off. If you take the time to thoroughly investigate the true reason for their leaving – AND YOU SHOULD – you will likely uncover that it’s not the products, customers, industry, competition, location, coworkers, commute or tools they have at their disposal. IT’S THE LEADERSHIP! When employees or ex-employees grumble about “culture,” or that “communication is poor,” or express frustration at the lack of career progression and professional development— they are telling you that it is the leadership they are unhappy with and leaving. Clearly, company leaders are responsible for setting the culture, communication and career development within a business. For the sake of your company, and more importantly your people, take one moment as a leader and be brutally honest with yourself in answering these questions: Do you find yourself behind closed doors a good portion of the day as you strategize or execute in private? Do you put your personal gain over your employee’s best interest when making decisions? Do you consistently affix blame on the departing employee for “not following the process” or working hard or smart enough? (Have you ever blamed yourself?) Do you promise the “stars” in career progression, but consistently find an excuse why the company cannot deliver them? It’s time to look in the mirror and answer these questions. A “company” is a legal entity. A “business” is a collection of assets and liabilities. No one resigns because of that. It’s the decisions, the motivation, the atmosphere, the ethics, the support, the training, the vision, and the direction set by leadership that will properly engage employees to stay with you in a highly productive manner. If they are not engaged, then take another look in that mirror! The next time an employee resigns, resist your patterned behavior to shrug it off as, “another underperformer who didn’t follow the process.” Take a moment to reflect in that mirror on what it actually is they are resigning from. Too many times it is not the departing employee who doesn’t “get it.” It’s not the company they are leaving. IT IS YOU! So you looked in the mirror and – employee retention issues are your fault. Admitting that is a good first step. Should you act immediately to improve employee retention challenges? Can’t you just add it to the projects scheduled later this year?” Check out these two recent findings published in a recent Kiplinger report as to why you should act NOW. Unemployment held at 4.1% in December 2017. Look for 3.8% by the end of 2018 as it becomes harder for employers to find suitable candidates. The short-term unemployment rate (less than six months) has fallen to its lowest level in 65 years. Further proof of a tightening labor market is evidenced by lots of job openings in certain sectors, including heath care, food services, construction, transportation and warehousing. Openings in health care and food services are at their highest level in 15 years. If you lead a company of 500 or fewer employees, the urgency is heightened. The shortage of qualified workers is starting to squeeze small businesses. In industries, such as manufacturing and construction, many small firms are finding themselves being forced to hike wages. Not just to lure new hires… many smalls need to pay more just to keep their current workers from jumping ship. The problem will only worsen later this year. The economy is accelerating, and many small businesses want to expand in order to cash in on rising orders. But those expansion plans will bump up against the constraints of a tight job market. What are retention or engagement warning indicators you should be looking for? According to the U.S. Department of Labor: 55% of Employees are currently searching for other job opportunities. 40% of organizations report that losing key employees is the top concern. 33% of new hires quite their job in the first 6 months. 33% of employees know within 1 week if they will stay with that company long term. What do the statistics look like for companies with highly engaged employees? They are: 2x more likely to remain with their current company. 3x as likely to do something good for the company that was not asked of them. In addition: 51% are more likely to have engaged employees when companies’ values are properly communicated, clear, and understood by all. 78% of employees communicate they would retain/stay longer with their current company if they could see a clear career path for their career. “So how much is subpar employee retention costing my business?” Employee turnover costs include more than job posting fees and recruiter commissions. Some costs include, but are not limited to: Revenue loss from unfilled Jobs. Pre-& Post-employment administrative functions and expenses. Pre-employment screening and interviews for replacement hires. Training Costs for new hires and promotions. Loss of Productivity due to overworked remaining employees. Loss of knowledge transfer opportunity. Click here for the full list of 20 Retention Cost Metrics available upon request. To help you identify your company’s specific cost of retention, we found this calculator on bonus.ly that you may find helpful. Just remember to check the “assumptions” that these automated calculators use to make sure they accurately represent your company’s situation. Up Next: Click Here
Why Succession Planning is Rarely a Success
The numbers are staggering. 10,000 Baby Boomers hit retirement age every day, and 60% of all business owners are over age 55. According to recent surveys by the Exit Planning Institute, PNC Bank, and Kent State, 80% of business owners have no transition plan or have not documented or communicated a succession plan. Furthermore, 80% of these businesses are simply not saleable, nor do they have a proper talent pipeline to continue on. Of the remaining 20% that are sold, 12% will be sold, but not at the original asking price. The study also discovered that 40% of business owners did not have a plan that covers their forced exit (death, disability, divorce or illness). Perhaps Benjamin Franklin said it best: “By failing to prepare, you are preparing to fail.” Even when succession planning is undertaken by business owners, and 98% of them feel it is important, they rarely have a plan in place. When they actually do have a plan, there are several reasons why they rarely succeed… Many think it is not important and choose to focus on the transition, rather than the transactional nature of a business. If it is family business, sometimes the family grows faster than the business, and there are other family dynamics and emotional components at work that delay or prevent an effective transition. Potential future leaders leave the company looking for greener pastures. Owners simply do not adhere to the plan, and many continue to stay long past their expected date of departure. New leaders are ill-prepared to take over, or simply do not perform to the level of the original owner. A focus on the past or a mindset fixed on, “this is the way it has always been done,” not only cripples future leadership, but puts the entire future of the business in jeopardy. Politics, time, lack of commitment and fear. Not all hope is lost. We have been a part of many succession plans that have been and continue to be successful, and they all share these characteristics… The understanding that effective succession planning is more than just transitioning to new leadership, there are transactional components at work as well. They take an objective investor’s approach to looking at their business… Is the risk at a low level and is there a potentially high ROI? Operational Efficiencies: Are there efficient processes and procedures in place that can be easily managed and communicated? Financial Strength: Looking at the metrics (ratios, receivables, banking situation), is the company operating at a high level and doing more with less? Transition Ready: If the owner should suddenly leave or pass away, how easy would it be to transition to new leadership or potentially sell the business for a high return? Legal and financial preparation? We know from our own experiences, especially in a family business that is often emotionally charged, that succession planning is an extremely necessary, but difficult exercise. In fact, according to the Exit Planning Institute, after transitioning or selling their businesses, owners “profoundly regretted” it after just (12) months. A glut of companies will be transitioning or be for sale for many years to come as the Baby Boomer generation continues to move into retirement. Focus on making your company more transition-ready, and get your advisors (Financial Planners, Attorney, CPA and other key advisors) on the same page to make sure you are financially and legally ready. It is also important to focus on your emotional readiness with a life or executive coach. Also align yourself with a well-trained executive search and business advisory group that can help you find your next leader and management team, as well as help you build your organizational bench strength. Instead of planning to fail, plan a clean transfer to the next generation that has been fully prepared and wants it, or a mutually beneficial transaction or transition to a new owner. After all, succession planning is about preparing for the transition or transaction of your life. Are you ready? SOURCES: PWC Family Business Survey; PNC Bank; Kent State; Exit Planning Institute; and Pew Research Center. The single largest transaction and transition of your life deserve special attention. Are you planning to exit and sell your business? Business Exit planning is quickly becoming a buzzword in the legal and financial communities. Your professional advisors position themselves to provide tax, risk management, wealth management, and contract preparation services. BEST Exit Plan Advisor has been trained to manage your team of tax, legal, business, and financial planners to navigate your exit strategy. Click here for our Special Section for more details and a video on how to get started. If you want to see how prepared you are for transition, take the 15-minute Assessment at no charge: There is one indisputable fact – 100% of owners will eventually exit their business. The Assessment is a multiple-choice questionnaire that does not ask for confidential or financial information. Nevertheless, it is a critical first step in starting the discussion and planning process.
