Lessons from the Tank: Can Your Employees Be the Next Scrub Daddy?
One of the most popular and interesting reality TV shows today is Shark Tank. For over ten years, it has been the show where wealthy, mostly self-made, business professionals help a small business owner achieve their entrepreneurial dreams. There have been many successful products introduced to the consumer market after appearing on Shark Tank. Take the Scrub Daddy®, for example. The concept is simple (a smiley-faced, reusable sponge in which the texture and function change with water temperature), but it has sold over 10 million units, and the growth continues. To date, the Scrub Daddy® is one of the most successful products to ever appear on the show. But where would Scrub Daddy be today if it wasn’t for the investment from one of the Sharks, Lori Greiner? According to Forbes, before Scrub Daddy was introduced on Shark Tank, it struggled to make $100,000 in over 18 months. Scrub Daddy has now made over $75 million in sales thanks to a $200,000 investment from Lori Greiner, including her time and considerable marketing muscle. Since then, Scrub Daddy has dramatically expanded its facilities and released several new products. As business leaders, we talk a lot about investing in our people, especially in this age of low retention and high turnover. So, what happens when we invest in our employees (time and dollars) the same way the Sharks invest in these companies? We continue to see several recurring trends in today’s job market. For instance, a steady paycheck, bonus, and PTO are no longer enough to satisfy employees. Employees want to feel like they are a part of something bigger than just an office job, and something bigger than themselves. The feeling that they are a part of a team that values them as an individual and respects their ideas. They want someone to invest in them. As the Millennial and Gen Z generations continue to make their imprint on today’s workforce, the “job for life” mentality of their parents and grandparents is becoming non-existent. The younger generations are focused on the concept of belonging to a team that creates value, not merely working for a paycheck. When employees don’t feel challenged, or fully engaged in the work they are doing, employee turnover rates skyrocket. As Richard Branson, the CEO of Virgin Group, has popularly stated, “Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.” The discussions around employee engagement have become so prevalent in recent years that you would think it’s second nature by now. It is also no coincidence that in study after study, increasing employee engagement is now the top priority of most CEOs. After all, research proves that investing in the talents and capabilities of your employees is one of the best and most cost-effective ways to increase employee engagement and instill loyalty. The same holds for the investors on Shark Tank. For example, when you look at something as simple as a sponge, you might not see much potential return. However, when you add a little ingenuity, time, and care, you can produce a multi-million-dollar product line. It is the same with your employees. Invest in them, and they will invest their time, energy, and passion back into the company and produce a higher return. When sourcing and interviewing for a new hire, you are putting the candidate in “The Tank.” The investors are Human Resources, Supervising Manager, Project Leader, and the Owner/CEO. The candidate’s resume is their pitch outline, showing a base overview of their strengths, skills, past experiences, and successes. Throughout the interview process, the candidate will begin showing you their behaviors and talk a little more in-depth about their past and what they aspire to in the future. Based on this pitch, the investor can decide if they want to invest in the candidate or keep looking for a “million-dollar candidate.” Investing in your employees also doesn’t have to be a Shark Tank-sized investment. In a study conducted by PricewaterhouseCoopers, the results showed that the top qualities that Millennials look for in a job are opportunities for career advancement and learning and development programs. With that in mind, employee engagement can be as simple as having an immersive and detailed onboarding program for new hires and continual training for existing employees. In a study conducted by Axonify, they noted that only 31% of employees receive formal job training. As Carol Leaman, the CEO of Axonify, states, “If employees don’t have the correct training to perform their jobs properly, they will disengage. This, in turn, will result in work quality, productivity, and customer satisfaction issues.” In the same study, 80% of workers state that it is vital to receive regular, frequent training, so they don’t forget the information, up from 73% in the previous year alone. “Training should not be a dull, isolated event, as employees loathe sitting in long, boring sessions and immediately tune out,” added Leaman. The one thing that all generations in today’s workforce can agree on is that people want training anywhere and at any time, but keep it short and offer rewards upon completion. Yes, more PTO and “fun stuff” are great additions to your workplace and may attract employees to apply, but to get them to stay and produce meaningful outcomes takes more. Views of work continue to evolve. The number of positions and companies that a person will work for in their lifetime is increasing. Investing in the capabilities of your employees by providing experiences and creating mobility ensures that they are building a lifelong career, not just a pit stop for some experience before they move on to bigger and better things. Move towards being bigger and be better by investing in your employees to increase retention, the same way Lori Greiner invested in the Scrub Daddy: provide them the resources, time, and support they need to achieve their dreams. Like the Scrub Daddy, they will, in turn, be flexible, grow, and provide you a high rate of return. SOURCES: wheniwork.com/blog/reduce-employee-turnover industryweek.com/onethird-of-us-employees-dont-receive-formal-job-training
Should You Expect a Thank You Note After the Interview?
Last April, Jessica Liebman, the Executive Managing Editor of Insider Inc., had the sheer audacity to suggest in a Business Insider article that she has a simple rule when she is hiring. “We shouldn’t move a candidate to the next stage in the interview process unless they send a thank-you email.” Liebman went on to state that bringing someone into your company is always risky. However, a thank you email (not snail mail – too slow) signals a candidate’s motivation and desire for the position and generally means they’re a “good egg.” There are only so many data points one can collect in an interview, she reasoned, that sometimes the thank-you note will make the difference in the selection of candidates. She further clarified and stated, “To be clear, a thank-you note does not ensure someone will be a successful hire. But using the thank-you email as a barrier to entry has proved beneficial, at least at my company.” So it makes sense, right? Nope. Unfortunately, it is 2019, and social media and the Twitter-verse went into hyperdrive to condemn her and her statements. Other hiring managers, reputable organizations (SHRM and LinkedIn), and publications joined the fray, with several siding in large part with those who disagreed. It got so bad, Liebman followed up with another article cheekily titled, “Thank you for reading my story about thank-you notes!” a few days later to clarify what she meant. Many people were seemingly offended that anyone would actually “require” sending a thank you note after an interview. She went on to explain she was trying to be helpful and shed some light and that, “The biggest factors we consider are a candidate’s talent and fit for the role.” It was a “rule of thumb” and not official company policy. What were the disagreements and the outrage with Jessica Liebman’s piece on sending thank you notes? Thank you notes are antiquated and pointless [apparently not to her and the many hiring managers and business leaders we talk to daily here at BEST]. Thank you notes are to stroke the ego of the interviewer. Seriously? The application and job description said nothing about sending a thank you. Liebman’s response was priceless on this point, “Neither is being on time to the interview.” Our favorite? Expecting a thank-you note is elitist and shows discrimination and bias because many people have never been taught this skill. Diversity is critical to any organization today. Different perspectives can lead to increased creativity, innovation, productivity, better decision-making, and a better work environment and culture, among many other benefits. However, we have never seen it be used as an excuse not to be courteous and to say thank you. Laziness would be a better excuse. After all, especially in a customer-facing role, would you want anyone on your team that doesn’t know how to say thank you? But it’s a candidate’s market. They [interviewer] should be sending the candidate a thank you. Liebman conceded this point somewhat in that all companies need to do a better job notifying candidates and letting them know why they did not get the position. Point well taken, and it is also something we strive for at BEST. A lot of the outrage on this could be the times we live in – where being contrary on social media is expected and merely aiming for “likes” and that all-important re-tweet. Indeed, social media can help us all whittle down the candidate pool. However, at BEST, we can only speak to our own experience working with clients and candidates and heartily thank those who disagree (because it is indeed helpful). As business leaders, hiring managers, and recruiters, it is often about overcoming buyer’s remorse. When a hiring manager or company leader is getting ready to make a hiring decision, they want that one thing that can put a candidate over the edge and calm their fears about making a bad hire. In talking with a client last month, he mentioned that he really liked the candidate, but he had not yet seen a thank you email. The next day he did without our prompting, and the job offer went out shortly after that. To the client, it was expected as well as another box to check. For the candidates we work with, our resources stress the importance of the thank you email. A candidate should always ask for the interviewer’s email address during the interview (whether on the phone or in person). Rarely, if ever, has it been questioned. After all, it is another opportunity to sell yourself to the prospective company. It doesn’t have to be a long note— say thank you, say that you want the position, and use it also to state why you are the best fit for the role (one or two reasons you are the best candidate for the job or maybe there was something you missed during the interview) and would welcome further discussion. Then, send it within 24-hours while you are still fresh in the interviewer’s mind. Where is the controversy in that? When we were hiring an intern at BEST last year, we had three strong candidates, all with equal skills, talent, and fit for the role. The deciding factor? One candidate went over and above and sent us all a personalized thank you email. He was hired and then became a permanent fixture on our team and has been very successful to date and has a bright future. The difference? His thank-you email. As record low unemployment continues and less skilled workers are available for more increasingly skilled open positions, there are already hiring and employment trends that would have been unthinkable just five years ago. So, as we enter the holiday season, a time for giving thanks and reflection, here is hoping the time-honored thank you note is not one of them. Thank you for reading, and thank you, Jessica!
Salary History? Don’t Ask and Don’t Tell
Last July, Illinois Governor J.B. Pritzker signed into law a bill that prohibits employers from asking a candidate for their previous job salary history. Illinois is not alone. In the U.S., there are currently 17 statewide bans and 19 local ordinances that have acted against discussing salary history. With more states adopting these practices in the next 6-12 months, the question of “why?” comes to mind. Some municipalities, like Philadelphia, are choosing not to follow this mandate, arguing that taking away this question was inhibiting an employer’s First Amendment right to free speech. The fact remains that asking a candidate for their salary history allows for discrimination and does not always provide the top-quality candidate that companies spend thousands of dollars trying to find. As business leaders, hiring managers, and recruiters, we have to ask ourselves— is knowing a candidate’s salary history all that important? After all, we have a set compensation range (low-mid-high) that we have budgeted for an open position. If a candidate meets and exceeds the requirements, qualifications, and behaviors for the role and fits within the compensation range, does it matter? After all, both the employer and candidate win. Maybe the employer doesn’t get the “deal” they wanted or lower their expenses by getting the candidate for less than the compensation range. The candidate may also get a lot more in compensation than they received in their last position. Is that an adverse outcome? Or could it have the effect of engaging and motivating the new employee to increase his or her performance? Think back to your last interview. You were probably a little nervous being the center of attention, knowing that one key answer could land you a job or send you back to the drawing board. You did your research on the role and knew the range a prototypical person in this position would make, but the company has not divulged their compensation range for the job. Then they ask the dreaded question, “How much are you currently making, or what did you previously make?” Most employers assume these guided questions are to measure compatibility between past and future positions. However, for many candidates, this question feels like a trap. If the current salary is too high, the candidate could be pushed aside for being overpriced or overqualified. Indicate a range that is too low, and the candidate might receive less than the value of the job. There are also ethical questions at work. Shift the Conversation When examining questions regarding salary history, there is an opportunity for labor compliance violations. This question allows for disparate impact, which unknowingly discriminates against a group of people, especially women when compared to men for the same position. According to Business Insider, a Hispanic woman makes 53% of what a white male makes in a given year. These statistics vary by state, as some have enacted policies to close the wage gap, but the average data shows that this gap is still very much alive. Assigning a salary based on past employment earnings continues errors of the past rather than righting a wrong and determining the adequate compensation based on the position and responsibilities it brings. By creating laws prohibiting employers from inquiring about salary history, many states feel they are taking a step toward complying with the Federal Equal Pay Act of 1963 and attempting to close the wage gap. How do we move forward and continue to find ways to make sure the candidate matches the role if salary history is now out of the equation? Carolyn Cowper, V.P. of Performance and Rewards with The Segal Group in New York City, advises, “Shift the conversation to the candidate’s salary expectations rather than salary history, then move on to focus on the candidate’s skill set and qualifications for the role.” Recruiters now feel it necessary to ask the candidate what they think they are worth — taking a net worth of all their talents, experience, and assets that they will bring to a new position. For example, one person could make twice the salary of another but only have half of the work ethic and drive. When you take a deep dive into the backend of the hiring process, we see that salary history tells us very little. In a study done by Workplace Culture, they reported that 86% of millennials would take a pay cut if it meant working at a company with a better company culture. Work-life balance, a culture of advancement, and education reimbursements are often more important than compensation to today’s candidates. As a business, it is in your best interest to find people that share similar values and goals to help grow the company into the future. The Market is Speaking Many states agree that it does not matter how much you made in your past job. You should, instead, be getting paid the market price of the current position. Candidates should take it upon themselves to research the standard salary rate before going to the interview, and employers should also monitor this as well to see if they’re competitive. There are many online sources for these statistics (Salary.com, Glassdoor, and PayScale). Company leaders, hiring managers, and recruiters should ask the question by taking a “Total Rewards” approach: What is your desired base salary? Bonus? Benefits? Vacation? Other rewards (for example, educational reimbursement) and then let the discussion progress from there. As record low unemployment continues, and there are less skilled workers available for more increasingly skilled open positions, there are already hiring and employment trends happening that would have been unthinkable just 5-years ago — retention bonuses, extraordinary counteroffers, and even limiting background checks. Even Non-Compete Agreements are on the block. They are already not enforceable in 4 states (including California), and resistance is growing with a Senate bill introduced last year looking for a nationwide ban. In such an environment, it stands to reason that asking for a candidate’s salary history and other employer-favored actions will become history. Be prepared.
Employee Engagement: “Did I Stutter?”
Poor Stanley. The lovable curmudgeon on the still popular TV Show “The Office” wants to be left alone so he can do his crossword puzzle in the middle of a company brainstorming meeting in peace. His boss, bumbling Michael Scott, tells him to put his game down and join the group. Stanley replies with a firm, “No.” Michael then says, “Stanley, we’re havin’ a little brainstorm session.” Stanley then proceeds to cut him off and says loudly and firmly enough so the whole room can hear it, “Did I stutter?” Michael becomes so embarrassed and flustered that he calls a quick end to the meeting so he can grab a glass of water. The episode continues with Michael and Stanley trying to come to an understanding and better define the boss and employee relationship. Do you think Stanley is engaged in his work? Do you think he is committed and connected to his organization? Do you think Michael may have something to do with that? According to SHRM, executives from around the world say that enhancing employee engagement is one of their top five global business goals. As a critical business driver in today’s highly competitive environment, employee engagement can have a significant impact on your company’s bottom line. According to The ISR Employee Engagement Report, “Companies with high levels of employee engagement improved 19.2% in operating income while companies with low levels of employee engagement declined 32.7% over the study period.” Is it any wonder that increasing employee engagement is a top-five global business goal? A highly engaged workforce is the key to retaining top talent within your organization, driving high levels of customer satisfaction and loyalty for sustained growth. However, how do you know if your workforce is engaged or not? Then once you identify low engagement as an issue, how can you address the problem before your bottom line starts to suffer? Is My Workforce Engaged? That is a good question because we often confuse job satisfaction and happiness with employee engagement. Therefore, the thought goes that if my people are happy, then they’re engaged. However, it is possible to have a happy and satisfied employee who is not actively involved in their work or committed to the company. According to Kevin Kruse, the author of Engagement 2.0, “Someone can be happy at work, but not ‘engaged.’ They might be happy because they are lazy and it’s a job with not much to do. They might be happy talking to all their work friends and enjoying the free cafeteria food. They might be happy to have a free company car. They might just be a happy person. But! Just because they’re happy doesn’t mean they are working hard on behalf of the company. They can be happy and unproductive.” Thus, happiness and job satisfaction are not useful indicators of employee engagement. It could be they have found a comfortable place to “hide” in your organization without the level of commitment and caring that could help propel your company to the next level. Gallup regularly conducts surveys on the topic of employee engagement, and they have found that nearly 70% of the workforce today is disengaged, causing employees and businesses to suffer dramatically due to increased turnover, low commitment, and reduced productivity. How to Address Low Engagement? Measure employee engagement each quarter to provide closer-to-real-time data about how your staff views the organization, their managers (who have a significant impact on their overall engagement), and their roles within the company. The powerful “heat map” it creates shows leaders exactly where problem areas exist as they slice and dice the data into targeted workforce segments (by the department, location, generation, tenure, and more). Scientifically based employee feedback surveys allow you to take a deeper dive into the company culture and pinpoint the root causes of disengagement. By collecting anonymous feedback regularly, it gives teams and leaders real-time insights from scientific data that can then be used to impact change quickly. If you’re looking to bring more meaning to your employees’ work experience and increase employee engagement and productivity, then start acting on a proven and predictive data format. We can help you build an action plan to drive high engagement and performance, which will impact your bottom line and your ability to compete better and win. In August 2019, close to 200 business executives met and issued a statement on “The Purpose of a Corporation,” radically stating that companies should no longer advance only the interests of shareholders but also invest in their employees. It could be a reaction to a changing economic environment and record low unemployment. It could also be that business leaders finally understand the importance of employee engagement. That’s right—Did I stutter? SOURCES: “Did I Stutter?” The Office, written by Brent Forrester & Justin Spitzer, directed by Randall Einhorn, 2008; Gallup Employee Engagement Poll, August 26, 2018; The ISR Employee Engagement Report by Towers Perrin; Engagement 2.0 by Kevin Kruse, Createspace Independent Pub, 2012.
Don’t Let Your Succession Plan be a Bad Sequel
When movies are made correctly and have appeal, there is no denying the impact. They win awards, inspire the audience, and fill the pockets of the movie studios. However, these blockbusters can also be the platforms for some of the biggest flops on record. After a successful movie the audience wonders what will come next, and the studio wonders how they can keep the franchise going? Good sequels can be important, expanding on worlds and delving deeper into plot lines, but a bad sequel can strain our love for the movie by losing key actors and directors, and recycling plot lines and jokes. One such example is director Allan Arkush succeeding Harold Ramis to direct Caddyshack II, which flopped and earned a 4% score on Rotten Tomatoes. Compare this to the 1980 original classic, which received 74%, and you can see the difference. The same thing can happen in business. Once it is time for a CEO or business owner to retire, the whole company can be put on edge. Many of the employees are thinking about what happens next. Are they left having to find a new job or can a new CEO/owner create the next bright sequel for the company? It might not be possible for the Dan Ackroyd’s of the world to replace the Bill Murray’s in an iconic role, but with the right director they have a better chance to make the role their own and not some cheap imitation of the past. A study from the Exit Planning Institute shows that 76% of business owners plan to transition their business in the next 10 years. However, 83% do not have a transition plan in place. Coincidentally, lack of planning is the number one reason why businesses fail. During succession planning a business needs to be transitional, meaning ready to pass leadership onto another. A business also needs to be transactional, meaning maintaining a high level of value and low debt, so it is attractive to a potential buyer. The Script The key factor that determines a successful succession is planning. One should begin this planning the moment they obtain leadership and/or ownership because succession does not happen only when one retires. The only way to beat the worst-case scenario is to plan for it and pray it never happens. With a thorough plan a company will increase in enterprise value, secure future worth, and reduce potential stress. Without a plan, the decrease in value could be substantial. According to the Exit Planning Institute, 80% of companies are simply not able to be sold and only 8% of companies actually get their asking price. When creating a sequel, the studio needs to consider how popular the first movie was and if a second would generate enough revenue. Then they choose a director, receive a budget, write the script, and cast all the roles before sending the project off for production. The same considerations need to be undertaken in succession planning. This requires weighing all your options for a successor. Most people look just to the C-suite, but is there any outside hire or fresh face in the company that should be considered? You also need to budget. How much is this transition going to cost? Are there going to be other changes that will take place that need to be considered? Next comes the company plan. Is the new successor going to use the same business model or create one of their own? The answers to these questions will help the company become more transition-ready. This means that all the transactional and transferable aspects have been fine-tuned and prepped for the next stage. In a movie you can usually tell when there will be a sequel. At the end of the movie you are left with either a cliffhanger or some unanswered questions. It is also easy to tell when a movie studio was not planning on doing a sequel but decided to release a shameless cash-grab. Typically, the sequels that are released after a movie that seemingly wrapped everything up and left no real questions are the ones that flop. Caddyshack II was a movie that did not need to be made and the director believed that enough people would enjoy it purely for the nostalgia and not notice the absence of all but one of the key characters. This lack of planning left the audience bored and consequently became one of the worst movies ever made. Your Sequel? Only careful planning and a sufficient amount of time can prevent you and your business from becoming a bad sequel. If a studio decides to make a sequel, you need to pick the “director” who wants to continue the growth of the company and lead it into the future. Budget? Focus on making the business more financially attractive so there is sufficient capital, investors, and/or potential buyers. Script? Engage in continual business and succession planning and make sure your key financial advisors, accountant, and lawyer are also involved. Casting? Work with an industry recruiter, consultant, or advisor to make sure you have the right people in the right roles. After all, your team needs to be as transition ready as your business. Succession planning is ultimately about the transaction of your life and not all sequels are bad. The Godfather II is arguably better than the first movie and is considered one of the best sequels, if not movies, of all time. Do you want to be a Caddyshack II or a Godfather II? The choice is yours and now is the time to get started. “Quiet on the set… Action!” SOURCES: PWC Family Business Survey; Exit Planning Institute; and Pew Research Center. The single largest transaction and transition of your life deserves 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.