The “Why, Not That” Approach: The BEST Way to Assess Job Hopping
According to a recent Business Insider article (1/22/2023, Stacey), Gen Z is not ashamed of “job-hopping.” But does that make all of them “job-hoppers”? What is a “job-hopper,” and is it a bad thing? What does this mean for employers? Most managers see “job-hopping” as less than two years at a single employer or more than three employers in a career history over 10 years. Gen X and Baby Boomers, even some early Millennials, have all been raised believing job-hopping is a bad thing. However, the Great Recession taught us very differently, and this is the era of Gen Z’s formative years, the time when they began to be aware of and influenced by the world around them. The Great Recession taught us that bad things happen to good people. Just because you left a job that the employment market deems as a “good employer” or you have a gap in employment of 3 months or more, that does not mean you are a bad hire, a poor-performing employee, or lazy. There are many reasons people leave an employer or the job market that have nothing to do with the negative pre-conceived notions of prospective employers. Why, not that, is most important. What this Pandemic has taught us is that sometimes there are serious health issues impacting the family that necessitate leaving your employer or changes in your spouse or other family members’ employment status necessitating relocation. There are many different reasons. Additionally, the Great Recession and the Pandemic have uncovered how poorly some employers have treated and still are treating employees, giving them all the more reason to want to find a better place to share their talents. Job-hopping is not necessarily a bad thing. However, what is more important than how many jobs a person had in the last 10 years, or how long a gap between employment, is the reason for the job change and how they spent their time during a gap in employment. If the reason for a job change is a positive one, such as a move that improves the ability of a person to support their family; an opportunity to expand knowledge, skills, and abilities; or because of a spouse’s promotion necessitating a relocation to a place where there was no employer presence, then there should be no reason job changes should be looked at as negative. Even gaps in employment are not necessarily a bad thing, though you must tread carefully as to how you inquire. HIPAA, ADA, GINA, and other employment laws prohibit inquiry about a candidate’s or relative’s Private (personal) Health Information (PHI) or genetic history. You can ask an open-ended question such as, “how did you occupy your time during this gap in employment?” and let the candidate fill in whatever they want. However, suppose they volunteer that it was for health reasons, either for themselves or their family. In that case, you must be very cautious about what you do with that information and your decisions about whether or not to advance the candidate in the process. Still, the question should be asked as it is relevant and will likely remove any negative concerns about why the gap exists. If they have a reasonable explanation, the gap should not be a negative that keeps them from being considered. The labor market has been a candidate-driven market since before the Pandemic, dating back to late 2017 when the number of open positions finally surpassed the number of unemployed. What this labor market has taught us is that there may be enough labor out there for most positions, but the location of the labor relative to the location of the position is very often mismatched. So, even when there are gaps in employment, that does not mean a candidate is lazy. Instead, it may mean their skills are not aligned with the jobs in the market where they reside. In addition, despite the strong desire by candidates for remote or hybrid work, not all jobs can be performed remotely. For example, the recent tech layoffs have left many people with very specialized skills and a history of high wages unemployed. Tech positions of similar scope won’t be readily available for many of these people for a while. So, just because there is a manufacturing machine operator position open in a food processing plant within a reasonable daily commute of a recently laid-off software developer, that does not mean that person is the right fit to fill that role. It may not pay anywhere near what this person needs, given the lifestyle they built from their previous job. But, of course, the reverse is also true. A recently laid off Project Manager of a corrugated box manufacturer likely is not the right alignment for a Director of FP&A position at the logistics company just down the street from them. Let’s not forget that not all employers are as employee-centered, kind, considerate, and caring as you may be. Not all employers understand that when you care for your people, your people will care for you and your business. In fact, too many employers take the skills from their people and give back as little as possible in compensation and benefits. Can you really be upset at a person who makes a change because their previous employer operated in an unethical manner, violated compliance regulations, or treated their people poorly? Likely, a good candidate will not disparage their prior employer, but there are ways of getting the message across in a positive manner. Likely, a candidate with high integrity knows when their employer is unwilling to act ethically and will make the professional decision to leave. That candidate is likely the right employee for you as you can be assured of their ethical focus and care for your business. There are also benefits to employers for people with numerous jobs on their resumes over a 10-year period. Employers today are looking for a lot of soft skills. They need flexibility, adaptability, innovation,
BEST Receives the Certified Value Builder™ Designation
BEST invests in current and future business owner clients with the addition of a Certified Value Builder™ (CVB) Designation BEST keeps getting better – BEST Human Capital & Advisory Group proudly announces that Managing Partner Chris Cimaglio, CEPA, has earned and received the respected Certified Value Builder™ (CVB) designation from The Value Builder System™. Chris now joins an international community of trained business advisors, which incorporates the world’s leading thinkers in building value in companies for their owners and stakeholders. Chris earned his designation as a Certified Value Builder™ to support our clients’ transition goals and maximize the value of their businesses. According to The Exit Planning Institute, 76% of business owners plan to exit their business in the next ten years, and many will turn to an advisor for help. For the last four years, BEST has become very involved in the succession and exit planning process to better prepare its clients for the eventual leadership transition of their business. It was a natural extension of their Executive Search services. Many owners came to BEST looking for successors to lower their company’s dependence on themselves and assist with leadership and family succession. Other engagements arose from BEST’s HR Advisory services. BEST has now integrated The Value Builder System™ into its strategic advisory services for small and midsize business owners and CEOs. The Value Builder System™ incorporates several diagnostic tools, including the Value Builder Score, an evaluation system driven by an algorithm that evaluates a business on the eight core values acquirers consider when buying companies. The Value Builder Score provides a comprehensive assessment of the “Sellability” of your business, whether you want to sell next year or to know that you’re building a valuable asset for the future. As CEPAs and Certified Value Builders, our team is qualified to interpret your Value Builder Score. Those businesses that achieve a Value Builder Score of 90 or greater are worth double the average-performing company. In our Succession & Exit Planning Advisory at BEST, our mission is to dramatically increase your business’s value, anticipating a future sale or inevitable ownership transition. After completing a Value Builder Assessment, a confidential report measures the owner’s readiness. The report provides a process for the organization to achieve full value before selling a business. The “Sellability” of your company is not determined by the owner, your revenue, or your impressive list of customers. The buyer determines it. The Value Builder Score is based on eight factors that make a company attractive to buyers and maximize what a buyer is willing to offer. Sound like something you want to know? Then let’s get started. The single largest transaction and transition of your life deserves special attention. At BEST Human Capital and Advisory Group, we are committed to helping our business-owning clients succeed in their business and personal lives. Unfortunately, we see clients working so hard in their companies, and too many owners delaying their happiness and financial savings. Many do not have family interested in the business, which brings the question of succession planning when there is no succession? Many owners arrive at the end of their careers and find out the company is not positioned nor ready to successfully transfer to a new owner. As a result, these owners missed the opportunity to grow transferable value. On the flip side, BEST has also experienced working with owners who try to handle the business transition by themselves, which usually leaves money on the table and leads to regret.
Taking the BEST Exit and Succession Planning to a New Level for You
BEST invests in current and future business owner clients with the addition of a CEPA Designation BEST keeps getting better – BEST Human Capital & Advisory Group is proud to announce that Chris Cimaglio, a Managing Partner, recently earned the Certified Exit Planning Advisor (CEPA) designation after completing the Exit Planning Institute’s (EPI) intensive executive MBA-style program. For the last four years, BEST has become very involved in the succession and exit planning process to better prepare their clients for the eventual leadership transition of their business. It was a natural extension of their Executive Search services as many owners came to BEST looking for successors and to lower their company’s dependence on them and assist with leadership and family succession. Other engagements arose from BEST’s HR Advisory services. After training and partnering with the ExitMap® and BizEquity®, this has become a growing part of BEST’s clients’ needs. After publishing several articles on the topic and speaking at major industry events, Chris decided to complete the Certified Exit Planning Advisor (CEPA) Program through the Exit Planning Institute (EPI) to serve these growing needs better. If you aren’t familiar, the CEPA Program is the most widely accepted and endorsed exit planning program in the world, focused on cross-functional consulting and value acceleration. As a CEPA, Chris belongs to a multi-disciplinary network of high caliber, collaborative advisors in our area and across the globe. According to Chris, “This is personal for me, and I am passionate about it. I grew up in a family business and have worked with hundreds of them throughout my career. I have seen succession and exit plans work well, and others fail miserably. As a CEPA, we can now apply tested methods and approaches to change the outcome for these owners. We can do it together, collaboratively, and offer a more holistic program that helps business owners maximize the value of their business and personal financial plans to the next level and be prepared for what adventure comes next after they exit their company.” There is one indisputable fact – 100% of owners eventually will exit their business. It could be through family succession, sale, liquidation, closure, death, or any number of reasons – many of which are outside the owner’s control. According to an EPI report, over 75% of business owners who have sold their business profoundly regret it within a year after the sale. 50% of exits will be involuntary, and 40% of business owners lack even a basic business continuity plan should something happen to the owner (death, disability, divorce, or illness). BEST Human Capital and Advisory Group is committed to helping their business-owning clients succeed in their business and personal lives. They see clients working hard in their companies and too many owners delaying their own personal happiness and financial savings. Many do not have family interested in the business, which brings the question of succession planning when there is no succession? Many owners arrive at the end of their career and find out the business is not positioned nor ready to successfully transfer to a new owner. These owners missed the opportunity to grow transferable value. On the flip side, BEST has also experienced working with owners who try to handle the business transition by themselves, which usually leaves money on the table and leads to regret. We know in our hearts that it doesn’t have to be that way. 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. 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 on Exit Planning 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. Click here for FAQs and more information concerning our free, no-obligation exit planning assessment.
Business Succession Planning When There is No Succession
Insights into Preparing for the Business Transition and Transaction of Your Life The phone call was a jolt and shook us to our core. Tragically, we received news that a grower we had met during our Succession/Exit Planning Seminar at Cultivate ’21 in July was killed in a car accident. He was a good man, who had built a fine operation, but the business was highly owner-centric – everything passed through him. He had no accountant, lawyer, financial planner, or exit plan advisor and certainly no business continuity plan. We had a few discussions with him after the Seminar, but he had put things on hold. Now a strategic partner of ours is helping the family, amidst their grief, with the disposition of the business. Unfortunately, there is a long and challenging road ahead. There is one indisputable fact – 100% of owners eventually will exit their business. It could be through family succession, sale, liquidation, closure, death, or any number of reasons – many of which are outside the owner’s control. According to the Exit Planning Institute (EPI), 50% of exits will be involuntary, and 40% of business owners lack even a basic business continuity plan should something happen to the owner (death, disability, divorce, or illness). Suppose there is no family to take over the reins? In that case, the logical choices are to transition the business to new leadership and/or your employees (often through an Employee Stock Ownership Program, or ESOP), sell the business outright (to an investor, competitor, or investment group), or close up shop and liquidate. Since a company can often represent about 80% of an owner’s net worth, we will address the more wealth-saving and positive options of transitioning and/or selling the business. 48% of business owners don’t know how or have even thought of preparing for the sale of their company (PWC Family Business Survey). We have found that the best business transitions begin early and have a team of people working in tandem to maximize the value of the business and get you and your business transition ready. The Challenges “If you fail to plan, you are planning to fail!” – Benjamin Franklin The numbers are staggering. 10,000 Baby Boomers hit retirement age every day, and 60% of all business owners are over age 55. Yet, according to EPI, PNC Bank, and Kent State surveys, 80% of business owners have no transition plan or have not documented or communicated a succession plan. Furthermore, 80% of these businesses are not saleable, nor do they have a proper talent or family pipeline to continue. Of the remaining 20% sold, 12% will be lower than the original asking price. Even though 98% of business owners feel that succession planning is essential, they rarely have a plan. When they do have a plan, there are several reasons why they fail: Many think it is unimportant and choose to focus on the transition rather than the transactional nature of a business. Potential future leaders and family leave the company looking for greener pastures. As a result, owners do not adhere to the plan and stay long past their expected departure date. New leaders are ill-prepared to take over or 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 future of the business in jeopardy. Time, lack of commitment, and fear. Successful Succession Planning = Transition Ready Not all hope is lost. We have been a part of many business succession and exit plans that have been and continue to be successful. We begin with an assessment and evaluation of four critical areas of personal and business transition readiness that have a direct impact on value from an investor’s perspective and the questions they will be asking: Financial Preparedness: Valuation of the business and industry comparisons, reviewing financial metrics (ratios, receivables, banking situation, and overall financial health), and the tax impact— on the owner and the business. Is the company operating at a high level and doing more with less? Planning Preparedness: Review potential buyers, professional advisors (accountant, lawyer, financial planner, exit plan advisory, and broker), business continuity planning, and addressing owner centricity. Can the business operate independently of the owner? An owner with all the key relationships and is responsible for most of the sales, especially to larger customers, can be an issue. Are customer relationships spread out among your staff? Workaholics, who are in their operations 7-days a week and micromanage their businesses, are bad bets for a potential buyer. 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? Revenue and Profit Preparedness: Consistent sales and profits— The ability to drive revenue but not at the expense of margin. New product/service offerings, new markets, diversification, and those elements of your operation that deliver consistent sales and profitable results. The presence of recurring revenue is also important (long-term contracts, vendor agreements, and leases). Bankability— Are there well-prepared financials and key performance metrics with predictable and reliable cash flow? Operations Preparedness: Do you have up-to-date modernized systems, and are your processes and procedures efficient? Is information readily available? Review management, systems, technology, standard operating procedures, and operational efficiencies. Are you staying on top of trends? Website, eCommerce, email lists, social media are all critical. Are there efficient processes and procedures in place that can be easily managed and communicated? The next step is to optimize and accelerate the value of the business before a sale or transition and understand that effective succession planning is more than just transitioning to new leadership. It is a process that could take several years, so it is never too early to get started. There are transactional components at work as well. Owners need to take an objective investor’s approach to their business— Is the risk at a low level, and is there a potentially high ROI? Addressing
The Missing Employees
Are you missing employees? Where did they go? I just got off the phone with a restaurant owner who temporarily closed one of his locations so that he could redistribute the staff to the other three. I’ve also heard or seen in the last week: A Starbucks closing at 4:00 PM for lack of staff. A director in a large accounting firm reporting that two pay raises in 9 months (for remote employees) are being characterized by the 30-something accountants as “non-competitive.” Apple employees publishing an internal letter saying the company’s plan to require 3 days a week attendance is “unacceptable.” A wire service story noting that only 12% of office workers in Manhattan have returned to their offices. The manager of a new restaurant scheduling 27 interviews, then sitting through 26 no-shows. Wait times for services businesses that are are unworkable for customers. Our tree trimmer offered me a date 4 months out. The pool contractor’s backlog is seven months. Both claimed insufficient crews to handle the business. I talk to at least a dozen employers a week, and all are complaining about the lack of qualified applicants. Several have raised their starting wage rates multiple times, with no discernable change in the flow of applicants. What the hell is going on? To start, I don’t believe that it’s all the fault of supplementary unemployment benefits. It is true that the states which discontinued the supplements have somewhat lower unemployment rates, and that $300 a week is enough to entice a $10/hour employee, but the missing employees are across the wage range. Factors Driving the Shortage and Wageflation One fact is that the economic rebound since 2009 has not previously had much impact on wages. They were bound to catch up at some point. The Federal Minimum Wage of $7.25 an hour is now insufficient to pay for basic apartment rent anywhere in the USA. Supplementary benefits or not, no one wants to put in 40 hours a week and not be able to live on what they earn. Another is the absorption of women into the workforce. For much of the ’80s and ’90s, women working for the first time represented a net addition to the number of available workers. This had a depressing effect on wages, as there were more bodies chasing limited jobs. The employment market has adjusted to this new normal. Remote working has frayed the cultural relationship between employers and employees. Where workers often stayed in a job because they had friends there, or were comfortable with their responsibilities, now salary is rapidly becoming the only factor they consider. The inflationary pressures of deficit spending are shrinking the buying power of static paychecks. The lessening of COVID-19 is releasing a backlog of employees who “wanted to move anyway,” but were hanging on to what security they had through the pandemic. Most importantly, over 50% of the Baby Boomers are now over 65 years old. Generation X is much smaller, so these retirements impact mid-level employees and managers the most. The available pool of experienced people is literally shrinking. Missing Employees and Exit Planning If you are one of the Baby Boomers who are now 21% of the population but still own 51% of the private companies in the U.S., missing employees will impact you in more ways than just on your daily workload. Increased labor costs will have a direct impact on profitability, and therefore valuations. The challenge of retaining employees long enough to develop true proficiency is growing. Higher turnover means you’ll need more people for the same tasks. The long-term commitment of a relationship where someone is in training to assume control of the business becomes in many cases, unimaginable to an employee. Lack of experience in a management team also detracts from enterprise value. In businesses that depend on repeat customers, relationships may need to be reestablished regularly. I saw a cartoon a few weeks ago. An owner is talking to his employees. He says “When we said you were essential workers, we didn’t mean you should be paid like essential workers.” Perhaps they can be forgiven for misunderstanding. In our mission statements, we often say that employees are our most important asset. It looks like we may have to put our money where our mouth is. John F. Dini, CExP, CEPA is an exit planning coach and the President of MPN Incorporated in San Antonio, Texas. He is the publisher of Awake at 2 o’clock and has authored three books on business ownership. 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. 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 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. Click here for more information concerning our free, no-obligation exit planning assessment.