I have written on this subject many times over the last few months and cannot emphasize how important it is. In a recent conversation, I heard that many Gen Zs are leaving jobs because they find the culture too oppressive. Now I can already hear the cries that they are soft, spoiled, don’t like hard work or responsibility. While some of that may be true in some cases, I would suggest rather than being defensive, CEOs and leaders need to look at their behavior to see why they are causing these issues.
Two recent examples that I heard of were:
- A company had installed keyboard activity monitoring on their employees’ computers, and if the employees do not meet a certain amount of clicks per hour, they get written up.
- A large employer is putting out a policy that if you have school-aged children and they are in an online school, then you cannot work from home.
I wonder who comes up with these “genius” plans because, in my opinion, they must be graduates of the school of “The beatings will continue until morale improves.”
These examples remind me of a discussion several years ago with an attorney who was advising his client to get all employees to sign non-competes. I pointed out that I would never join such a company, as they were hiring for my skills and were going to use them, so why should I grant them the exclusive use of my abilities, which I have developed throughout my career, for a market salary. The attorney’s view was that the non-compete stopped employees leaving with the benefit of what they had learned at the company. My response, to his chagrin, was instead of spending all this money on non-competes, if the company developed a culture and core values that attracted employees, they wouldn’t need them.
Companies that are driving away employees at a time when unemployment is at record highs, rather than criticizing their employees, should look hard in the mirror and ask where are we failing in developing a culture that attracts the best. There is an old saying, “One satisfied customer will tell one person, but one dissatisfied customer will tell twenty.” Well, today, with Glassdoor and its ilk, dissatisfied employees are telling everyone. Attracting key talent will become harder for those with many critiques. For many organizations, they will find that employees are only coming until they can find the next gig, or are just collecting a paycheck.
COVID is, as has been said many times before, an accelerant. If your culture was vague to non-existent, and you couldn’t articulate why you exist, COVID is exposing these weaknesses dramatically. Since we are having to hire and onboard virtually, culture, core values, mission, vision, and why you exist are more critical than ever. They are the glue that holds a virtual organization together and keeps it on task.
A CEO I know, in most conversations, says, “People suck” when referring to his employees. However, his business has no core values, mission or vision, or defined reason for existing. Thus his employees have no “North Star” to guide them. Without that, they make decisions that don’t align with what the CEOs would do, so he assigns them to the “People suck” world. Investing time in fixing his culture, core values, etc. would resolve many of the problems, but he views them as uninteresting. Not everything in running a business is exciting, but culture is critical.
Another business owner I dealt with had a doormat outside his office that said, “Go Away.” Since he didn’t want to deal with personnel issues and people, I am sure he found it very valuable. However, the culture in the organization was toxic, performance below par, and high employee turnover, which just confirmed his view that employees were difficult. Forcing him to develop and live core values, a reason for existing, and removing some of the toxic people who had filled the void he created, resulted in morale and performance improving, increasing the value of the organization.
Again, I often ask CEOs the following question. You are interviewing for a critical position, and the candidate in front of you is an A+ on every criterion. Before extending an offer, you ask, “Do you have any more questions?” They respond with, “Why should I work for you?”
It is incredible how few CEOs can answer this question. The typical answers are, “We are a great company. We provide a great career path.” I responded that I am sure this great candidate probably is considering a few offers, and do you think those other employers are answering the question with, “We an awful company. This position is a dead job.” While many business leaders can sell their products and services, they cannot sell themselves as an employer. I expect it is because they cannot articulate why they exist and what they stand for.
My readings suggest we are going to be living a COVID world for another year, so you cannot afford a year of dysfunction. In an accelerated environment, an organization needs to respond quickly to market conditions. The only way to do that is to move the decision making to where the information is, at the front lines. But if you want the decisions made to be the ones you expect, your workforce needs to know and live the company’s core values, and understand why it exists.
Employees that are not performing at their best often work in an organization without core values, or if they have them don’t live them, and they don’t know why the company exists. As a result, these employees are detrimental to the organization’s long term health. If this defines your organization and employees, you are likely to emerge from COVID damaged, if at all.
Defining an organization’s culture as a “Family” culture reflects tolerance to subpar performance. Rather focus on those characteristics of a “family” culture that you want.
Knowing the profit of your core customers is key to building a growth model. Many companies have identified core customers that are generating a sub-optimal profit and so they cannot realize the profits they seek. Identifying the correct core customer allows you to generate profits and often operate in “Blue Ocean.”
The European Super League collapsed within days of launch due to hubris and the founder forgetting the key parts of their business model, value creation, sales, and value delivery. The collapse might bring a high price.
Many business owners want to sell at the top of the market. However, market timing is tough. Is this the best strategy? Probably not.
Working with many companies looking to grow, I am always surprised how many have not built a financial model that drives growth. I have mentioned before a financial model that drives growth? Here I am basing on Jim Collin's Profit/X, which he laid out in Good to...
As we emerge from COVID, the current employment environment makes me think of a surfing concept: “Being Caught Inside When a Big Set Comes Through.” Basically, the phrase refers to when you paddle like crazy to escape the crash of one wave, only to find that the next wave in the set is even bigger—and you’re exhausted. 2020 was the first wave, leaving us tired and low. But looking forward, there are major challenges looming on the horizon as business picks up in 2021. You are already asking a lot of your employees, who are working flat out and dealing with stress until you are able to hire more. But everyone is looking for employees right now, and hiring and retention for your organization is growing more difficult.
“Why don’t they use common sense?!” You may have said this phrase yourself, or heard it with your managers, when discussing an employee’s actions. However, the frustrated appeal to “common sense” doesn’t actually make any meaningful change in your organization. We all make decisions based on the information we have and the guides we have to use. So if the wrong decisions are being made in your organization, it’s time to examine the tools you give decision-makers.
You can only determine profitability when you know your costs. I’ve discussed before that you should price according to value, not hours. However, you still need to know your costs to understand the minimum pricing and how it is performing. Do you consider each jobs’ profitability when you price new jobs? Do you know what you should be charging to ensure you hit your profit targets? These discussions about a company’s profitability, and what measure drives profit, are critical for your organization.
If you were starting your business today, what would you do differently? This thought-provoking question is a valuable exercise, especially when it brings up the idea of “sunk costs” and how they limit us. A sunk cost is a payment or investment that has already been made. Since it is unrecoverable no matter what, a sunk cost shouldn’t be factored into any future decisions. However, we’re all familiar with the sunk cost fallacy: behavior driven by a past expenditure that isn’t recoupable, regardless of future actions.
Bringing clarity to your organization is a common theme on The Disruption! blog. Defining your business model is a worthwhile exercise for any leadership team. But how do you even begin to bring clarity into your operations? If you’re looking for a place to start, Josh Kaufman’s “Five Parts of Every Business” offers an excellent framework. Kaufman defines five parts of every business model that all flow into the next, breaking it down into Value Creation, Marketing, Sales, Value Delivery, and Finance.