Do you know your Profit per X to drive dramatic growth?

Do you know your Profit per X to drive dramatic growth?

I recently facilitated a workshop with several CEOs where we worked on the dramatic business growth model components. One of the questions that I had asked them beforehand was, “What is Your Profit/X?” The results showed that there this concept is not clear to many. So I will try to provide some clarity below.

What is Profit/X?

Jim Collins, in Good to Great, said,

“The essential strategic difference between the good-to-great and comparison companies lay in two fundamental distinctions. First, the good-to-great companies founded their strategies on a deep understanding along three key dimensions; what we came to call the three circles. Second, the good-to-great companies translated that understanding into a simple, crystalline concept that guided all their efforts … one particularly provocative form of economic insight that every good-to-great company attained is the notion of a single ‘economic denominator.'” 

The economic denominator is Collins refers to is “X.” So if you could pick just one “profit per X” ratio to increase over time systematically, what “X” would have the most significant and sustainable impact on your business?

Whatever it is, it is your single, overarching KPI, and to achieve that status, it needs to meet the following:

  • Everyone in the business knows it.
  • It is the factor by which all significant, strategic decisions are measured.
  • It has a positive impact on revenue and is cost-effective
  • More “X” is desirable.
  • It is tightly aligned with your long-term vision.
  • It is unique within your industry.
  • It should improve your team’s discipline and focus.
  • It should decrease the likelihood of spending on initiatives that end in failure or don’t align with your strategy.
  • It can always tell you whether you are trending forward or backward? 
  • Everyone understands their role in driving its improvement.

How do you determine it? 

Again from Good to Great, “The denominator can be quite subtle, sometimes even unobvious. The key is to use the question of the denominator to gain understanding and insight into your economic model.”

So, determining your “profit per X” is not just choosing what appears to be the most obvious answer, as many do. Instead, you need to understand your company’s economic model. Don’t just accept any denominator, but figure out what is the strategy to increase it.’

However, determining your “profit per X” is difficult! It requires an investment of time and effort and will be the source of many debates and disagreements. Not only that, but once you do agree on your unique KPI, it needs to be managed, which is also tricky. Finally, it requires the discipline to review and monitor it continually; otherwise, it won’t provide helpful insight.

Determining your unique economic denominator is difficult. Because it’s complicated, many companies are unwilling to invest the time and effort required for this exercise to succeed. 

Remember, what works for one company may not work for yours!

Those who struggle to determine it?

Some of the CEOs I asked struggled to develop their “profit per X.” What is apparent is that those companies are not clear on their core customer and marketplace, so they cannot clearly articulate what problem they’re solving and for whom.

A CEO didn’t have the data on their profitability per client, so without that, they couldn’t determine effectively who their core customer is. However, he informed us that the larger customers were the most profitable. Suppose the data shows that is the case. In that case, they are probably over-servicing their smaller clients and making barely any money from them.  If the company lost all these smaller clients, they would be only marginally worse off.  It would be better for them to focus most of their resources on our higher value, larger customers, which will lead to exponential growth.

It needs to align with your strategy.

It is critical that “profit per X” is tightly aligned with your long-term vision. Many companies either pull a random number out of thin air or align it to a vague aspiration statement. That will not work! Your strategy and “profit per X” must support each other, and your strategic goals should be measured in the same units as “X.”

Some of the CEOs I mentioned said “gross profit per FTE” and another revenue per FTE with a general assumption on profit levels. The latter fails the test above because no one in the company knows it, gets behind it, and it’s not measured regularly. Gross profit per FTE reflects efficiency, but does it align with the strategy and drive growth? If the strategy is to be the most efficient in the industry, maybe. But if your strategy is to grow to $XMM in revenue and be the market leader, probably not. Using up valuable management cycles and energy to improve efficiency will distract from your growth objective. Instead, find a “profit per X” that drives revenue growth.

Unique within your industry.

When discussing this concept recently, someone mentioned that they didn’t believe it needed to be unique to your business. However, suppose the key driver in your economic engine is the same as your competitions’. In that case, you are all focused on pursuing the same outcomes from the same market. The result is that you are viewed as a commodity rather than differentiated from your competition. Once you’re a commodity, it is a race to the bottom.

Also, a good “profit per X” can provide an advantage to your business even during an economic downturn by differentiating the company from the competition and focusing on revenue and costs containment. It can help a business succeed, even if it’s in a dying sector.

Here are some examples of how uniqueness can enable your business to scale dramatically.

Walgreens. In Good to Great, Collins uses Walgreens chemists as an example. The industry model was profit per store, so to increase “profit per store,” the trend was fewer larger stores. Instead, Walgreen adopted the Starbucks model of profit per customer visit. As a result, they focused on opening lots of smaller stores instead of a few big ones. With more (conveniently located) stores, customers’ likelihood of coming to one of their stores increased. Since the customers were no longer visiting for a single purpose, customers’ spend per visit increased.

Southwest Airlines. The world’s most profitable airline. Southwest identified that their core customer was someone who would otherwise get the bus or drive. They weren’t solving the problem of a Fortune 1000 executive who needs to fly from the US to Europe on a flatbed. With customer clarity, their “Profit per X” was profit per airplane. They made their money while their planes were in the air. They identified their competitors, not as other airlines, but bus companies. So, their business was focused on price. They stripped out food and assigned seats to increase profit per airplane and only used one model – the 737.

Autopia car wash. Like many companies, it was focused on “profit per customer.” While they offered car wash memberships, the “profit per customer” metric showed membership customers were less profitable. They took up more admin time to update credit card details than single-transaction customers. 

However, looking at the data and examining the company’s economic engine, the CEO realized membership customers were ten times more valuable, not the inconvenience he perceived. The company pivoted its model to focus on memberships, making customer satisfaction and member benefits central to the strategy.  Profit per membership card became the new “profit per X,” the one metric that drove the company’s growth. (Thanks to Doug Wicks, a Scaling Up coach, for sharing this story).

New System Laundry. New System Laundry serviced the hospitality industry, picking up and delivering laundry. Again their “profit per X” was profit per customer. However, given their core customer, they could only scale the business by increasing business per customer or prices. They re-examined their business and economic model. Changing their “profit per “X” to “Gross profit per truckload” enabled them to focus on reducing cost per delivery through more efficient delivery routes and schedules, customer clustering, and core customer locations. They added new customer locations strategically, and the business grew dramatically! 

A jewelry design firm. Their initial “profit per X,” like many, was profit per customer. However, looking at the data, it was apparent that many showroom customers were not profitable as they took up too much time and didn’t spend enough. As a result, the owner closed the showroom and moved into a studio, taking customers by appointment only. Taking appointments on weekends and offering champagne and hors d’oeuvres while customers shopped, revenue per appointment increased over 400%. As a result, “profit per X” is now “profit per appointment.” By optimizing appointments, the business can scale dramatically. (Thanks to Glen Dall, a fellow Gravitas coach, for sharing this story.)

So what is your “profit per X?”

As I have tried to show above, profit per X is different for everyone. It needs to align with your strategy and drive dramatic growth. What works for one company doesn’t necessarily work for you. 

Below are some examples to get you and your team’s imagination going about what is the unique economic denominator for your company:

  • Profit/customer visit or interaction
  • Profit/customer
  • Profit/employee
  • Profit/location
  • Profit/geographic region
  • Profit/part manufactured
  • Profit/division
  • Profit/sale
  • Profit/purchase
  • Profit/life of the customer
  • Profit/plant
  • Profit/brand
  • Profit/local population
  • Profit/invoice
  • Profit/market segment
  • Profit/store
  • Profit/square foot
  • Profit/fixed cost
  • Profit/recurring revenue client
  • Profit/seat
  • Profit/plane
  • Profit/product line

If you would like help determining your “profit per X” and dramatically scaling your business, contact me.

(c) Copyright 2021, Marc Borrelli

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Five Ways to Attract Prospective Employees

Five Ways to Attract Prospective Employees

Like many of my clients, if you are experiencing significant increases in business, you’re noticed that there is a War for Talent! That is not surprising. There are approximately 9.3MM job openings and 9.5MM unemployed, so demand is about equal to supply. So how do you find employees? Without getting into political arguments about the lack of employees, here are five ways to attract prospective employees better.

If we take the business model that I have outlined before, which I believe can be applied to many situations, e.g., Recruiting employees and the collapse of the Superleague. So, I will examine attracting employees through the lens of:

  • Value Creation
  • Core Customer
  • Brand Promise
  • Value Delivery

and the fifth item is “Spread the Word.” You don’t want to be the unknown greatest secret among employers!

Value Creation

Value Creation in hiring refers to Why Should I Work for You? 

The first part of this is the company’s mission, or as Patrick Lencioni puts it, “Why do you exist?” Articulating a reason for existing that will resonate with the prospect is critical. There is much research by McKinsey and others that shows that if the employee can identify with the organization’s mission, they are more likely to stay and be more productive. Thus, know your mission! It needs to be succinct and easy to understand. But the entire organization needs to know it and express it the same way so that the prospect believes that you believe in it.

Second, you need to explain why the prospect should work for you. Having asked many CEOs, the following hypothetical.

You are interviewing a candidate, and they are “It.” They are an “A” player, exactly what you need and want, and you about to offer them the opportunity. Still, before you do, you ask if they have any more questions. The candidate looks are you and asks, “Why should I work for you?”

To date, not a single CEO or business owner answers this question in a way that would attract the candidate. The most common answers I get are, “We are a great company,” “We offer employees great opportunities,” and “This is an exciting place to work.” If these are your answers as well, consider the following. Do you think when the candidate asks your competitors the same questions, the responses are:

  • “We are an awful company.”
  • “This is a dead-end job where employees’ careers go to die.”
  • “This company and position are boring beyond belief, and nothing ever changes. There is no excitement or challenge.”

Of course not! They provide the same answers as you.

What to do? Consider the question and have a response ready that is supported with details and stories.

  • If you are a great company, explain how in a way that resonates with the candidate.
  • If you offer opportunities, tell stories of how employees have had great opportunities at all levels and how they have progressed.
  • If you are an exciting place to work, show how and make sure the energy is reflected in your tone and attitude.

Being able to articulate this is more critical than many CEOs, and C-Level people realize. Prospective employees have many options. If you want “A” players to take your organization to the next level, you have to stand out from the rest and show them why you are the best choice. Being the “Tallest Pigmy” is not going to cut it.

Core Customer

As with Customers, we determine our Core Customers, so we know how to market and sell to them. With employees, we need to determine who is our “core employee.” As Jim Collins has often said, culture is more important than skills as the job will change, but having people with the same values is critical! Also, you can teach skills much easier than you can teach culture. Hire for core values! Ensure that all the people involved in the hiring decision can determine that the prospect has the correct values. Finally, if you hire them, ensure that your onboarding process makes those values a habit!

Because Core Values are critical, companies that permanently rely on temp agencies are making a mistake. Temp agencies provide you with someone who can fog a mirror and do the job, but there is no test for culture. So, they don’t last, and if you have to get a new temp in who needs training. The cost is high, and productivity is low. Finally, the temp agency is competing against you. If they have another client who will pay the employee more, your temp employee is gone. While temp agencies may solve a short-term problem, they are not the solution many think they are.

Brand Promise

As with customers, you have a brand promise to convert prospects into customers; what is your promise to your employees. What are you offering them other than a salary? A CEO once told me that he couldn’t keep employees, but when we discussed it, the only thing he could say that he offered was a salary, which was in line with the market. No wonder none of his employees stayed. What you offer is not just a salary, but you need to consider things like:

  • Benefits;
  • Career advancement and development;
  • Further education and training;
  • Other opportunities; and
  • Feeling part of something bigger.

It reminds me of Cameron Herold, who, on the first-day offer that an employee joined the firm, used to celebrate to welcome them to the company. At this party, the new employee had to prepare their bucket list. The company used to commit to helping them realize an item on it during their first year. Helping didn’t mean paying for it but instead finding a way to work with the employee to realize it. Doing this gained a tremendous amount of company loyalty.

More recently, a client was telling that her daughter had just joined a new company during COVID. A few days after accepting the offer, her daughter received a laptop and a large computer monitor to help her work. The daughter was so excited about the monitor. She felt that the company cared about her and her performance, increasing her loyalty to the new employer.

Value Delivery.

How do you measure value delivery with customers? NPS scores. Well, do you get NPS scores from your employees or get them to complete Gallup’s Q12 Employee Engagement Survey? I do these for my clients. Doing these things will enable you to understand if you deliver on your promise and show that your employees are engaged. You can use this as recruiting materials. (If you are interested in having an NPS and Gallup Employee Surveys done, don’t hesitate to get in touch with me.)

Get employee testimonials from employees at all levels. The strongest recommendation you can have is from your employees in their own words. Get them on video so that prospects can see how strongly your employees feel about the company and how you deliver your brand promise to them.

Spread the Word

Finally, most companies have no information on their website about any of these things. At best, a few websites ask you to submit a resume without even listing any jobs. Why would an “A” player do that? If this is the best you offer, you are not attracting them. Your website needs a section in the top menu for employment opportunities. It needs to tell prospects:

So, attract them.

While the above is not a guarantee to fill your empty positions, it will help great employees find you and be interested in working for you. If someone applies and appears to be a great candidate, but you have no role for them, find a place for them or keep them in a talent file for when a need arises. As with selling, if you don’t get the message out that you have a great product, meet your brand promise and have the data to prove it, you need to do this with hiring. Failure to do so will limit your success. Just because you are a company, realize you are now fighting for employees, and you need to work harder!

 

Copyright (c) 2021, Marc A. Borrelli

 

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Are you killing your firm’s WFH productivity?

WFH during COVID did result in the falling of productivity that many feared. Surveys showed that productivity remained the same and, in some cases, increased. However, a new study of more than 10,000 employees at an Asian technology company from April 2019 to August 2020 provides a different picture. Using software installed on employees’ computers that tracked what the employee was doing, the research confirmed that the employees worked hard. Total hours worked were 30% higher than pre-COVID, including an 18% increase in working outside regular hours. But this additional effort failed to translate into an increase in output. 

This research confirms early survey evidence where both employers and employees felt they were producing as much as before. However, the correct measure of productivity is output per working hour, not hours worked. Using this measure of productivity, productivity fell by 20%.

The research further analyzed the time the employees spent in:

  • “collaboration hours,” time spent in various types of meetings, and
  • “focus hours,” time where they could concentrate on their tasks and weren’t interrupted, even by email. 

The data showed that despite working additional hours, the employees had less focus time than before the pandemic as meetings consumed the extra time. The study supports Bartleby’s law which states that “80% of the time of 80% of the people in meetings is wasted.”

Why were there so many meetings?

  1. Managers can check on their team’s performance as they are less sure of the team’s commitment.
  2. Managers call many to validate their existence when they are not in the office. 
  3. The increased difficulty of co-ordinating employees who are working remotely. 

The latter suggests that WFM is inefficient, not to mention that remote employees also spend less time being evaluated, trained, and coached.

So, while workers saved commuting time, they didn’t hourly pay fell. However, WFH did not impact all employees similarly.

  • Those who the longest tenure with the company were the most productive, suggesting they could use well-formed relationships to work more effectively. Simon Sinek explained this in a recent video
  • Employees with children worked around 20 minutes a day more than those without, implying an even more significant fall in their productivity, presumably because they were distracted by child-care duties.

The researchers point out that the firm’s staff are nearly all college-educated whose roles “involve significant cognitive work, developing new software or hardware applications or solutions, collaborating with teams of professionals, working with clients, and engaging in innovation and continuous improvement.” The impact on other types of employees could be very different.

WFH expectedly resulted in teething and coordination problems as it was imposed suddenly. However, since the study stopped last August, there is a question of whether employee productivity has increased since. Most important from the research is that employees achieved the same output with slightly less ‘focus time’ than at the office. The real culprit of inefficiency was the time spent in meetings. 

Conclusion

So, to increase your firm’s productivity, don’t have as many meetings and keep them short. Ensure that the behaviors you accept and expect as part of your firm’s culture are not encouraging non-productive meetings. Also, with a move for more WFH, start building behaviors that will encourage meeting efficiency. Finally, there are a number of ways to improve meeting productivity as I mentioned in Not Another **** Meeting.

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For those of you who are not aware of EOS, it is the Entrepreneurial Operating System. It seeks to improve businesses by getting six components aligned to enhance business operations. The six are:

  • the vision
  • the people
  • the issues
  • traction – meetings and goals (“Rocks”)
  • the processes; and
  • the data

I am a supporter of EOS in that I believe all companies should have some system to improve their performance. However, as I have worked with clients who have implemented EOS, I found that it is just that, an Operating System and not a business model that enables the organization to grow!

As defined by Wikipedia, an Operating System is “the software that supports a computer’s basic functions, such as scheduling tasks, executing applications, and controlling peripherals.” So for a business, I defined it as “a model that supports the company’s primary functions, such as identifying a vision, getting the right people in the organization, improving meetings, defining goals (rocks), etc.” At the risk of upsetting EOS Implementers®, I think EOS satisfies these metrics to a varying degree, but in most cases, doesn’t enable the company to build a growth engine.

Here is what I believe is missing to develop a growth model.

The Hedgehog Concept

In Good to Great, Jim Collins talked about the Hedgehog Concept named after Isaiah Berlin’s essay, “The Hedgehog and the Fox,” which divided the world into hedgehogs and foxes. The theme is based upon an ancient Greek parable where “The fox knows many things, but the hedgehog knows one big thing.” Collins found that those companies who became great followed the Hedgehog Concept. Those companies which didn’t tend to be foxes never gaining the clarifying advantage of a Hedgehog Concept, being instead scattered, diffused, and inconsistent. 

The Hedgehog Concept is based on the questions prompted by the three confluence of questions. 

  • What can you be the best in the world at?
  • What are you deeply passionate about?
  • What drives your economic engine?

The EOS Model® doesn’t focus on the hedgehog concept, and so many companies using EOS have goals and strategies based on bravado than from understanding.

Knowing your hedgehog concept will keep the organization focused on something that aligns its passion with what it can be the best at. Being good at something means you are only good and indistinguishable from many others. If you are the best at something, then you stand above the crowd. Finally, the economic engine keeps the company focused on a metric that drives profit.

Vision

While the EOS Method® works to develop a ten-year goal, I find that is not as compelling as Jim Collins’ BHAG. A BHAG, Big Hairy Audacious Goal, is a clear and persuasive statement and serves as a unifying focal point of effort with a defined finish line. It engages people, is tangible, energizing, highly focused, and often creates immense team effort. People “get it” right away; it takes little or no explanation. 

A visionary BHAG is a 10-25 year compelling goal that stretches your company to achieve greatness. It should be a huge, daunting task, like climbing going to the moon, which at first glance, no one in the company knows how on earth you will achieve.

As Collins’s noted, the best BHAGs require both “building for the long term and exuding a relentless sense of urgency: What do we need to do today, with monomaniacal focus, and tomorrow, and the next day, to defy the probabilities and ultimately achieve our BHAG?”

Profit/X = Economic Engine

The BHAG’s economic engine is the concept of Profit/X. In Good to Great, Jim Collins defines this strategic metric as “One and only one ratio to systematically increase over time, what x would have the greatest and most sustainable impact on your economic engine?” Unfortunately, too many companies don’t have an economic engine, so they fail to deliver hoped-for profits. This metric is not easily identified; however, Collins noticed that the companies that took the time to discuss, debate, and agree on one key driver for their economic engine are the ones that went from good to great.

Profit/X how you choose to make money; it is a strategic metric, not an operational one. This ratio is a key driver in your financial engine and when you make decisions about how to spend money. When developing your Profit/X, you need to have that is unique and not the industry average because if you choose the latter, then everyone will be pricing and driving costs the same way to maximize it. Like the BHAG, a correctly defined Profit/X will promote teamwork as everyone can focus on their role to drive the metric, from how many people to hire, where to open new operations, etc.

Here are some examples of Profit/X.

  • Profit/customer experience or customer visit
  • Profit/customer
  • Profit/employee
  • Profit/location
  • Profit/geographic region
  • Profit/part manufactured
  • Profit/division
  • Profit/sale
  • Profit/brand
  • Profit/local population
  • Profit/invoice
  • Profit/market segment
  • Profit/store
  • Profit/plant
  • Profit/purchase
  • Profit/square foot
  • Profit/fixed cost
  • Profit/recurring revenue client
  • Profit/seat
  • Profit/plane
  • Profit/product line
  • Profit/life of the customer

To frame this in a real-life context.

Southwest Airlines: Profit per plane

Walgreens: Profit/Customer Visit

New System Laundry: Profit/Delivery Truck Load

I think the EOS Method® ignores the following areas, but to me, they are part of the Hedgehog Concept. If you are doing something with clarity and focus, you need to have clarity and focus on these areas.

Value Creation

It is said, “A Business That Doesn’t Create Value for Others is a Hobby,” so what value does your organization create? Value creation is part of what you can be the best at. However, organizations need to know, “What is the problem they are seeking to solve for their customers.” Christian Claytonson defined this as “What is the job your customer is hiring you or your products to do?” Too many organizations define the job to be done as what they do, e.g., “We integrate your systems.” While that is what they do, that is not the job they are hired to do. The job they are hired to do may depend on the client but could be, “Provide information from across the organization to make better-informed decisions.” Knowing the job to be done enables your marketing and sales efforts to focus on the customers’ needs rather than on what you do. No one cares about what you do; they care if you can solve their problem. I don’t see the EOS Model®’s focus on this crucial question, but it is central to a company’s growth.

Core Customer

Who is the company’s core customer? I have discussed this before, and many companies can identify their core customer. However, most haven’t analyzed their customers from the point of view of Profit/X. If Profit/X is the driving metric of the organization’s profitability, then failing to know which customers meet and exceed it is crucial in defining your Core Customer. There is little point focusing on a Core Customer that doesn’t meet your economic engine’s critical financial metric, hoping that somehow you will magically capture the lost profit elsewhere. Furthermore, if you don’t know your Core Customer, your marketing and sales activities will be directed towards the wrong groups, further weakening your performance. 

Brand Promise

What is your Brand Promise, and how is it measured? This question is one that the EOS Model® doesn’t address. However, it is crucial.

  • It is what convinces your targets to buy from you. 
  • It is what you stand for and promise to deliver. 
  • It is the metric against which you will be measured.

Some organizations do have a brand promise, but it is not measurable. In that case, it is “valueless” because if it is not measurable, no one knows if you are delivering it, and in that case, it has no value to prospects or clients.

Value Delivery

Value delivery is vital for knowing how customers value the performance of the organization. While the EOS Model® discusses many metrics, this one does not get enough focus. Companies need to understand if their customers are satisfied with their performance. Recently, I spoke with a CEO who said that 80%+ of their customers were “Very Satisfied.” However, on further investigation, I discovered:

  • It was just a guess as they didn’t measure it.
  • 7 – 10% of their customers had complained in writing about their product and delivery in the last year.
  • None of their clients had recommended them.

Here is wishing over reality. I would expect that the company had a “Very Satisfied” score of less than 25%, and they should be working hard to improve their delivery and start collecting customer satisfaction data.

Critical Number and Counter Critical Number

The EOS Model® deals with goals (Rocks) and meetings, and that is one area that I think it does very well. However, I notice that the Rocks are not aligned to improving a critical number for the quarter. The Rocks should seek to improve some Critical Number each quarter. Without a Critical Number, you are once more a Fox, not focused. Those that use Scrums know the importance of the Critical Number. 

Rocks are great, but they need to improve a single business area to have the most significant benefit. As the saying goes, “You cannot defeat ten soldiers by sending in one soldier every day for 100 days.” For example, if our Critical Number is Customer Service in a Call Center, then the Rocks could relate to:

  • Hold time
  • Time on the call
  • Customer satisfaction at the end of the call
  • Percentage of calls resolved in one call
  • Employee satisfaction.

The Counter Critical Number is essential to preventing the critical number from overwhelming the company and leading to adverse effects. For example, if our Critical Number is project completion, then a Counter Critical Number would be customer satisfaction. This metric would counter the attempt to deliver incomplete or defective products or projects.

Focusing on a Critical Number and Counter Critical Number for the 13-Week Sprint is essential to developing focus and alignment within the organization.

Team Alignment

The EOS Model® does a great job of looking at the “Right People” in the “Right Seats.” However, what it doesn’t look at are alignment among the leadership team and employees’ satisfaction. Is your leadership aligned around the company’s direction or not? Culture will bring them to agree on values, but not necessarily alignment.

Your employees may all have the correct values, which is crucial, but if they are not engaged or dissatisfied with the leadership, cultural values will not prevent them from leaving or, worse, showing up but not there. Companies need to survey their leadership teams for alignment and their employees for satisfaction to ensure everyone is working in the same direction and committed to its success.

Conclusion

Thus while I like the EOS Model®, I think it doesn’t deal with many of the key things involved in the Hedgehog Concept. This failure enables companies to perform but not grow at an optimum rate. I am not ignoring many of his other areas of focus in Good to Great; however, this refinement of the Hedgehog brings an additional guide that the EOS Model® doesn’t. 

The above model is most of Gravitas 7 Attributes of Agile Growth® model, and if you add in the rest, you have a model that will propel you to growth while keeping your operations running smoothly. The 7 Attributes of Agile Growth® focuses on:

  • Leadership
  • Strategy
  • Execution
  • Customer
  • Profit
  • Systems
  • Talent

making it a more encompassing system. If you want to start your transition to an agile growth company as a certified Gravitas Agile Growth coach, please contact me.

 

 

Copyright (c) 2021, Marc A. Borrelli

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  • Have you lived your culture during COVID?
  • How are you maintaining your culture and connections in a WFH world?
  • How are you instilling your culture into new hires in a WFH environment?

Have you lived your culture during COVID?

COVID has forced many companies to pivot, cut costs, and adjust strategy. However, did the leader and management team live up to the company’s culture while executing these changes? As everyone’s cultural values are different behaviors to consider.

  • Did you check in with your employees regularly to see how they were coping?
  • Did you communicate effectively and often with your employees, so they knew what was happening?
  • When making changes, did you explain why and where the company’s new direction was aimed?
  • When terminating people, did you do it in person or by email?

The above is just a sample of behaviors that maybe didn’t live up to the company’s values. If you didn’t, then you need to work hard to fix it. As with any crisis like this, there are a few key steps:

  1. Get in front of it. It has happened, so it is hard to get in front of it. However, do an audit of behaviors and values during COVID. Identify the lapses and then plan accordingly. Don’t wait for the Zoom cooler talk to destroy any belief in the companies values.
  2. Admit It. Let your employees know you recognize that you didn’t live up to your values in the identified situations.
  3. Own It. Say it was the leadership’s fault. The buck stops with you, and that is why you get paid the big bucks! Deflecting the blame will only weaken a fragile state and create further disbelief in any values you may have.
  4. Correct it. Layout a plan to correct the behaviors from happening again and what steps the organization will take to reinforce its values in the future. This plan needs to have SMART metrics tied to it so that employees can see the progress being made and it not just more “CEO Bingo.”

Maintaining your culture and connections in a WFH world?

For many, the move to WFH has gone well overall. Productivity is generally up, and work is getting done. Many CEOs and business leaders are considering to what degree they can allow WFH going forward, permanently, one to five days a week, etc. However, one of the reasons that WFH has gone so well is that before COVID, we had strong relationships with our coworkers. We knew them, had worked with them, and most importantly, had built some degree of trust. But the longer we don’t connect with them, the weaker these bonds grow. While we are connecting with them over Zoom, Teams, Slack, or email, that is not the same as in person. If we lose the culture or connections, it weakens the ability of the company to respond to other threats, and people will leave for companies where they see better relationships.

The more time we are remote, the bonds between us grow weaker. Long distant relationships have a 58% chance of success, basically a coin toss. There are stronger connections in a romantic relationship than a work one, so the chances of a “long-distance” work relationship working are less than 50%. So leaders need to figure out how to maintain the connections and culture among employees as they go forward with a WFH policy. If employees are only going to be in the office rarely, the company needs to increase how it builds connections between employees and promotes its culture.

Regular gatherings of employees at events where they can strengthen their relationships will be essential. Getting them to share personal information to build stronger bonds will also be a crucial part of the effort. Doing this will differ among companies, but figure it out and ensure that the events have a clear purpose that everyone understands and get feedback on to know if you are achieving your goals.

Instilling your culture into new hires

New hires are posing the most difficult challenges for companies. Historically we know that 70+% of people regret making the job change on the first day. Now we are in a WFH environment where there are fewer personal connections. If we cannot build those connections and get them to buy into the culture, they will shortly leave, which is expensive for the organization and poses new problems when people are hard to find.

The leader and leadership team need to work with their HR departments to figure out how to effectively onboard new hires and simultaneously install the firm’s culture and develop personal connections among the teams. Achieving this won’t be easy, but the effort will pay huge dividends.

Why Does This Matter?

It doesn’t take much to destroy the employees’ belief in the company’s values and attribute them to just words on a wall. If this is where you are, the road back to get alignment around values will be hard. Without core values, nothing connects the employees to a common bond and purpose, so they are more likely to leave.

If your employees are not connected, they are less likely to have a good friend at work. Without a good friend in an environment where they spend a third of their time, there is less keeping them attached. With demand for employees increasing, and thus wages, they will be tempted to move if there is no downside to leaving the tribe.

Those organizations that live their culture and whose employees have strong bonds of trust will outperform those that don’t. The work to achieve this is not always easy but very beneficial.

 

Copyright (c) 2021, Marc Borrell

 

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