Are you ready for the Talent Crunch?

Are you ready for the Talent Crunch?

Companies are looking to hire! According to Vistage research, “The most notable finding from the December survey is that more than two thirds (67%) of small businesses reported plans to increase their workforce in the year ahead, up significantly from 55% in November. These expansion plans among small businesses are the highest since February of 2018.”

At the moment, from what I hear, finding the “right” people is hard. That is because of COVID. People will not:

  • Leave current employment. With COVID, employees are staying put for the moment as the risk of moving is too significant. Everyone is aware of a “last in, first out” bias, so no one is ready to take the risk until things improve.
  • Move. With COVID, employees are unlikely to take jobs in new cities. That is not to say people aren’t moving; they are, but usually back to where they came from, with support systems there. Baby boomers are moving to some excellent early retirement locations. However, average employees are unlikely to move for a job as there is too much risk involved in incurring up and moving expenses when the job is uncertain, and they may have no support structure.
  • Take large risks. There is enough risk right now from COVID, and the economic uncertainty that most people will not take on more for a situation that they feel is very risky.

Current expectations are that we may hit COVID herd immunity in July, with the recovery starting in May or June. If that is the case, businesses will benefit from the pent-up demand that COVID has caused. Thus, we can expect employees to adjust their risk profile and start job hunting and moving just as companies increase their employment demands from Q2 onwards.

What are the employees looking for?

Purpose. For many, COVID has brought home their mortality and causing them to ask if what they do matters. Thus, if the company has no core purpose or “Why?”, or the core purpose doesn’t align with the employees’ purpose, the employees will move to those companies where the core purpose aligns.

Empathy. Many people will feel that their employers/bosses didn’t treat them well during COVID or showed insufficient compassion. They may have had to work through challenging homeschooling or ill parents/spouse with their employer making little allowance.

Living Core Values. Many companies have claimed to have Core Values, but when they are just words on a wall. During COVID, many organizations’ behavior has shown employees that their Core Values are just words and not beliefs, and not living your core values will drive employees and prospects away.

Opportunity. Since we are all mortal and life is fleeting, not only do employees want to work where they believe in what they are doing, but they want to realize their potential. Employers that show no interest in an employee’s career development and personal requirements will find those employees departing.

Character. As a result, employees will look for those companies who have always stated their Core Purpose and Values rather than those who have suddenly “found religion” and hoping that their new statements will make a difference like a fresh coat of paint.

McKinsey research showed that of employees:

  • 82% believed it was important for the company to have a purpose;
  • 72% thought that purpose should have more weight than profit;
  • 62% believed that the company should have a purpose statement; and
  • 42% said that their organizations’ purpose statements drove impact.

So, where does your organization fall? If you don’t have a purpose statement that is driving impact, how will you fare in the looming talent crisis? As I have often said, “How you behave during this crisis will define you for a decade or more.”

Here are some questions to ponder.

  • Do you have a clear purpose?
  • Can you say in one sentence what your organization is passionate about?
  • Why does the organization exist?
  • What are your Core Values, and can you point to those that live them and where they are part of your folklore?

If you can’t answer these, then the Talent Crunch is going to hurt! People will leave for places where they feel their purposes align and people live with similar Core Values. As the economy recovers and demand picks up, most companies will need more people to meet the challenges. If you don’t have enough and cannot hire the type you need, you will be in trouble.

If you don’t have a Core Purpose or Core Values, then you are attracting three basic types of employees:

  1. Walking dead. Can’t get a job anywhere else
  2. In Transition. They need a job, so they will work for you until something better comes along.
  3. Don’t care about a Why. These people do have a Why, but it is usually money and nothing else. At any time they feel they are not getting enough, they are gone. Real mercenaries and not good if you ever expect to hit a rough patch in the future.

If you don’t understand your Why, Simon Senik’s video below will put it better than I ever could.

Remember, a Core Purpose is a deep reflection on your corporate identity—what you really stand for—which may well lead to material changes in your strategy and even your governance. If you don’t have a Core Purpose and Core Values but will start defining them now, I would offer some suggestions.

  1. Get a coach or facilitator to help. Discussions over this can easily get bogged down. Many times, everyone will look to the business owner for guidance, which may be okay. But if the business owner comes up with a bad Why, e.g., profit, will anyone challenge?

2. Don’t make profit your Why, for some of these reasons:

  • No one cares but shareholders, and generally, they are not the ones operating the business.
  • Your customers and suppliers are not impressed that “making a profit” is your Why, as that implies you will take advantage of them.
  • If profit is your why then everyone’s only interest is making money. Thus, anything that will make money is okay. When the company hits trouble, no one will stay and help; they are only there for the money.
  1. Remember Jim Collins’ statement about Core Values, “you are willing to lose money than breach your core values.” So, once you determine, make sure your leadership team and most of your employees can live them. If not, they need to go, as they are not “the right people.”

If you have an excellent Core Purpose and held Core Values, put them on your website, in your recruiting materials, and make sure you live your core values. You will be able to attract some great talent in the times ahead.

 

Copyright (c) 2021 Marc A. Borrelli

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What is Leadership?

What is Leadership?

I was on an interesting call this week where the question of “What is leadership?” arose.

Today, there are many definitions, and the concept of leadership has changed over the last seventy years. However, I think the adage that “Great leaders are forged through adversity” still holds. In adversity, great leaders come to the fore as they can get their teams to outperform others during that period when everyone is struggling to achieve their goals and leave a lasting legacy. To me, the “adversity” qualifier is like Warren Buffett’s saying about you don’t know who is swimming naked until the tide goes out; well, adversity is the tide going out.

So, what defines a great leader? Let’s start with the things that don’t.

  • Leadership has nothing to do with seniority or one’s position in the hierarchy of a company. In most cases, people are promoted to leadership positions because of tenure or technical skills; leadership ability is rarely considered.
  • Leadership has nothing to do with titles. Just because you have a C-level title doesn’t automatically make you a “leader,” and you don’t need a title to lead. A great example is Greta Thunberg who has become a leader but without title or seniority.
  • Leadership has nothing to do with personal attributes. While people often associate “leader” with a domineering, take-charge charismatic individual, leadership isn’t an adjective.
  • Leadership isn’t management.  This is the big one. Leadership and management are not synonymous; managers manage things. Leaders lead people. Given the above qualifiers for what leadership is not, some definitions try to capture it but fail.

“The only definition of a leader is someone who has followers.”

This definition, while simple, fails because it is similar to titles. In the video above, the first one dancing is the leader, but I doubt he is still leading once the followers start.

“Leadership is influence – nothing more, nothing less.” This sounds good, but what is the source of influence? If it the leader’s position, e.g., the CEO or the power to cause harm, e.g., your kidnapper, I wouldn’t define it as leadership.

“Leadership is the capacity to translate vision into reality.” Many can translate a vision into reality. An architect or a builder? A painter or sculptor? But I wouldn’t define them as leaders because there are no “others” that they are leading.

Maybe looking at the traits of great, leaders we can better come to a definition. What are the traits of great leaders?

 

Acknowledge people’s fears, then encourage resolve.

The first part is empathy. While this is a personal attribute, which is excluded under the definitions above, I believe without it, you cannot be a great leader because it enables so many of the key attributes. By acknowledging people’s fears, we don’t cover up the crisis and deny its existence. But with the fears on the table, we can then address them and encourage resolve to overcome them. In a crisis, everyone knows that things are bad, but much of the energy and fear exists because of the unknown. Being honest about the situation and facing it allows people to come to grips with the unknown, which enables them to move forward.

 

Give people a role and purpose.

Real leaders charge individuals to act in service of the broader community. They give people jobs to do. But I would add to that; they frame everything within the outcome being sought so that the jobs are not mindless but have a purpose which they can see. It is not about the leader but the great community. I think Shackleton was a great example of this, but I always fall back to David Marquette’s Turn the Ship around.

Inspire others to see opportunities in everything.

There is no playbook in a crisis, so it is up to the leader to be open-minded enough to find possibilities that will help serve their community through their discussions with their team and their data.

 

Be flexible to anticipate the unexpected.

As said above, there is no playbook in a crisis, and leaders must quickly get comfortable with widespread ambiguity and chaos. To get out in front of the crisis they cannot be fixed on any one route but need to see around, beneath, and beyond what they seek. To fully succeed here, they need to get their followers to be flexible, which requires them to understand the greater goal and their role in it and use its core values as their guidelines.

 

Manage everyone’s energy and emotion, including their own.

Crises are exhausting, taking a toll on all of us and possibly leading to burnout. A critical function of leadership is to keep your finger on the pulse of your people’s energy and emotions and respond as needed.

 

Unleash their team’s passionate pursuits.

Passion is what drives experimentation and learning. If everyone is passionate about the outcome, they will seek new ways of addressing the crisis, and great discoveries will be made. Not only will passion drive greater discovery, but it creates more energy. The best example I can think of Apollo 13.

 The Respect to Lead to Leave a Legacy.

Legacies are born during crises. While leaders are most respected based on how well they reacted and responded to all the chaos and uncertainty around them, I believe the key measure is how much of a legacy they leave. Does the organization continue to thrive when they are gone? Do the others in the organization go on to greater and better things? Are the behaviors that enabled it to survive and thrive now part of the company’s DNA. There are many leaders who get the organization through a crisis but leave no lasting mark. I would argue, that they are not great leaders.

So, in conclusion, I would define Leadership as, “A process of social influence, which maximizes the efforts of others, towards the achievement of a goal, and leaves a lasting legacy.”

The key things about this definition are:

  • Leadership stems from social influence, not authority or power
  • Leadership requires others, and that implies they don’t need to be “direct reports”
  • No mention of personality traits, attributes, or even a title; there are many styles, many paths, to effective leadership
  • It identifies the maximization of “efforts”
  • It includes a goal, not influence with no intended outcome
  • Finally, it ties in with a lasting legacy.

Not everyone will become a great leader, but everyone can become a better leader and your organization will thank you. So, start your journey today and if you need help, call me.

 

Copyright (c) 2020, Marc A. Borrelli

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Want to be a great athlete, I mean business leader?

Want to be a great athlete, I mean business leader?

We all admire world-class athletes. I have had the fortune to meet a few and what I have learned is that to be a world-class athlete requires two things, natural ability, and work. I remember the first time I watched a water skier ski a course at 38’ off while riding in the boat, that no matter how hard I worked, I would not reach that level. The second thing is that they work at it relentlessly. What does that mean?

Train – usually six days a week and a day off
Food – what they need for the demands on their body
Sleep well – they recognize deep sleep is required for their bodies to recover.

For more, here is Roger Federer’s workout; however, if we look behind this, what else.

 

Skills

As part of the training, they work on their skills by practicing, Malcolm Gladwell’s 10,000 hours. But it is not just practicing; it is practicing the right thing. How do they know if what they are practicing is correct? They have a coach. Besides, they review their past events and practices with videos or discussions with coaches. Even Maria Konnikova, who decided to become a competitive poker player, used to review every hand of her last tournament with her coach to analyze why she made the decisions. However, that practice also involves practicing interacting with teammates. Joe Montana’s great passes to Jerry Rice didn’t happen because both practiced in isolation. Instead, they practiced while the defensive team tried to stop them.

 

Play against an opponent

If you compete against opponents in your sport, e.g., poker, squash, tennis, rather than yourself, e.g., golf, you need to practice against opponents, mostly better ones. While you can hit perfect tennis balls against a practice wall all day to improve your swing, it won’t help you when you have an opponent who does something unexpected. An opponent changes the entire dynamic of the game. They make their own decisions, which affect the tempo, your positioning, and your mental game. Just ask Garry Kasparov. In his 1997 rematch Game 1 against Big Blue, Big Blue made a move due to a programming error. However, Kasparov didn’t realize it and “concluded that the counterintuitive play must be a sign of superior intelligence.” This caused Kasparov to lose the second game.

 

Learn from others

The great thing about competitive sports is that we can see what our opponents are doing to win and emulate them. As Oscar Wilde said, “Imitation is the sincerest form of flattery that mediocrity can pay to greatness.” I remember John Battleday telling me how all the best water skiers at one time were battling to do a forward flip on a trick ski. However, once one person figured it out, the rest could quickly do it. That happens everywhere. It takes a long time for someone to figure out how to do something new and improved, and it is adapted in now time by the entire community, e.g., the Fosbury Flop.

 

Coaches

Finally, they have coaches and teammates that push them outside their comfort zone so that real development takes place. No matter who we are, it is easy to justify to ourselves why we are not pushing ourselves, but coaches and teammates call B.S. and force us to get and keep going. They help us improve our skills by pointing out our mistakes, asking us questions to understand why we did what we did, and role-playing with us. When Maria Konnikova decided to become a champion poker player, she didn’t know how many cards there were in the deck, but she did know she needed a coach, so she got one. In Roger Federer’s team, he has two tennis coaches, a fitness coach, and his wife, an ex-top tennis player.

A couple of years ago, Vistage speaker Jack Daly said, “Top athletes practice constantly; why don’t businessmen?” That statement hit me then and has stayed with me since.

It appears that for the majority of CEOs and business leaders, once the white smoke rises and they are chosen, there is an assumption, they should have all the answers and not need any more learning or insight from anyone. I have heard this from Private Equity Groups of all people who say, “We hire great people, so they don’t need to spend more on personal development.” Really! I reach peak physical fitness and then stop working out because hey, I am here!

 

As a Vistage Chair, I meet lots of CEOs who I talk to about joining Vistage or a peer group with coaching. The reasons I get for not joining are:

 

Time

Time is the one thing that we cannot buy more of. Not only that, but as we move up the corporate ladder, there are more demands on our time from our company, and then there are demands on our time from family and friends. Since time is fixed, we turn to the adage, “Work on the business, not in the business.” Easier said than done. You start your day, and the emails and calls come in disrupting your plans to do X. Typically, what happens is we deal with “the urgent,” both important and unimportant. But what we struggle to deal with is “the important but not urgent.” How does a peer group help? Well, one day a week, you get away from emails, interruptions, and phone calls. You get time to reflect, present ideas to your peers, and get feedback. That is feedback is not the “right solution,” but rather may be:

  • Asking questions you have not considered.
  • It is offering alternative solutions that achieve the same results.
  • Telling of their experiences at doing the same thing, which either worked or didn’t.

Since the group has no incentive behind helping you other than you will help them, they are often the ones who help you, as Jim Collins says, “Confront the brutal facts.” However, their questions, suggestions, and insight can save you time and money far above what you would have spent otherwise.

 

Cost

Yes, groups and coaches cost money, but they provide a real ROI. If they didn’t, why would so many world-class athletes use them? Although I am a Vistage Chair, I remained a member. Why? Because I need:

  • People who hold me accountable and ensure that I did what I said I would. It is too easy to be the cobbler’s children, providing coaching and not having anyone coach you.
  • A group that I could bounce ideas off because working for myself, I don’t have anyone else on my team.
  • A group that I can bring issues to, without fear or concern, and know they will help me work out a solution and then hold me accountable for doing the work to resolve them.

A response I hear from many CEOs is, “I have a board/friends who do that.”

If you have a board, you probably meet quarterly. While the board gives you input and hold you accountable, it is not a place where you can quickly bring up issues and challenges. Also, a lot happens in three months, and you need someone far more regularly to ensure you keep to your commitments and even help you process the feedback you are receiving.

Your friends are precisely that, friends. They will support you. They are not going to challenge you, tell you your ideas don’t work. If they did, you wouldn’t be friends.

I have had members present their websites, sales pitches, investor pitches, and marketing materials to the group, which is a group of CEOs who are the types of people who purchase their products and services. Everyone who has done it has found the feedback to be incredibly valuable. We get so caught up in our mind and decision process that we need unbiased outside voices to point out what we are missing.

Finally, as the CEO or President of an organization, your daily decisions are usually involving something that costs more than $50,000. The final decision on hiring someone, a new production plan, a new marketing plan, new product development, etc. If the group helps you make just one better decision a year, the return is over 200%.

 

I don’t need a group or coach.

Now, this response, I understand. it was my response when I was initially asked to join Vistage. I was overconfident and sure of my abilities. However, a few years later, I realized I did need the group, coaching, and education that Vistage provided. On reflection, I realized my arrogance and attitude had cost me so much.

Atul Gawande, professor of surgery at Harvard Medical School, has studied the question, “How do we improve in the face of complexity?” His solution: having a good coach to provide a more accurate picture of reality, to instill positive habits of thinking, and to break your actions down and then help build them back up again. Gawande says, “It’s not how good you are now; it’s how good you’re going to be that really matters.” See his TED talk below.

I still need a venue to practice, learn, and be held accountable. Even today, I have a coach outside of Vistage to force me to work on those things that I don’t want to do. It is easy to put off the things we don’t want to do, but again to follow Jim Collins’ advice, those companies that succeed do the 20-mile march.

Finally, today we are in a rapidly changing environment. What worked before may not work again. We need to rethink many products and services, develop new ones, enter new markets, or find new supply sources. Also, it is hard; we are all struggling, even you, the CEO. Where can you go and share that experience? Not with your employees, your investors, your spouse. But you can with a group of peers. That is why today, according to McKinsey, more and more CEOs are turning to Peer Groups for help and support.

If you want to be a much better leader, get a coach, a group, and access learning, to help you do the “hard” work. You will be grateful.

 

Copyright (c) Marc A. Borrelli, 2020

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If You Want To Succeed, Look to Darwinian Evolution

As we move towards opening up the country to varying degrees, I see some interesting data points.

 

Many consumers and businesses are wary.

While I don’t have any specific data, talking with friends, clients, and looking at social media, I see that most people are careful. They are:

  • social distancing,

  • avoiding contact with others,

  • wearing masks and gloves, and

  • not going to restaurants.

Furthermore, I don’t see anyone in a hurry to change this behavior. I look forward to seeing some data on this.

 

Some businesses are open.

As I move around Atlanta, I see many retail locations are open, from Home Depot to some small local retailers. What I notice is that Home Depot is still busy but at a lower level than pre-shutdown. Many small local retailers are open but empty. From what I have heard, some hotels are operating, but service is limited, and the employees are continuously cleaning after each guest touches the doors, check-in desk, etc.

Online business is operating at full speed and shows little signs of slowing. The biggest issue will be their inventory. B2B remains relatively strong in specific sectors, but as the effect of more bankruptcies and closures ripples through the economy, I think demand could weaken.

 

Some places are giving up on data and experts.

Many states are opening up before meeting the guidelines set by the Administration, i.e., Georgia, and Texas, and the White House is encouraging this behavior and anti closure protests. Furthermore, Arizona has halted its partnership with experts predicting coronavirus cases would continue to increase. The argument is that we have to open up as the damage to the economy cannot be sustained. To stop the fear, kill the messenger. To quote David Farragut, “Damn the torpedoes… go ahead! … full speed!”

 

The delicate nature of our supply chain.

An interesting paper argues that the cost of opening up is higher than the price of shutting down, as we are learning daily that our supply chains cannot take the hit from illness, i.e., the meat industry, nasal squabs, fresh produce. Could other sectors be affected? What would happen if the energy, transportation, or pharmaceutical sector failed? We aren’t even sure which industries are critical. As this progresses, will more industries stop working effectively as their supply chains stop working? I expect so, and we will learn what is vital.

 

Waiting for a return to the old normal.

Many are looking forward to a return to the way things were before COVID-19 hit. I don’t think we are returning to that period. If we look at 9/11, 3,000 people were killed, vs. 76,000+ today of COVID. Also, the economic loss will be much higher. Events like this will change behavior for many forever. Some of the things I see being affected are:

  • Business travel

  • Flying

  • Hotels

  • Rental Cars

  • Ride Share

  • Restaurants

  • Large meetings/events

  • Sports

I am sure I will be proved wrong, but things will be different. An interesting article on how COVID might affect restaurants like Prohibition affected drinks may provide food for thought.

 

What does this mean for your business?

As I have said in this weekly newsletter before, Darwinian evolution holds that those that adapt best to the new environment will survive. Therefore, the questions for all CEOs and business leaders are:

  • How do we continue to perform in this new world?

  • What is our new environment?

 

Performing in the New World.

There is resistance among many in the U.S. to look abroad for best practices that are implementable here. As a CEO once told me, “There is nothing anyone can teach us.” However, many of our current practices came from abroad, i.e., just in time manufacturing and continuous improvement. So why not.

While experiencing about the same number of diagnosed infections as Italy, Spain, France, and the UK, Germany has registered approximately one-quarter as many deaths. Also, German authorities gave all factories the option to stay open through the pandemic, with the result that over 80% of did so, and only one-quarter have canceled investments. Businesses, to protect workers, implemented strict safety rules early on, and managers involved unions and employees in safety planning. Regional governments were quick to test and trace chains of infection to contain the spread. Finally, many German firms having ties to China had a jump on planning for operations through a shutdown. As a result of its experience in China, Volkswagen implemented a 100 steps affecting many aspects of workers’ routines, including where to change into work clothes, where and how to eat lunch, and how to check for Covid-19 symptoms.

Ebm-papst Group, a family-owned fan and motor manufacturer, has kept its domestic factories running at 80 percent of normal capacity. With three factories in China, management got an early warning of the seriousness of the pandemic, and so they sought to buy masks. Today they a full-time employee whose sole responsibility is to source masks and now have over 100,000 stockpiled. To provide a safe environment, social distancing, ubiquitous face masks, in-house Covid-19 tests, and contact tracing when employees fell ill helped enabled the company to keep its plants open. Ebm-papst, like most German companies, involves employee representatives in management decisions. The head of personnel and a workers’ representative sit on the crisis task force. To date, only 15 of its 6,700 employees in Germany have contracted the virus, and the workers feel safe.

However, the German economy is not immune to COVID and will probably suffer its most significant downturn since WWII. Furthermore, German’s rely heavily on international trade and global supply chains, which could remain under pressure for months or even years. Yet many economists, including those from the International Monetary Fund, thi
nk that the decision by German companies to keep running through the lockdown could allow its economy to recover faster than other nations next year.

 

What is our new environment?

This question is more complex; however, all CEOs and business leaders need to have a team to look at this. As I have said before, they need to look beyond what is happening today, and consider:

  • How could our supply chains be affected?

  • How could my customers’ supply chain be affected?

  • What will our working capital look like going forward if we have more inventory?

  • Can we source more products locally and reduce reliance on international supply chains?

  • How will our business operations change going forward, great WFH?

  • What costs have we cut that we can live without going forward?

  • What personnel have we cut that we don’t need?

  • What roles have we cut that we don’t need?

  • What roles do we need that we don’t currently have?

  • What employees/skills do we need that we don’t currently have?

  • What do we need to do to keep workers and customers safe?

  • Will any consumer/business behavior or government policy changes affect our business?

  • Will any consumer/business behavior or government policy changes affect our customer’s business?

  • Will any consumer/business behavior or government policy changes affect our supplier’s business?

  • How financially stable are our customers and suppliers?

  • How financially stable are their industries?

  • What new markets are available that were not before?

  • What new clients can we attract with our service/product offerings which we didn’t have before?

  • What happens if revenue falls by 25%, 50%?

  • What happens if revenue grows by 25%, 50%, can we meet standards and delivery schedules?

  • What should we automate?

  • How should we change our investment plans?

This is not a definitive list, but definitely, a place to start. Good luck and if I can help, contact me.

Copyright (c) 2020 Marc A. Borrelli

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