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.
Regardless, the stress is coming at us from all sides. I recommended that my clients spend time talking to their direct reports, employees, clients, and suppliers and asking how they are doing. Not just asking, but actively listening to hear what is going on in their lives. Things like this make a difference.
Besides, a repetitive theme is “Clarity,” e.g., what is your strategy in a single sentence. However, regardless of our intentions, the corporate playbooks come out periodically, messing everything up. I have recently heard companies ignoring such advice and reverting to keeping all information secret and locked up.
Now I am not talking about profits or trade secrets, but rather things like strategy, brand promise, employee development, and bonus calculations. This lack of clarity causes confusion and more stress. However, it is also giving rise to another issue, the loss of “A” employees.
My recent blog on the coming talent crunch pointed out a shortage of “A” players. As see from my clients and others, as we are starting to emerge from COVID, demand is increasing. Many are scrambling to fill positions to meet that demand. As a result, for “A” players, the call is out that you are needed, and the market will reward you!
If your organization is focused on obscurity over clarity, whether intentionally or not, your “A” players are vulnerable. It reminds me of my many years in M&A when a selling owner or CEO would concoct stories to cover the buyers’ due diligence. In every case, the “A” players would realize what was going on. In the best cases, they would be in the CEO’s office that same day asking, “Are we being sold?” However, in the worst cases, they would start the discussions around the proverbial water cooler. Nature abhors a vacuum, and it never ceases to amaze me the stories that people can come up with when they don’t know what is happening. Regardless, the net effect of uncertainty with the future leads all your “A” players to get their resumes out and start looking. Only the “C” players stay because they have no options.
Regardless of how your business is doing right now, you need your “A” players to survive and thrive. If you are left with your “C” players, you might as well start looking for a buyer or considering some other form of exit.
So, consider your “A” players. They need to know the strategy, brand promise, and core purpose of the organization, their career development and options, and their expected compensation and how it is calculated. Why?
If they don’t know the strategy, they cannot execute it. As David Marquet put it in, Turn the Ship Around, “Push the decision making to where the information is.” The information is at the front lines, not in the board room. The more your employees know about the strategy and the clearer it is, they can make the correct decisions as market conditions change. And market conditions are changing rapidly at the moment.
Core Values and Brand Promise
COVID has brought home how precarious life is. So, people during this time of lockdowns and death are questioning the meaning in their lives. They are now looking at the organizations that employ them and asking if their values align. A recent Harvard Business Review article put it that Core Values are no longer a nice thing to have but a core part of the strategy. So, if you cannot articulate your core values and brand promise clearly to your employees, they will determine it on their own, and it may be very different from what you proclaim. Self-determined values are based on the behaviors they see rather than what is claimed. In that case, you may lose those employees who would support the values and brand promise you aspire to rather than what you live.
As mentioned above, COVID has brought home fragility. Many are questioning if they want to do “X” for the rest of the career. Thus, a vital part of any employee review at this time is understanding what they seek for their future. It may no longer be promotion and leadership, but more time with family or new experiences in other divisions or markets. Understanding your employees’ desires and working with them to realize their desires while meeting the organization’s needs is more likely to retain them than ignoring them.
Their compensation and its calculation
Your “A” employees are getting calls from headhunters and recruiters because there is a talent crunch. If not, they soon will be. While the vast majority of employees don’t leave because of compensation, as a result of COVID, many bonuses or pay raises were deferred, changed, or ignored. Many organizations face cash flow issues and are in no position to provide employee bonuses or raises but explaining that is key. Others thrived during COVID, and many of their employees have stepped up well above expectations.
In some cases, those employees don’t understand how their financial rewards correlate to their efforts and believe they were short-changed. Those employees are more likely to take a headhunters’ call. Therefore, explaining the situation, explaining the policies, pay, and bonuses are calculations will help dramatically.
With greater clarity, you will more likely realize your strategy and keep your “A” players, enabling you to thrive. Obfuscation will only lead to tears.
Copyright (c) 2021, Marc A. Borrelli
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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.