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Archive for the ‘General Business’ Category

Welcome to Apple

Apple is recognized as one of the world leaders in innovation and bringing consumer products to market with outstanding success. While there are some amazing leaders at the company who are visionaries, including the late Steve Jobs, there is a lot more at play going on. There is a company culture which empowers all of their employees. I received a copy of their “welcome to Apple memo”, which, while short, is amazing powerful. It speaks to the culture of the company, where they encourage their employees with an enhanced sense of purpose.

In the book Drive: The Surprising Truth About What Motivates Us by Daniel Pink, which is backed up by several published academic studies, purpose is one of the driving factors of what motivates us in life. There is a shift taking place in workplace as it relates to motivating employees to improve productivity. Our industrial era management thinking says that placing a proverbial carrot (bonus, fear, or other monetary pain/pleasure) was effective when the labor required no cognitive thought (assembly line work), but as the nature of work in the majority of western countries evolve into positions requiring cognitive thought processes, the concept of the carrot provides worse results.

What Pink speaks about, which can be seen at TED, as well as animated at RSA, is that we are motivated by purpose, autonomy and mastery. This welcome memo to all new employees at Apple is an excellent example to reinforcing the culture of purpose.

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The Counter Offer (part 2)

I just completed importing several older blogs, and among them there was one titled The Counter Offer. This is the second installment of that article which was never published. In that article we discussed that a growing trend is to offer departing employees a counter offer in an attempt to retain their skills. However, often these efforts are risky and do not necessarily ensure that we have the best environment moving forward.

With that stated, it begs the question, “so what should we do with departing talent.” The best thing you can do is typically let them go, unless you have a short term strategy to retain them just long enough to replace them.

So beyond that, what are you to do. It is an excellent opportunity to a very open and honest exit interview. Beyond simply their manager or HR performing the interview, consider having someone they trust such as a different department manager, supervisor or even a peer. The goal is to obtain the best information on why they are really leaving. From that data, it should be incorporated into a 360 degree review of the department, manager and organization as a whole. How does the departing employees fit into the organization as a whole.  Typically if you were considering a counter offer this isn’t an employee you typically want to loose, and you find value in what they bring to the company.

Usually the first great employee leaving is the tip of the iceberg and we need to pay serious attention to discover what we’re doing and if we need to adjust our employee retention process. What? You don’t have a formal employee retention process? It is time to start putting one together. Here are a couple of ideas for you:

First, you don’t need to begin with compensation. Most managers who have the title because of a natural promotion instead of training or education, begin with compensation. As a matter of fact, several well published studies outright say that financial reward for performance, when even minimal cognitive skill is required, results in worse performance. Yes, this is opposite of our expectation. In our industrial era mentality, we have been raise to believe that the effort-reward system works. That bonus program is successful when we are talking about tasks which do not require cognitive thought. Areas such as assembly lines or manual labor. But the moment individuals are required to turn on their brains and use their thoughts to create productive results, money has a negative affect on performance.

What researchers have discovered is three things which lead to better performance and personal satisfaction, and isn’t that key to retaining talent:

  • Autonomy
  • Mastery
  • Purpose

Evaluate for a moment in what ways you can encourage your staff to be more autonomous (which isn’t working solo, but rather self directed); mastery (which is enabling them to become an expert at something); and purpose (the “why” behind what they get up for everyday, and it should be a paycheck). Take a look at this YouTube video: The surprising truth about what motivates us.

The next area is understanding the workplace environment. It is amazing how much the culture can impact the overall workplace satisfaction. The late Stephen R Covey, in his book The 8th Habit shares about the 6 cancers which inhibit greatness in people which include: Cynicism, Criticism, Comparing, Competing, Complaining, and Contending. This is something that is best change from the top down, as well as identify several key people in your organization at the lower levels which can be intentional about building a positive workplace environment. Also understanding how your current management processes might be encouraging these cancers.

A second perspective on the workplace environment is to understand the actual physical working space. Do your employees have the tools they need to perform their jobs, do they have the basic environmental needs met. Environmental change can be something as basic as ensuring a clean, working (non broken) environment, to very elaborate office setups designed by professional workplace designers. There is one place where in the bathroom, for years, the mirror wasn’t hung on the wall, the hand towl dispenser was broken so it was just a stack on the counter, and the TP dispenser was broken as well. Seemingly unimportant things, but it is has a slowly deteriorating effect on employee morale and pride in their workplace. A quick coat of paint, and basic maintenance made an immediate improvement in several employees pride.

Finally we get to compensation. It is always surprising to many people that this is at the end of the list. This is also surprisingly more complex than many people thing. Again, lets take a look at the first section about motivating people. Simply a bonus or higher hourly wage isn’t sufficient to improve productivity or worker satisfaction. There are two factors on compensation I’d like to focus on:

(1) is to take the issue of money off the table, employees should be compensated at a level which meets their needs, as well as provided measurable and predictable control over their compensation. An excellent tool I learned from Michael Brand, Executive Vice President at Cornish & Carey Commercial, was that he would have his team members interview with 3 competitors each year. They were required to report back on how those interviews went. Can you imagine! Encouraging your team to seek out the competition. That takes boldness. There are two takeaways from that exercise. First is that it forces the employees to evaluate their own real value in the marketplace. Many people have higher self-worth than is accurate, an interview forces that into reality, causing them to take an honest look at themselves, it can be very humbling. Imagine how your annual reviews would go if they were first required to have interviewed at three different competitors. The second was the other side of the same coin, this is the point where your organization is forced to evaluate how good is your environment to your employees. What are you doing to motivate employee loyalty?

(2) is to understand what would motivate them financially aside from their paycheck. Several places have employee owned companies or profit sharing plans. A recent survey of web developers showed, to my shock, that profit sharing was dead last in their different things which they care about, second to that was medical benefits (the group was primarily 20-somethings-think-they’re-invincible). For some employees compensation may come in the form of more PTO, better break room perks (free lunch, booze, etc), free massage or car wash. Some companies offer company vehicles, cell phones, laptops, etc. One company, Atlassian, actually gives you a one week vacation before your first day of work!

The overall goal is to ensure that you are ensuring a positive outlook and capturing the potential to become even greater with every change. Learn from departures, and bring about positive change in your environment. Not all employees who leave are those which you want to change your culture over, in fact, the majority of employees that leave are going to be incidental and insignificant to the company. However those employees which you would want to keep around, those which you have been tempted to offer a counter offer to, are the ones you can really learn something from.

In summary, be sure to capture the real reason why an employee is leaving, and leverage that to create an atmosphere where people want to stay and are not tempted to leave. Understand what motivates people is autonomy, mastery and purpose; create an environment free of the 6 cancers; ensure your environment is something you can take pride in; and finally understand compensation transcends the paycheck.

Basic Corporate Metrics

A trend I’ve seen within the last couple of years as been to measure performance of employees through a series of metrics, which are numerical representation of performance, service, quality, etc. A couple of thoughts have come up as I’ve spoken to a few business partners:

  1. You will always have a couple of people who want to have high numbers – and while that may appear good on the surface, make sure that they are not sacrificing unmeasured areas to make the measured numbers look good;
  2. Make sure that you’re using sound statistical calculations – when your numbers don’t appear to correlate to real life, there is a problem – don’t trust the numbers of themselves, make sure they make sense in real life. Have a good idea of what the numbers should be saying, and if there is a divergence between what is observed versus what is measured, be sure to reconcile those two – which might be to find a better way to measure the results, or that might be to come to the understanding that the measured results are more accurate;
  3. Have a combination of public and confidential metrics. That is, have a series of measurements which are published and discussed. These are areas where team members can strive to achieve and improve. Then hold a second set of metrics you use to measure your own management of these employees. Keep those measurements private. Do not disclose to the employees how you’re measuring in this area. Simply address problems as they occur, but kept your actual measurement system private;
  4. Your business goals, including customer service and profitable should be measured. Again, keep disclosed and undisclosed numbers.

Also, in the context above, everything is referencing “within the company” — an even smaller set of numbers (if any) should be published to the outside world.

Website tips, what works

What are you doing to make your website work for you? Here is a couple of tips I’ve picked up along the way, and we’ve implemented ourselves…

1) Get a website champion – someone who is really living the website, thinking about it in the shower, staying on top of what’s out there and going on. Let them try to become the leading website for your industry.

2) Use search friendly websites and blogs; does your developer know how to make a friendly website for search engines? What about your blog?

3) Outsource the development of your website, but don’t give up on point 1, you need your own internal website champion; they don’t need to know how it all works, but they need to have a vision;

4) Utilize both on-site and off-site blogs or other social networking tools (twitter, etc). A blog on your website is great, and essential, but you also need other reputable sources – so create an off-site blog. Get your staff into blogging on their own sites. If they’re professional related, consider sponsoring their own private blogs (i.e. pay for them to have their own domain name through a company like WordPress.com).

5) Create a regular posting schedule for both your regular website content and your blogs. Set calendar reminders, rotating staff schedules, whatever is appropriate, but keep content fresh and current. It doesn’t have to be multiple posts per day — just whatever you set yourself to, try and keep it regular. Once every other week is even fine, if you can maintain it.

6) Relevant, relevant, relevant — keep your posts relevant to your readers. Don’t post for the sake of posting, although you want to keep to some form of a schedule; but when you say something, have something to say. One trick is to get one-ahead. Use the advance publish tools to let you post for the following week – always post next weeks blog, and you’ll always have some grace room.

Budgeting for warranty service

In preparing your budgets or cost anlysis for providing services, is as an essential to calculate the cost of warranty service. This can come in the form of warranty service due to internal causes (not completing work projected, not performing the job properly, etc) or external causes (a problem with newly installed equipment). These costs exist and need to be calculated as part of your overall overhead. For example, say you sell and install a brand new piece of equipment that you sold to your client. So your capturing both your margin on the hardware, plus the labor of installation – perhaps even advanced consulting/sales services. Now, what happens when the product you receive from the distributor comes in and is broken, or isn’t really the correct item (not compatible with application) — should your client be expected to pay the labor and costs associated with the inital install and then again the reinstallation? Likely not.

What blend are you (MSP)

In the professional services arena, there is typically three types of service industries: innovation, experience and processes. There are some industries, such as your oral hygienist, which you’re primarily looking for someone who knows the process well and can repeat it forwards and backwards. Yet you want them up to date on all the latest trends and skill sets, but you’re not really looking for anything special in this individual that you aren’t already expecting from the next professional.

The other group, experience, is called by some the gray haired group – these are people who have a lot of experience under their belts. It is why we are often drawn to older people for our accounting, taxes and medical needs. We want them to be highly educated and smart, and have some form of a routine and process – but most importantly we want them to have seen our situation or condition before, and have the experience to deal with it. Anyone who has tried to fix a leak under their sink has learned that there is a bit more to plumbing than knowing what to do from an intellectual standpoint, but rather there is some experience involved. Especially when you discover that your sink, isn’t quite like the one they showed you in the store. You’ve had to take 3 or 4 trips back to the hardware store to get the right parts, while the plumber has everything in his truck and has seen it before. Same goes even more so for your tax accountant, who has seen your special circumstance before, and not only knows the law about it, but how the IRS actually treats it in the real world.

Finally, the third group are those who are on-top of innovation, that you’re going to for something new and innovative. These would be your problem solvers with a new way to resolve it. We all often think we’re the innovators, and probably love that element – however in a great deal of cases, we spend the majority of our time, and make the greatest revenue from the other two areas.

The balance to most successful managed service companies is discovering your exact blend that makes you successful to the clients you serve. Realize this blend and make sure that your staff reflects this blend. There should be a match between the two. If you have a bunch of clients looking for experience, and you have a bunch of young, hip innovators – your clients or staff need to change. You’re working less than optimal and efficient if you’re not.

Financial Solvency

Did you find a CPA for your team yet? You probably have  a bookkeeper, but you want an independent CPA firm at your beck-and-call. The better off you think your company is during this economic situation, the more you might want to panic. So far I have seen two companies fall this year because their books were being cooked. Money was disappearing right from under the owners nose!

So what do you need to do – have your books audited by an external, independent CPA. A few reasons:

1) To ensure that things appear on the up-and-up with everyone who is involved with the finances at the company, from on-paper to actually having check authorization. Make sure all of the money is properly accounted for. Be prepared to dig-deeper as necessary;

2) To ensure that you’re doing everything properly. You simply don’t know about the things you don’t know. A CPA is paid to know these things.

3) A good honest look into your company. The CPA has seen it all before and can give you a good sounding board, or perhaps devil’s advocate with you. They can be a reality check on where your company “really is” – how bad things are effecting your company.

So, what are you waiting for, make that call now…

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This is not intended to be specific legal advise, but general information and a guide to help you work with your professional team including lawyers to provide the correct amount of protection for your company. This is part of a 4 week series which came out of a luncheon discussion with several close business associates of mine.