When people have heart attacks, it’s important that they recognise that what’s failed is an organ (or organs) in their body. They weren’t the reason for the failure.
Along the same lines, a screw-up by your team members doesn’t necessarily mean that they are at fault but rather that their work output is.
In other words, criticism shouldn’t be taken personally. And, if as the leader, you can instill this mentality as a core cultural value at your company, poor performers may start thinking, “Hey, I need to improve; this guy (or gal) doesn’t hate me – he (or she) is just trying to run a business.”
Angela Duckworth, author of the bestselling Grit, wrote about this in a recent article in theWashington Post. Duckworth said that bosses must be as supportive as they are challenging in order to prove that they genuinely want people to succeed. She wrote that she believes talent takes you only so far: that how you react to setbacks is the real predictor of future success.
Ducksworth further likened leadership to parenting: You have to challenge the people whose development you’re responsible for while at the same time supporting their progress.
So, rather than telling employees that their results aren’t up to par and that you’re disappointed in their performance, be a supportive leader. Approach team members’ failures with positivity and encouragement. What’s key is letting them know that you believe they can do better.
Staying supportive while holding people accountable
“Soft on people, hard on results.” To me, this mantra, which I first heard many years ago, is another way of saying that managers are responsible for the well-being and growth of their teams.
Employees who are held accountable for meeting performance goals are more than twice as likely to be engaged at work, according to research by Gallup. Yet only about 20 percent of those surveyed said that their managers had even talked to them about how to reach their goals. What’s more, only 30 percent strongly believed that being involved in setting goals or that receiving feedback would motivate them to do better work.
When it comes to building teams, employee development must align with your organisation’s goals. While results are the driving force behind any business, people are fallible. Keeping this in mind as a leader will help you build more valuable relationships with your employees, which helps them see you not only as the person controlling their income stream, but also someone they trust to help. The key is to be demanding and supportive at the same time.
According to the Society for Human Resource Management’s 2016 Employee Job Satisfaction and Engagement survey, the most engaged employees cite their relationships with leadership as the reason they stay engaged. The key to building that engagement is to offer support for as long as possible; when it’s time to be demanding, make your demands very clear.
Here are three ways to do that.
1. How do you spell love? T.I.M.E
Leadership IQ found that people who spend just six hours per week in direct contact with leadership are more inspired, motivated, engaged and innovative. Time is, indeed, the big equaliser, and there’s no substitute for it. Get to know your teammates on a personal level: Where are they going on vacation? What sports do their kids play? Engaging with people where it matters lets them know that you see them as more than workhorses.
Kuty Shalev, founder and CEO of Clevertech, believes personal ambition is the key to a teammate’s value. In Clevertech’s “Dream Goals” workshop, which helps longtime employees discover their real purpose, participants aren’t asked generic, nebulous questions, but instead questions about the places and activities on their bucket lists and their visions of the future.
For Shalev, helping employees clarify their deepest desires goes a long way toward his gaining their trust.
In my own experience, when you truly connect with people, they believe you have their backs. If this is not the case, and you call out their failures in front of everyone, they’re going to adopt a posture of self-defense; all of your candor and transparent communication will go right out the window. Instead, you should be building rapport privately and publicly, but saving the criticism for private conversations.
2. Move people up or out
This is another old-school sales expression that shaped my management style. People are always moving in one of two directions: They’re getting better, or they’re working themselves out of a job. Both are OK.
Cultivating an autonomous and independent meritocracy allows those who are ambitious and entrepreneurial to rise. These people will also admit when they’ve messed up, and ask for help. If your open-door policy is legit, your relationship with them will be more productive and collaborative. Those who aren’t ambitious require a lot more direction and tend to self-select out.
Bob Glazer, founder and CEO of Acceleration Partners has written on his company’s blog that he supports his company’s high expectations and goals for employees through a mix of encouragement and training. He’s said he understands how keeping people on who aren’t a good fit can damage perceptions among their teammates.
Early on, for example, he ended up having to let go of two high-performing contractors because, while clients loved them, these employees didn’t take a team-based approach to deadlines or communication.
If an employee of yours exhibits behaviour that doesn’t align with your values or can’t keep up with the evolving nature of his or her role, you too should consider terminating this person. Let people know that you care, but also that everyone tows a fair share of the load.
Don’t let things spiral just because you have a strong relationship with someone. If you make your expected results known, your A-team will deliver. Everyone else must move up or out.
3. Keep development and discipline separate
Remember: If you’re the boss, people are already scared of you. Don’t give them reason to be by delivering mixed messages. When it’s really time for a disciplinary talk, make it clear that you’re discussing consequences, not just room for improvement.
Early on, we encouraged improvement by telling our employees to work on certain things. Our message aimed to be developmental, but people mistook these directives for discipline and thought they had strikes against them.
So, we, the company leaders, were the ones who changed.
We now have “island talks” that focus on consequences and discipline. Everyone knows the rule: Three island talks, and you’re fired. Employees will ask whether any given conversation is an island talk, and we will clarify whether that’s the case – or whether our conversation is just focused on development.
When you build the kind of relationships that make your employees want to deliver for you, it makes the tough talks a little bit easier. Employees won’t approach those conversations with fear but with openness. It’s a fine line to walk between supporting and demanding, but you’ve got to find it if you want your company to grow.
This article was originally posted here on Entrepreneur.com.
4 Common Myths About Leadership That Can Hold You Back
Alignment with your values and belief systems is the foundation of becoming an effective leader.
To be a great leader in today’s world, being a brilliant knowledge expert or technician is no longer enough. Even harder is trying to learn the golden rules of the wrong and right ways to be a great leader. The amount of content spouted in countless books and resources is overwhelming let alone confusing.
To be unstoppable leaders for our businesses and our people, tuning out from the noise and distractions potentially misguiding us is pertinent now more than ever. Pay attention to any presence of these four myths and make guiding your people a more soul-enriching journey that they and you will want to continue well past your leadership term’s end.
Myth 1: Great leaders are highly ranked individuals
Richard Branson proves a classic example of how great leaders can get to the top without having ivy-league school connections and astounding qualifications. Having had enough of struggling at school, Branson dropped out of the highly reputed Stowe boarding school at the age of 16 to start a magazine called Student. The first publication sold $8000 worth of advertising. We all know the Virgin story from there on. Then there are the likes of Rachael Ray, food industry personality whose empire has amassed a $60M fortune without her having any culinary qualifications whatsoever.
There’s a common entrepreneurial DNA that runs through the veins of such leaders. An avant-garde vision, tenacity and patience seem to be common underlying themes for many. For others, it’s about making sacrifices and taking risks that could cost their life to serve a cause extending far beyond serving their own needs.
By publicly speaking out against the Pakistan Taliban’s extremist rulings, one of which of was to prevent females from accessing education, Malala Yousafzai became a target. At 15 years of age, a masked gunman boarded her school bus and shot her in the head. She survived and many months of rehabilitation spurred her determination to fight for every girl to have the opportunity to attend school. The work she achieved through establishing the Malala Fund with the undying support of her father, earned her the Nobel Peace Prize in December of 2014.
Whether from desperation or a happy place there is always the genesis of a passion driving a persistence to go against the grain and to continue the fight. Often there’s no formal training, qualification or certification in sight.
Myth 2: Following a certain checklist of behaviours will make you a great leader
The ‘fake it ‘til you make’ adage has become a common throw-away phrase consultants and coaches spout as a means to quickly build confidence. Following advice to merely emulate the behaviour of those you admire and respect can pose grave risks, especially when you become a leader by default as opposed to by your own audition. Smart teams can smell falsehood and copycats a mile away. Your integrity will often be scrutinised and your jury will constantly evaluate the values and principles you lead by. One foot wrong might end your leadership term just as quickly as it began and not necessarily by your team’s choosing.
Imagine being tasked with driving credit card sign-ups yet you yourself struggle to make repayments on your own overdraft. How long can you resist your inner conscience? You’ll feel the tug every time you invite a customer to sign up and at every request to your team to follow suit. At some point, you’ll be struggling to face yourself see in the mirror.
This article was originally posted here on Entrepreneur.com.
9 Ways To Get Employees To Buy Into Your Vision
Your business is your dream come true, now it’s time to include your employees in your vision to drive future success.
Your vision statement is the foundation of your business. It is the baseline against which all strategic planning is assessed and the benchmark against which all results are measured. However, as important as it is to have a vision when it comes to business success, it is equally important to get your employees to buy into this vision to ensure that success.
Here are nine ways to get your employees to buy into your vision by making it their dream, as much as it is yours…
- It must be believable – Your company vision needs to be within the realms of possibility otherwise people just won’t believe in it. It must be steady, achievable and relevant.
- It must be inclusive – Employees need to see how they can play a part in achieving this vision to make it relatable and inclusive. If they don’t understand what the business does, they won’t care how well the business does.
- It must be reinforced – Talk about your vision all the time. Don’t assume everybody has read it or is familiar with it as new people may not have seen it and older people may have forgotten. Constant communication is critical to ensure everyone is, literally, on the same page.
- It must be transparent – Make sure your communication around your vision is open and clear. Talk about it with clients, with all staff members, at all meetings and keep on talking until everyone understands it. When a vision is tangible and accessible it is far more achievable than when it is ethereal and vague.
- It must be practical – Don’t make flamboyant statements that are almost impossible to achieve like, ‘We will be number one in X!’. Be practical. It doesn’t matter if you’re not number one, it does matter that your vision is practical.
- It must be shared – Connect people’s careers to the vision by creating opportunities for them. Show them how the work they do is tied back to the vision and the business. If the business is only about profit and customer, then employees often don’t see how they fit in or why they are important. Create opportunities for them and they will be inspired to achieve your vision.
- It must be people-centric – People make up the core of your business. It is bigger than just one person or one idea. So, give them something to aspire to with a realistic, practical and human company vision.
- It must have purpose – Embed your vision and its values into the way you do business. The way you treat your employees and your customers and the choices you make should all reflect your vision. Take it beyond just ‘We want to make money’ and show how your vision positively affects your community and others.
- It must be visible – Put your vision on doors, in emails, on letterheads, in proposals. Show what you stand for at every opportunity. Employees need to feel that there is a cohesive plan for the future. This will not only drive engagement but it will keep them steadfast when times get tough – they believe in the ship too much for it to sink.
What’s Your Number? How To Unpack Company Valuations
Business is booming. Investors want in. But how do you put a price on the value of the company you have built with your own hands?
Company valuations is such a hazy part of the scale-up journey of a private company. Putting a price tag on a business is both art and science. At the end of the day, the number that makes the headlines (if ever disclosed) will be where willing buyer and willing seller meet.
But how do you , as business owner, go about setting your asking price? Before approaching investors, it’s a good exercise to determine your own valuation range for the business. Choosing the right valuation method is the first big question. The answer has many parts to it, but the most important driver is the stage of the business.
Let’s look at some of the most commonly accepted valuation methods in our market:
Applicable stage: Established, profitable companies
Listed companies, institutional players and private equity investors normally invest in a company for its cash flow profit that can contribute to their portfolio income. More often than not, companies will be valued based on their current earnings (bottom line profit after tax).
This method can only be used for companies that consistently make a profit. A multiplier will be chosen based on the company’s perceived risk. Younger, more risky businesses will likely have lower multipliers (as low as 3 and 4) and high growth, well established, lower risk companies will get higher multipliers (8-15).
Sometimes small adjustments are made to current year earnings (like non-standard, non-repeating income statement items) after which the valuation is set at Earnings times multiplier equals company valuation.
Discounted Cash Flow (DCF)
Applicable stage: Post-revenue start-ups, growth companies and established businesses
The most commonly used method in practice, the DCF method argues that a company’s value is determined by the future cash flows that it will yield to investors.
The starting point is creating a five to ten year cash flow forecast for the business. This is no small feat. In order to create a full financial model – income statement, balance sheet and cash flow statement – for the next decade requires a lot of work, both from a strategic and technical perspective.
Investors love this model because if forces the owners to put a clear strategy and expansion plan for their business into numbers. It will include dozens if not hundreds of assumptions – all of which can be scrutinised for reasonability. The result of financial model will be five to ten years’ worth of projected cash flows. These amounts are then discounted to present value at a discount rate that reflects the company’s risk and expected cost of capital.
The sum of the discounted future cash flows plus a terminal value (that represents the value after the five or ten year period of the model) then represents the valuation of the company after some final small adjustments for things like existing debt in the business.
A revenue multiple valuation approach is focused on the market for similar businesses and is underpinned by your company’s current turnover. It seeks out the sales price of other similar companies in the country or worldwide, adjusted for size, stage and market differences.
A company that sold for R100 million at a turnover of R50 million would have a two times revenue multiple (valuation/revenue). If the average revenue multiple for similar companies is in a certain range, this multiple is then slightly adjusted and applied to your business.
If the average sale in your industry has been two times revenue but you are growing much faster than the average with a better competitive advantage, you can argue that two and a half times revenue is a more applicable number for your business. Revenue multiples are often used as a reasonability check in the market for the current asking price.
Most established companies are valued using one or a combination of more than one of the above three methods. At start-up stage, there are a number of other methods like Cost to Replicate or the Scorecard Method that early stage investors look to. When a company is simply in too early stage to practically value it, seed stage investors would also consider SAFE Agreements (Simple Agreement for Future Equity) – an instrument that determines that the percentage of the company the investors are buying with their investment. This is only determined when the Series A round is raised at a future date and under certain conditions, generally at a discount to the price the series A investors are paying.
Company valuations are complex. Many of the above technical factors play a role. A lot of it also comes down to the salesmanship of the owners and the negotiating capabilities of the parties. In ‘How Yoco Successfully Secured Capital And The Importance Of A Pitch’, the Yoco team speak about the importance of the right approach in their recent R248 million fundraising
Don’t go into this process without seeking some kind of expert advice. The price of the wrong valuation is simply too high. Make your numbers and your arguments bulletproof and you will be on your way to defending a strong and exciting valuation for your next raise!
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