Over the years, as I’ve worked with tens of thousands of small-business owners to answer the question “What works, what doesn’t, and what’s missing when it doesn’t?”, I discovered an often misunderstood law which is violated everywhere I look. It’s the law of “necessary but insufficient.” Let’s take a look at it together.
Start by taking your business apart, piece by piece. Can you identify what’s necessary to the success of your business but, by itself, is insufficient to produce the results you want?
Increased revenue is one example. Increased revenue is always necessary (or, at least desirable), but obviously, by itself, it’s insufficient without increased gross margins. And increased gross margins are always necessary (or, if not absolutely, positively necessary, at least preferable to decreased gross margins), yet without increased net profits, increased gross margins by themselves are insufficient to produce the results you want.
At the same time, increased revenue, increased gross margins and increased net profit can all still be insufficient if there’s inadequate capitalisation to support the growth. In short, without the necessary capitalisation, you can grow like crazy – and grow yourself right out of business! So manageable cash flow is the fourth part of the holistic financial equation that’s part of the law of necessary but insufficient.
And that’s only the beginning of the reason why, when somebody promises you more sales than you can possibly ever imagine, for example, you’ve got a whole bunch of questions to ask. Such as: What will the operational costs be to create those sales? What will my gross margins be? What will my net be? What will the cash flow implications be? What’s the business plan? What will happen to me if what you say will happen doesn’t? What’s the cost to me of not producing the results you’re promising? The people cost? The marketing cost? The sales cost? The missed opportunity cost? And so on and so forth.
No matter where you look in your business, there are necessary but insufficient categories everywhere:
Your business is clean, but visually unimpressive.
Your interior has been freshly painted, but the colours are psychographically wrong for your central demographic customer.
Your salespeople are courteous, but insufficiently knowledgeable about your sales process.
Your salespeople are sufficiently knowledgeable about your sales process, but there’s no script, so they each describe your business and your products differently.
Necessary but insufficient.
So what can you do to correct the situation? Make a list of each and every result you want produced in your business – scrutinise every aspect of your entire company. Next, create an organisational chart detailing every function and every position within every function.
Then organise each of the positions by the results each is accountable for, starting at the bottom of your business and moving to the top, thinking: What is the position? What is the function? What are the results each is intended to produce? How is it supposed to look, feel and act in order to produce those results? At what cost? At what price? What will be the return on investment?
None of the positions or functions is sufficient by itself to produce the results you want, but each of them, done in exactly the right way or put in exactly the right order, is necessary to produce the desired finished product: a highly successful business.
The law of necessary but insufficient is a great way to make all those decisions you need to make by asking yourself: Is it necessary? Is it sufficient?
If it’s not necessary, don’t do it. If it’s insufficient, what else is necessary to complete its sufficiency? It’s a logic tree I think will be of great help to you. But don’t just think about it. Do it! Thinking about it, while necessary, is insufficient to produce the impact I know it will produce once it becomes an operating part of your business.
Excellent Performance Management Supports Great Character
Personal character, and the character and culture of an organisation, is core to organisational health.
“We have little power to choose what happens, but we have complete power over how we respond.”
– Ariana Huffington, Thrive
Good character feels right
Having good character simply feels right. You will sense when you encounter it in an organisation or an individual. On the flip side, you will want to run away if you experience its polar opposite being allowed to run rife.
The fruit of “good character” in the organisational context includes: Sincerely serving colleagues, customers and suppliers. Ethical leadership. Showing integrity while performing tasks. It is reflected in something as “small” as looking after company resources.
- Personally: Do you take stationary home? Is that stealing? Do you habitually leave 10 minutes earlier, or come late?
- Organisationally: Do we commit to the promises we make our customers? Do we remunerate our employees fairly, or do we sweat our assets to get more work for less pay?
Good character is tested during turbulent times.
Will the company turn a blind eye when confronted with situations that require neglecting good principles for the sake of making money or closing a deal?
It is then when we see who stands firm in their values, good principles, and beliefs.
The benefits of excellent character
No one or no business is perfect. Building character is a lifelong process.
Benefits of excellent organisational character include: Attracting better leaders and talent, making better decisions, having happy and engaged employees who will take less energy to manage, but instead will add energy to the business.
Customers will sense this. Strategic partnerships will be formed. The business will also attract suppliers that share the same character.
Other intrinsic benefits include: Being responsible stewards, and understanding why the organisation exists, what it contributes towards, and is part of.
Making a sizeable profit is great, and a responsibility towards shareholders. How you make that profit, and what you do with it (how you spend it), is what defines “who” the organisation is, reflecting its character.
Obstacles to excellent organisational character
Warren Buffet said: “It takes 20 years to build a reputation, and five minutes to ruin it. If you think about that, you’ll do things differently.”
I want to be able to say that I display great character all the time, but I can’t. I wrestle with it, and I am tested in various areas daily. But I try. I review my actions and motives through discussions with individuals, in internal meetings, and in conversations with clients. I often need to face the facts that in some areas I may have acted inappropriately. This is not about work only, but about life, which makes it a weightier responsibility. Being confronted with the standards of having good character is sometimes the biggest obstacle you face.
From an HR viewpoint organisations will face obstacles in various areas: Ensuring that goals are reasonable. Ensuring that employees and managers act with integrity, and are held accountable for their actions. Also, recruiting the correct fit within the job and culture and not just recruiting the quickest available candidate who might actually not fit the culture profile.
When we see re-occurring patterns of moral “red flags” we should act accordingly to protect our business from the harmful repercussions of having “a little leaven ruin the whole lump”. Flags like unfaithfulness, malicious jealousy, destructive selfish ambitions, dissensions, and outbursts of rage, sabotaging envy, and addictions.
Setting the boundaries and letting employees and managers know through leaderships’ example what it means to act with good character brings security, and will contribute to a happy and productive workforce.
Performance management contributes to excellent organisational character
Sometimes performance management is inappropriately used by managers as merely a tool to discipline, or just done as a “box-ticking” exercise. This is not the approach we recommend.
The Imenent approach is geared towards creating a culture where the employee and manager can honestly dialogue about the real progress of a function or task. The majority of empowered employees are generally able to fulfill well-defined functions. It is when things go wrong that a manager needs to be made aware of it quickly so that they can work together as a team to understand what happened, and what the solution is.
Our system is a voice for both the employee and the manager, supporting both parties with tools and advise.
We believe that this open relational approach to performance management is an enabler of great organisational character.
To conclude with another Ariana Huffington quote: “It all starts with setting the expectations that make it clear that no matter how much hardship we encounter – how much pain and loss, dishonesty, ingratitude, unfairness, and jealousy – we can still choose peace and imperturbability.”
Always seek to do good.
The Role Of Employers In Skills Development
Here are a few reasons why you should invest in skills development for your employees.
Recruiting talent in today’s working environment has certainly changed for the better. With the new B-BBEE compliance and Skills Development Act regulations, it has now become possible for business owners to make an impact by employing unskilled individuals and training them up to be valuable workplace assets. In such a competitive working environment, investing in one of the many skills programmes can benefit your human capital more than any impulse hire could.
From UIF to skills development levies and more, business owners need to be up-to-date with the latest labour law requirements as they are directly responsible for the growth and progress of their staff. Employer-endorsed skills development plays an important role in the future of your business. This, unfortunately, has made many employers shy away from skills development because they fear that investing in skills may result in employees leaving. While that certainly can be a reality, the Skills Development Act encourages businesses to invest in training to help contribute to society, and to generally increase their business opportunities with international and local companies.
Skills development is a powerful motivator for new and existing employees. Be it through learnerships, internships or workplace-based training programmes, individuals who feel that their company is investing in them, personally and professionally, are more likely to be loyal to your company.
Here are a few reasons why you should invest in skills development for your employees:
Attracts and retains valuable employees
Beyond the skills shortage in South Africa, employee retention is a major challenge for employers. While the hiring process might be easy, it becomes an unnecessary expense for business owners when positions aren’t fulfilled according to plan. Knowing that you can rely on your employees is both a benefit to you and the employee themselves.
Skills development programmes do not only build loyalty, increase your BBBEE scorecard rating and create a strong workforce, but it gives your business a good reputation. A company which invests in human capital creates new opportunities within and outside the company.
Helps you create promotable employees
Taking the time to upskill employees means that you’re making an effort to support them professionally, as well as contributing to the economy at large. By implementing skills development training in your business, you’re creating a capable workforce and giving them the tools they need to excel.
Employees become engaged at work
Employees who don’t feel appreciated or cared for are the ones who tend to come and go. When you provide them with an opportunity to learn and grow, you’re allowing them to challenge themselves. Most unskilled employees can’t afford tertiary education, so when you give your employees the help they need, they’re more likely to become loyal, motivated and value-adding employees.
Helps you save and earn money
When your company partners with a company like Proud Afrique, according to Sector Education and Training Authority (SETA) regulations, there are many ways in which your business can save money. One of the most beneficial ways is through tax claims.
There will also no longer be a need to hire and recruit talent as often because learning programmes will give your business the chance to build up a pool of trustworthy, willing employees who could, potentially, add value to your company in the long-run. Not to mention, a trained workforce contributes to a higher productivity and output level in the office.
Creates a forward-thinking mindset
Employee development is forever changing. Something that worked well this year might not work well next year. But the exciting thing is that your team will be up-to-date with the latest trends and innovations. Over time, you will be able to adjust your plan according to the employee and industry’s needs. While it might seem intimidating for employers, it means that you’ll constantly need to think ahead and try new ideas. This type of forward-thinking can also spark many valuable relationships.
Contributing to human capital development in South Africa will give your business the opportunity to grow, regardless of economic conditions. B-BBEE training offers countless advantages which will help you learn the process, the benefits and the goals of being B-BBEE compliant. Employment should be more than simply having a job or receiving a paycheque every month. A skills development training option is there to help your employees change their lives.
Leadership – Lead Your Team To Dizzying Heights Of Productivity And Business Success
To ensure your company’s success, you’ll need a productive, effective team. But first, you should ensure you have the right people on the bus.
What is productivity?
When pondering the answer to a very important question it proves often to be a good tactic to first think on what a concept is not. Productivity is not appearing to be busy.
Productivity is not spending most of your time actually being very busy, but busy with things that propel you forward on the journey towards great achievements and making your vision a reality.
Productivity is simply to produce results. Results that leaps towards your end goals and ultimate vision. Trying is not an option, doing the right things in the right way so that they produce results is the only option, that is, if you really want to build a legendary company.
The ground-breaking difference between effectiveness and efficiency
Efficiency means to do the right thing. It is the right thing to do in business to give quality service, right? So what if doing the right thing does not produce results?
Effectiveness on the other hand is doing the right thing in the right way so that it produces results.
Quality service given in the right way so that we obtain actual referrals and the client comes back for repeat business is an example of effectiveness.
What must you be busy with?
The Pareto principle applies but in overdrive. Really hone in on the 20% of things to do that really brings home the profits, the purpose of the business, and brings joy to customers and team members.
Yes only 20% of your activity as an entrepreneur (roughly on average) brings in the true results, the other 80% of your activity is pure fluff.
Entrepreneurs often revert to what they like doing as opposed to what they actually need to do to be a success. Business growth and productivity is not a game of meandering between the options of dislikes and likes , but instead, taking action on what needs to be done to reach goals whether I personally always like it or not.
Be busy with what works in relation to producing the desired results. If you do not know what actually does work, be busy in terms of researching what needs to be done to produce results.
Get the right people on the bus
Another critical question to answer is: Who must be busy doing the right things in the right way to produce results?
Well only the people who really want to be successful and are willing to pay the price of disciplined and purposeful action will sustainably be effective anyway.
Hire people that authentically believe in your business’ purpose. Hire people that love what they do and already are highly skilled, or alternatively will put in the required work to become very skilful. Remove toxic behaviour from your business by either coaching towards excellence or firing for misaligned behaviours.
Lead by example
Do not expect productivity in the true sense of the word, from your employees if you as an entrepreneur is not the living example of the results producing behaviour that you require from your team. Inspire your team, not only by producing excellent results, but by doing it in a creative, purposeful and joyful way.
As Mahatma Gandhi said: “Be the change that you want to see in this world.” Do not simply demand it, be it first.
“Slay the holy cows”
Most businesses have ‘holy cows’. That means things that do not necessarily produce any results, or even produce very negative results, but the team keeps on doing those things because:
‘That’s how we do things here’
‘That’s how we have always have done things here’
‘We love doing things in that way, here’
A troublesome example is the ‘meeting holy cow’. Some people just love the sound of their own voices and will carry on speaking for hours upon hours within meetings, which usually then leads to little or no action. A meeting is usually just talking whilst only action can really produce results.
‘Slaying the meeting holy cow’ does not mean we stop having meetings. We simply change the way we do them so that they become effective. By having shorter, very concise meetings, that are actionable, measurable, and results driven we have ‘slayed the meeting holy cow’.
Productivity is producing results that continuously move you forward on the journey towards attaining your vision. Be busy with the 20% of activity that produces the real and tangible results that you want for your business. Be willing to ‘slay the holy cows’ that take up time unnecessarily and that do not produce the desired results.
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