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Managing Staff

Fostering Loyal Employees

Stop managers from leaving and launching competitor businesses with incentives and tight contracts.

Ed Hatton

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Challenge

A local funeral manager looking to grow his company with the right staff is struggling to find employees who can carry his vision to the next level. Instead, he finds that employees in whom he has invested time and money are willing to leave his employ and take his ideas with them.

Solution

This entrepreneur has stated a problem that will be recognised by many business owners with businesses in the early stages of development. When he launches his company he becomes responsible for marketing, finance, customer service, technical expertise and many other roles. Eventually he sees the opportunity to grow out of the start-up phase and expand the business, but cannot do so because he is already working to his capacity – and has probably compromised his family life and learned to sleep a lot less while doing so. Some entrepreneurs never get out of this trap and stay in the start-up phase. Not a lot of fun.

In this case the entrepreneur runs a funeral parlour and has recruited potential managers to expand the business geographically. He trained them in the formula which had allowed his start-up to succeed, only to find that as soon as they believed they knew enough about the business to start their own parlours they resigned and attempted to go into competition with him. To compound this problem ex-managers opening their own businesses will frequently compete on price and try to lure customers from their former employer. By so doing they will reduce the price expectation among potential customers. Although many such offshoot businesses either do not get off the ground or fail early, the lower price perception remains.

Entrepreneurs in many fields, PR agencies, small parcel delivery services and IT specialists among them will immediately recognise this problem. Staff members leave to go into competition and then fail after causing turmoil in the market. Why do they fail? It is part of a fundamental problem of would-be entrepreneurs convincing themselves that technical expertise in the chosen field and a lower price than the current suppliers are all that are needed. Of course that is far from enough. Entrepreneurship requires quick thinking, ruthless financial management, excellent salesmanship, capital, attention to detail, the ability to compete other than on price and a host of other attributes. For an ambitious employee who wants a greater share of the action it may be better to talk to the business owner about setting up a subsidiary or franchised operation rather than going into competition.

Recruiting the right staff

To return to the question posed by the entrepreneur – how does he escape the trap of recruiting and training potential managers so that he can grow his business, only to see them leave and open competitive funeral parlours in his target growth areas? He has made a good start by recognising the problem and asking for advice on how to address it.

Next he should define the type of managerial assistance he needs. In this case he has assumed that the right way to go is by having branch managers to open and run satellite branches, but he should also consider other models. For instance, a business development director to supervise the growth and manage branch managers could be more effective. If he does go the route of branch managers he should recognise that they will become reasonably senior people. He must be sure of what responsibilities and authority they will have, and therefore what qualifications and personality types he needs before commencing recruitment.

Risk vs reward

The next steps could be both carrot and stick, to keep the potential manager on board and motivate him to help the business to grow.
The carrot part could consist of bonuses, incentives (travel, prizes, business training or others), profit share or even shareholding options or franchise ownership on achievement of key performance indicators. Clearly both short- and long-term objectives and incentives must apply to ensure extended employment.

The stick part should definitely be a restraint of trade agreement with all potential senior employees. He should not skimp on the preparation of this agreement; rather pay some legal fees now than argue through the courts later.Anyone planning to open their own business could reduce future stress levels by recognising the potential limitations brought about by being the only executive and having no more bandwidth. They should factor solutions to the risk of getting locked in to the start-up phase into their business plan.  And like this entrepreneur, never be afraid to ask for help if they need it.

Ed Hatton is the owner of The Marketing Director and has consulted to and mentored SMBs in strategy, marketing and sales for almost 20 years. He co-authored an entrepreneurship textbook and is passionate about helping entrepreneurs to succeed.

Managing Staff

How To Build Better Employee Engagement

Here are my 10 tips for managers wishing to build real engagement.

Dr John Demartini

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Everything begins with values; with the top three highest priorities in an individual’s life. These are the source of that person’s primary purpose and the underlying determinants of their perceptions, decisions and behaviours.

In the context of managers wanting to help their teams to develop mindsets geared towards connection, conversation and experimentation, within a healthy environment, the process must begin with value determination.

Advice for managers

Here are my 10 tips for managers wishing to build real engagement:

  1. Write down the job duties that your people actually have: Their current, accurate, and most up-to-date daily action steps.
  2. Spend some time determining what their values are. You can use the free online tool on my website – www.drdemartini.com
  3. Once you have determined your highest values (the three things that are most important to you in your life, where you demonstrate your greatest discipline, reliability, focus and productivity), you’ll need to find the links between employees’ job duties (Step 1) and their highest values. This is a very specific and detailed step, unpacked below.
  4. The question to ask is, “How specifically will performing this particular job duty help me to fulfill my current top three values?”

EXAMPLE

Let’s say one of your team members is a payroll administrator. Her job duties might include: checking how many hours employees have worked; calculating and issuing pay; deducting tax and other benefits; processing leave and expenses; calculating overtime; answering staff queries; and giving advice.

Let’s presume one of her top three highest-order values is her children. The way to connect what she does with what she values is to ask questions like these, in order to make links and help her see them in context:

  • Does working with numbers help you teach your children to pay attention to detail?
  • Does making calculations help you help your children with homework?
  • Does knowing the art of fair exchange give you a lesson to teach your children?
  • By doing your work, are you earning the income you need to fund your children’s education?
  • If it’s tedious work but you don’t give up, is that good role modelling for your children?
  • Does knowing about money management, and sharing this with your colleagues, help them to help their own children?
  • Does advising others make you better at giving your children counsel?

Related: Why Conflict Resolution Is A Matter Of Matching Values

  1. The magic number to shoot for is 20 links, not seven. Once you get to 20, for some reason, it ‘clicks’ and people can see that what they do every day is (or can be) valuable and meaningful. Be aware that some links are harder to find than others. Some are obvious; some, more tenuous.
  2. Look for fluency. If the employee hesitates or can’t answer the question easily or at all, this is a sign that the job duty is incongruent with their highest values and they are not going to be inspired about that particular duty. (In this case, keep asking them how that specific duty would or could help them to fulfil their highest values, until they can see a connection.)
  3. This is a big job. Value determination and link creation can take a whole day or more, the first time you do it, depending on the size of your team.
  4. To create better connections between your people, use the same process to cross-link others’ three highest values with your three highest values. Go through the entire team, making a list of values across everyone you manage. Look at the common threads. This will help you achieve more equitable leadership, better management and healthier relationships.
  5. For better work conversations, remember that dialogue comes from equal values (or else you simply have alternating monologue). Employees must know each other’s values. You, the manager, must master the skill of communicating your high-priority intentions, expectations and delegations in terms of each employee’s top three values.
  6. Intrinsically, people love solving problems that align with their values, so fulfilling their values will give them the courage to experiment.

Remember: People go to work every day to fulfill themselves, not for the sake of a company. For this reason, managers must enable their people to explicitly connect their own values with their everyday, real-world job duties, so that they become engaged, feel grateful for their collegial support system, and are inspired to go beyond the call of duty and to innovate.

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Managing Staff

6 Ways To Break Bad News To Your Team

We asked six leaders: How did you handle sharing the hardest news of your career?

Entrepreneur

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Being the bearer of bad news is never fun. But there comes a time in everyone’s lives, when they’ve got to step up to the plate. This is especially true in business. When you’re in a leadership position at a company, knowing how to deliver bad news is a crucial skill. To help you out, we asked six leaders for their advice on delivering bad news to teams.

Here’s what they had to say:

1. With a promise

“After the economic meltdown of 2008, we couldn’t afford to keep everyone on staff. Picking who stays and who goes is one of the most difficult decisions you have to make as CEO. I delivered the news with honesty and empathy at an all-hands meeting. We gave some severance, referral to an employment service and a personal reference. We also gave the option to rejoin our team once things were back on track, and some did! It was a homecoming of sorts, a healing moment.” – Ori Eisen, founder and CEO, Trusona 

2. With support

“In 2016, our office manager passed away. She was only 26. We called a mandatory meeting, let everyone know, and brought in grief counselors. The hardest part was controlling my own emotions in front of the company. This was a crucial moment, and the team needed a leader. We organised a memorial service to celebrate her life. It took time for the business to return to a normal cadence, but her impact remains at the company today.” – Rahul Gandhi, co-founder and CEO, MakeSpace

Related: 22 Qualities That Make A Great Leader

3. With transparency

“In New York, construction delays are as common as yellow taxis. But when you’re working to open a new restaurant location and have promoted staff to run it, construction delays don’t impact just revenue but your team’s livelihood as well. Delaying promotions for people who have worked hard to earn them is tough news to deliver. But we invited the team to the construction site to see the space and ask questions, and it helped everyone get on the same page.” – Otto Cedeno, founder, Otto’s Tacos

4. With community

“The worst news my husband and I had to share with our employees, and kids, was that we’d decided to move our business from New York to Los Angeles. We gave employees the option to stay with us and relocate. Some came west, and others did not. We couldn’t guarantee that those who moved with us would love L.A., but we promised to figure it out together.” – Cortney Novogratz, co-founder, The Novogratz

5. With a plan

“One of my first experiences as an entrepreneur was running a restaurant, which I closed as a result of 2008’s downturn. I knew this was going to be life-changing for my team. We did everything we could to ease the disruption, and I leveraged my network to place laid-off employees in new positions – nearly 90 percent had jobs in just a few weeks. As a business owner, failure is hard, but it’s an opportunity to prove yourself as a leader.” – Michael Wystrach, co-founder and CEO, Freshly 

Related: 15 Of South Africa’s Business Leaders’ Best Advice For Your Business

6. With reason

“After I joined Interactions as CEO, my team and I identified significant roadblocks in our product development. We had been on an aggressive growth track, but it was clear we needed to right the ship. I told my board and team that we were shutting down sales to double down on R&D. Hitting pause was an incredibly hard decision, but it was necessary to ensure we were providing the best product and experience for our customers.” – Mike Iacobucci, CEO, Interactions

This article was originally posted here on Entrepreneur.com.

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Managing Staff

Why Small Businesses Are Unable To Pay Staff Salaries

Let’s look at it from a different angle and see if we’ll arrive at that same conclusion.

Matthew Mordi

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We’ve heard countless times the constant conflict between employers and employees over non-payment of salaries. Small business owners complain employees don’t understand what they have to go through to ensure the payment of staff salaries.

The moment they’re unable to meet up with the payment of staff salaries, workers accuse them of being wasteful when business was booming. So the age old story of members of staff not being understanding comes up again. The cost of running the business which includes maintenance of machinery, rents, paying off loans; all these and much more which sums up overhead cost.

While it’s true that overhead cost is usually the main challenge of small businesses, it’s true only in part. Let’s look at it from a different angle and see if we’ll arrive at that same conclusion.

Usually a lot of small business owners don’t save for the rainy day, neither do they invest income generated by the business for the benefit of the business. Personal savings and investment isn’t the same with that of the business. Small business owners tend to save and invest income generated by the business in their personal names.

Related: Start-Up Law:  I’m A Start-up Founder. Can I Pay Employees With Shares?

Let’s look at this scenario:

Mr A. is the owner of a grocery shop. People are patronising the business. Business is booming, everything seems perfect. At this point there is usually no problem paying salaries and overhead. This is the tricky part, what the employer does with the income the business is generating at this point apart from ploughing the money back into the business will decide whether he’ll be able to pay salaries when business is slow.

One would expect the owner of the store to not only save but also invest some of the income made by the business.

This is usually not the case because it’s at this point of booming business and perceived excess cash that the owner remembers he’ll pay himself more than he usually does (and that is if he pays himself salary), needs to move to a bigger apartment or better still, buy a bigger car.

The moment there is downturn in sales as a result low patronage, the problem of payment of staff salary begins. Mr A. makes it clear to his employees that the business isn’t turning in a profit and he’s using his personal money to pay staff salary. Therefore, he can’t keep on doing it and he’ll have to owe salaries.

This could have been avoided.

Do diligent – don’t dilly dally

What happened to the excess profit of years before? It’s obvious the employer hadn’t been diligent with the funds. Instead of investing the money to ensure it generates further income for the benefit of the business for the rainy day, the employer would instead use the profit for his own personal benefit.

If Mr A. had saved the money and income generated by his grocery store in preparation for the rainy day, the company wouldn’t be caught up in the quagmire it was put in.

A business is a separate entity from the founder, whether it’s a small or a large corporation they should stay so; separate. I’m not talking about the technicalities of whether it’s a company or business name. We have to realise that in order for the business to not only survive but also succeed, it must be separate from the owner.

This is one aspect small businesses must learn from large corporations with sound financial plan. There are times these corporations declare losses, yet they’re able to pay salaries! Money made by the business should be for the business. It’s not the time to buy that new car. If employers work with the mindset of paying themselves salaries (not excessive), it would go a long way to ensure the business is afloat even during uncertain economic times.

Related: How To Structure A Fair Salary That Will Motivate Your Sales Team

In fairness, some employers who own small businesses have been exceptional in this regard. However, the fact is, majority of small business owners don’t function with this mindset. Businesses, just like it obtains in our personal lives, have their ups and downs. The things you do or don’t do during the ups are equally as important as what you do during the downs. Save, save and save. You can’t go wrong with this. Invest, invest and invest. You can’t go wrong with this either.

That profit isn’t for spending; at least not yet. Invest the money like you would do with yours. Invest it in the name of the business. Let your business own shares in other businesses. This is sound business practice.

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