Do you have People Problems?
One of the great things about my day-to-day is that I get to collaborate with CEOs from every walk of life. Sometimes it is a speaking engagement, it may be teaching at Georgetown University, most often its one-to-one through video conferencing during a discovery call.
This week alone I spoke with a CEO from a leadgen company, software engineering, a specialized law office, communication trainers, construction, distribution, accounting, an education consortium, a manufacturing revitalization expert, and a medical doctor who all want to do even better.
I ask questions and listen. CEO’s talk about inadequate recruiting pools, the set backs when they train team members who leave once they become skilled, and quality issues resulting from C-players. Not to mention burning time and energy repeating the same errors with C-Players. In more than one case CEOs could 3x their business topline revenue if they just had the right people and capacity.
To further challenge People Capacity, the Great Resignation started in 2021. More than 40% of all employees were thinking about leaving their jobs. Between April and September,twenty-four million employees resigned! This is an all-time record. Attrition rates varied widely between companies in the same industry and markets. So much for the pandemic bounce back. Instead, things are changing fast (and this will accelerate as AI, autonomous vehicles, digital currency, etc. come into their own).
On January 11, 2022, Donald Sull, Charles Sull, and Ben Zweig published the outcomes of their Great Resignation research in the MIT Sloan Management Review article Toxic Culture is Driving the Great Resignation. They found that compensation is not the cause.
Instead, a toxic culture where employees feel disrespected is the leading cause. Job insecurity and reorganizations that often leave the remaining employees with heavy workloads and the laid off employees without employment are the second cause of the Great Resignation. Next are companies with high levels of innovation (What?). Yes, because the bleeding edge of innovation typically requires employees to put in longer hours, work at a faster pace, and endure more stress. The fourth cause of the great resignation is the failure to recognize and reward performers from laggards (this includes keeping C-players).
On some level employees had enough with the old ways.
Even before the COVID-driven Great Resignation, when CEOs are not one step ahead. In our model people capacity is the third obstacle to growth. In other words, what works at one employee headcount size will not work at the next. Roughly the breakpoint for stalling is 25, 50, 150, and 250 people.
New Expectations
The world has changed. Just like some CEOs are re-thinking what they want out of their business, employees are re-thinking what they want out of life and their career.
CEOs who press employees to return to the office then work like they did pre-COVID will be at a severe disadvantage when it comes to recruiting and retaining A-players.
As Growth CFOs working side-by-side with CEOs, we see employees seeking continuous development, flexible work hours to take care of the people in their lives, being able to work virtually because the last two years already proved that commuting doesn’t make sense, and lateral career opportunities to learn/do something new.
There are many benefits of these changes in expectations. For example, now CEOs are liberated to hire the best people globally. Another benefit is that many costs can be reduced or even eliminated like rent, technology devices, etc. For every dollar saved you increase your profitability and valuation by 6x or more to get paid twice.
Expectations already shifted so don’t be the last one to “get it.”
Different Management Practices
In the old days (two years ago), employee personality played a large role in hiring decisions. After all, you are going to be in the office most of your waking hours together. Now, in a distributed virtual workforce, collaboration, focus, and outcomes matter more.
Before managers could walk around to observe who is pretending to work. Now work is performed beyond the manager’s line of sight. Teaching managers and employees to use the numbers to gain clarity and confidence when evaluating performance, options, and outcomes goes a long way toward success.
Establish real mission and values then engage employees to figure out how to actively live up to them contributes to retention. This develops a sense that they are here for a reason and have a team that looks out for each other. In part, living up to a meaningful mission and values is how we overcome toxic work environments.
Enable scale by moving processes and systems to the cloud to connect your team members with any device, anywhere and anytime. Improve systems with visual overview and detail know how to capture and cultivate best practices.
With technology-enabled dashboards it is easy to see who is performing and who is not. This helps managers know who to work with side-by-side. Ultimately if the employee fails to get into the performance zone, they are a C player, prune them in a timely manner. Your A-players will thank you.
Anything less will put you at a disadvantage.
Growth CFO People Capacity Best Practices
Now let’s get into the fun stuff.
Create Your Future Organization Chart – As you scale, roles will begin to specialize. The combination of specialization and building capacity allows you to escape the owner’s trap to focus on what you were born to do.
To gain role and headcount clarity and confidence start with the end in mind. Create your year-end future organization chart or create the future organizational chart for your next major milestone on the way to 10x.
Be Intentional –
For recruiting assess candidates natural fit using tools like DISC, Predictive Index, or Culture Index. Conduct a formal skill assessment for each role. Then for your top candidates assess values in relation to yours and use a proven interviewing technique. One of the best approaches to interviewing is Brad Smart TopGrading.
When onboarding, create a certification program to teach new employees the “Your Company Way.” This mitigates reinventing the wheel through trial and error with each new hire plus it aligns team members globally.
Somewhere during onboarding integrate new team members into your continuous mastery program. Does it make sense for managers to huddle with team members weekly about their individual development plan to drive customer impact? What about self led weekly functional training using solutions like SkillSoft? Maybe create cohort groups of employees to participate in internal monthly masterminds to foster collaboration, resolve challenges and build real connections.
Use the Numbers –
Establish Your Daily/Weekly Dashboard. Kaplin lays out the use of financial and non-financial key performance indicators (KPI) in his book the Balance Scorecard. Start fast with a spreadsheet to figure out what is useful then evolve the right KPI into the right technology infrastructure.
Teach managers to use the numbers like a pilot uses their instruments. Our FIVE Habits of Profitability accomplish this. Master using the monthly financials like a scoreboard with Habit 2. Doing so informs proactive decision-making when you are over or under the plan. Then with Habit 4 engineer profitability by creating a rolling 12-month financial flight plan to gain near term visibility. Run “what-if” scenarios to figure out the best path forward. This is downright fun!
Using the numbers with foresight provides clarity and confidence to build the right people capacity and equip them with expert follow-through. The same approach is helpful to overcome other obstacles to growth like winning new customers and proactively gaining access to capital.
What’s stopping the flow of your projects? Is it people problems?
