I am not clairvoyant, but I can get a quick estimate of the stage of your business based on answers to three simple questions:
- How many hours a week did you work in last year?
- How much has your profit grown in the last three years?
- What percent of your team are A Players?
The answers to these three questions are inextricably linked – the quality of your People is essential to your business profit and your personal work-life balance as a small business owner.
To describe these business growth and health stages, I created a model that I call the People Pyramid.
Stage 1: Fires Chaos & People Drama
When you don’t have a trusted reliable team, you are left to deal with fires, chaos and drama. You and the rest of the team are exhausted dealing with everyday crisis, and feel frustrated rather than productive.
You might have a few Debbie Downers who squelch the whole team, and leave things hanging or a mess that surface later. Good employees are annoyed they have to pick up the slack or deal with someone who doesn’t work as hard or care as much as they do.
Tensions may be high or between co-workers, lowering the team spirit and creating interpersonal drama. The chaos lowers the customer experience and distracts you from pursuing new sales and customers. The focus is on getting through the day, not improving the business.
This creates a vicious cycle that is definitely not the foundation for growth.
Often owners work too many hours, and go home feeling like they didn’t accomplish anything. They feel burnt out and overwhelmed, and think about exiting the business.
Stage 2: A Few Good (Wo)men
At this stage, you have a stable core of long term employees who share your values about how to care for your customers and are good at their day job.
Most people are decent performers but a few don’t seem committed to doing a great job all the time. These lower performers tend to drag down the team, and take a large part of your day assigning and monitoring work is done on time and correctly.
Work flows fairly well and employees are mostly clear about job expectations, although procedures are informal and not written down. New employees struggle in their first few months getting used to how you do things. You have a fair amount of turnover as some of the people you hire leave after 2-3 years, and you are not sure how you can keep the good ones.
To make decisions, staff ask managers questions and get approval for anything they think should be run by the boss. There may be a continual flow of people asking questions and running things by you.
Your days are busy but progress is slow, and you have a wish list of business improvement ideas that you never seem to get started [much less finished].
You would like more free time and you are afraid to leave since issues or problems surface when you take more than a few days off.
Clearly the business is relying on your presence and guidance to function. You have the CEO Syndrome [Chief Everything Officer].
Stage 3: Silos and Soloists
The natural progression for a business is to start to organize around functional areas- sales, operations, customer service, accounting.
This is typically the stage where you have team leaders or managers who now coordinate the daily work in each area. Just like an orchestra, each area head is a soloist- concerned with the work under her section. Sales is concerned with selling more to more customers, operations is concerned with onboarding and servicing the customer, and accounting is counting the beans and controlling the cash.
It is also natural for these soloists to make decisions in a “silo” [a tall structure sitting directly next to another structure, yet not touching or connected.] Sales might promise 7 day turnaround without checking with the team who has to do the work and has a 14 day backlog. Purchasing might find a great deal on supplies and place an order without checking with accounting, and now there is a cash flow issue.
You now become the conductor of the orchestra—making sure that each soloist complements each other’s work and that decisions are made based on the impact on the whole business, not just one area. This requires daily effort on your part, because silos can’t see what is happening outside their walls, and often don’t hear about the impact of their decisions unless it is a crisis.
At this stage, there are often team leaders or manager who now assign and coordinate the work of your employees. These key people now are responsible for the daily monitoring of employees and customer care, and putting out small fires.
Most employees are clear about expectations and you have another layer to assist with performance and attitude issues, so you only need to get involved with serious and persistent People issues.
Now you have time to have informal team meetings to keep people informed and tackle current problems, although you may not stick to a consistent meeting schedule. You and your staff may not know what to talk about and when, and some people find these meetings boring.
You want to grow your revenue but sales may have been flat the last few years.
Your business has a good reputation and sales often comes from referrals and repeat customers. You may have sales people who use the traditional methods of networking, advertising and responding to leads that are generated to convert into customers. You may not have a specific sales pipeline or track sales metrics on a regular basis.
You feel like you are progressing on the business, but may feel like you “pay for it” when you take time off.
Stage 4: Trusted Accountable Team [Ready for Growth]
If you want to grow beyond a few million in revenue or 20 people without imploding, these are the elements you need to for scalable business. (Or if you want your smaller business to be more valuable and less reliant on you.)
This is a business that runs on “autopilot.” Just like an airplane, the captain is setting the course and still there for oversight and monitoring, but the routine work of flying at the same attitude is delegated to the co-pilot and systems.
This is a business that does not revolve around the CEO, who can then focus exclusively on strategic long-term planning and implementation.
This is the highest valued business, since it doesn’t need the expertise or effort of a single person to create value.
Key tasks and results are defined in standard operating procedures and are followed consistently. There is a method in place to review and improve process to eliminate bottlenecks, increase efficiency and delight the customer.
There are “A-players” in every main role and the majority exceed performance expectations. There is an ongoing coaching process in place to give regular performance feedback, and everyone has a training and development action plan. People are engaged, committed and loyal and the culture is positive and values accountability.
Everyone is clear about their responsibility and how they can impact business goals, and have individual metrics and projects with “line of sight” to key business priorities.
The business has a strong brand, and a consistent repeatable process to find leads and turn into customers. Sales is not dependent on a single rainmaker. The sales pipeline is clearly defined and semi-automated, and is reviewed and refined by the sales team in regular meetings.
The business uses dashboards to evaluate key company & individual results weekly and monthly. Business decisions are based on data analysis of past, present and future modeling. Managers meet regularly to evaluate and revise their plans and projects for continual improvement and long-term value creation.
Owners of businesses at this stage spend most of my day doing what they love, and choose how much time they take completely unplugged from the business.
Over the years, you built your small business on step at a time. Your hired more staff to sell and service your clients, then you added an office manager and/or an accounting manager. With each hire you expected to get “freed up” to act like an owner, not an employee.
Yet you are “crazy busy” every day– getting sales, monitoring if work is done, leading improvement projects, fighting fires, and otherwise tending to the daily work in your business.
What could be the cause? If you have 10 or more people on staff, you are likely missing a “level” of management.
You have level 1- individual workers, and you (level 4)- expecting to lead well-designed and highly functional systems run by others.
You might even have level 2- a “supervisor” who monitors daily work of direct reports (perhaps informally and tactically), and is concerned with the next week or month.
But if you want to plan 1-5 years out and make changes that will improve your people, process and profits, you have to get out of the “daily supervision” game.
You need a deputy.
Here is a list of 9 ways your deputy (general manager) can positively impact your organization:
- Watch the store– develop and implement dashboards with key business results, review regularly and alert you to any “exceptions” so you know things are on track and there are no surprises
- Process improvement – identify trends in your hassles, bottlenecks and other issues, research to find route cause and suggest solutions, then implement the solution
- Build your team– Identify new roles or more people before your delivery suffers. Recruit, screen, onboard and train new staff that are Ideal Candidates, build a virtual bench of pre-qualified candidates before a position opens up
- Coach the team– schedule, assign and coordinate work, monitor performance and attitude, give feedback, train and develop people for the best job fit and opportunities, engage the team to retain A players.
- Client experience building– handle escalation of client issues, routine relationship building, periodic follow up to uncover unreported issues and identify opportunities
- Get stuff done– Take your brilliant ideas for sales, marketing, process improvement, customer service and work with you to implement them
- Get Strategic – Provide another viewpoint and involvement input in annual goal setting, then cascade goals down to every person, communicate and implement via individual dashboards and team coaching conversations.
- “Hold down the fort” so you can have dinner with your family and take several two-week vacations (almost worry free)
- Open up your schedule– so you can focus on thinking and planning, provide leadership and direction, building strategic relationships, and monitoring from a dashboard (instead of an avalanche of data)
Basically a deputy lets you guide the process while they drive the business.
Most owners wait far too long to get a deputy- a general / operations manager. The concerns are the usual- effort (how can I find and train a good one) and cost (how will I pay for him or her?).
Take a quick count- how many of these are happening now in your business?
What impact would these activities bring to your business if they were in place?
- Would it tighten up your sales process to win more business and increase revenue?
- Would it increase customer satisfaction leading to more sales and referrals?
- Would it provide the systems for reducing your costs based on higher efficiency?
If you increase quantity and value of each sale 5%, and reduce costs 5% this can double your profit.
Can a deputy do this for you?
Most small business owners wear many hats—service provider, marketer, salesperson, accountant, customer service, and for your team – trainer, project manager and coach.
But the more the business depends on you, the more you are limiting it’s potential .. you can’t do it all well.
In fact, only 8% of businesses grow to over $5 million in revenue.. something happens to most firms and they plateau around the $1-2 million mark.
Actually, not just one thing…
There are 7 main roadblocks to achieving your business potential— a lack of systems in 7 key areas.
- If your firm lacks these 7 systems, it creates a bottleneck that flattens sales, prevents great customer experiences, and reduces profits.
- Once you get the key elements right, you can grow smoothly and consistently, with a business on “auto-pilot.”
Remember Steven Covey’s habit “Begin with the end in mind”?
There are four main plans to guide your activities and decisions to create the business you desire:
Strategic plan: It is crucial to provide a roadmap to guide your major decisions.
Budget: An annual budget is a planning document, report card, and decision tool.
People Plan: This plan outlines your current and future people roles— and forecasts what additions and changes to roles are needed to support sales growth and new business lines.
It also outlines individual’s work with organization goals (see People and Process below).
Owners plan: Owners, just like every team member, should be in a role that maximizes their strengths. Many owners continue to be the CEO- the Center of Everything Officer. This creates a huge roadblock for growing the business as the owner becomes overworked and overwhelmed.
An owner’s plan considers their current and future desired involvement, and outlines a plan to transition responsibilities to key people over time.
2. Sales plan
Most businesses have a reactive approach to sales—they do a bit of advertising or hire a sales person and then respond to the leads that come in.
Often the owner is heavily involved in all or part of this process. It is typical for a busy owner to be slow to respond to inquiries and provide proposals, and leads can be lost quickly without a tracking system.
There are several roadblocks in such an informal process.
Not only are you losing new sales that you already proposed, but you are also not pursuing qualified ideal prospects to have a consistent flow of new sales opportunities. A third sales area often overlooked is repeat business from current or prior customers—most organizations don’t have a solid process to keep in touch and offer additional services.
If you want to find, attract and cultivate leads into new and repeat customers, the solution is to have a consistent optimized sales process plan that is semi-automated.
Define your process
We all have our own way of doing things.
While that is just fine in our personal lives, a business needs to ensure consistency and quality of the product and service we deliver to our customer.
This roadblock is the lack of three little letters: SOP—Standard Operating Procedures.
Maybe you consider this super-boring, but this is the foundation of growing and scaling your business with few fires and chaos, not more. If you throw gasoline (more sales) on a fire (inconsistent work) you have an explosion.
If you want to grow smoothly, you need SOP’s.
SOP: Two key elements to a streamlined and consistent process are 1) to identify key tasks and results in standard operating procedures – SOP, 2) continually refine those SOP and implement projects to improve your process and delight your customer.
Employee involvement: To best way to process improvement ideas is to actively involve your employees in the process—they are closest to the customer and are more likely to see ways to do things faster, better, and cheaper.
Business success is about delivering an exceptional customer experience– and systems allow you to do this easily as you grow.
Your standard operating procedures are enhanced further by creating job responsibility profiles with key performance indicators (KPI) for each employee.
When everyone is clear about their responsibility, how it supports business goals, and how they will be measured, they perform better and are more engaged with their work.
One optimal practice is to create a firm-wide dashboard of key metrics, and then “cascade” the goals and metrics to the specific people responsible. These “report cards” show when company and individual results are on target, allow for quick adjustment in areas that need attention, and ensure focus on the main items to achieve this year’s goals.
Fabulous Team A Players
Even with perfectly optimized systems and all the pretty dashboards with your key metrics, you won’t grow with a fabulous team of People, who work together to achieve business goals.
A Players: There is a simple measure to know if you have this—do you have 100% “A-players” in every role?
Virtual bench: When you have qualified candidates on a “virtual bench” (ready to hire as business grows), this allows you to plug in the team you need when you need it, rather than overwhelming your staff and disappointing customers as you reactively scramble to find more teammates.
What is your ikigai?
As the owner, you are both the key to your success AND your biggest roadblock.
If you want your business to run without your daily involvement, you need to:
- Build a trusted management team to optimize the business
- Delegate to handle the daily operations (no meddling)
- Hold them accountable via the goals and dashboards tied to strategy
- Focus your efforts on your genius—what you love to do, what provides the greatest long term value for the business
A lack of profits is a huge roadblock to your business success. Low cash flow causes you to make decisions out of scarcity— cheaper labor, old broken equipment, taking on low margin jobs, not investing in process improvement, and working yourself harder.
When you have the Right Plan, Process and People, the Profits start flowing (I call this the 5 P’s model).
This upward spiral of success finally provides you the security, freedom and funds to step out of the daily “running” of the business, and let you focus on your ideal role and ideal week (and ideal life).
Download the Guide and discover Which Roadblocks are Limiting Your Small Business.
Article by Diana Southall
About the author: Diana Southall is the creator of the People Plan. She helps owners who want to grow their small business but are too personally involved, and who want to learn how to “run a business” and build a trusted team to handle the day to day.
More than half of for-profit employers pay out some sort of “year-end bonus” – sometimes it’s called incentive, profit-sharing, distribution, bonus checks.
I heard two examples this month of employees who were actually disappointed/ mad after receiving a fairly generous bonus!
Many well-meaning employers have one of these “plans” but there are two key problems that indicate you should re-design the plan:
1 vytorin 10 40. Not linked to performance
For most small employers and a surprising number of large ones, it is also a mystery to employees how they “earned” it and how they can get a bigger one next year. Your employee is thinking something along the lines of “thanks for the $500, what is it for?”
If you are going to spend money – cold hard-earned profits- I suspect you want to get some “bang for your buck.”
If your employees do not understand these three things, it’s time for a re-design:
- why they received $x in annual incentive,
- how it ties to either their and/or the company performance, and
- what they can specifically do next year to make this incentive larger
2. Becomes an “entitlement”
I have yet to meet an employee who will turn this down but often employees are actually MAD or disappointed when they get their bonus check.
Can you believe it!? An owner or manager group could take all the profits for themselves, yet they choose to share some with the staff. Instead of feelings of gratitude and joy, a poorly designed or communicated plan actually has the opposite effect.
And these feelings can linger and fester and actually lower the commitment and enthusiasm of your staff.
Yikes! A client recently used the phrase that sums this up: “we don’t need to spend money to piss people off!”
Typically the reason employees are actually dissatisfied with the bonus amount is because they expected more (for whatever reason) or think their amount is “unfair.”
Perhaps they thought they would get the same as last year (entitlement thinking) but profits were down so the overall pool was less. Or they thought that the promotion to manager would earn a bigger bonus. Or I should earn more than Larry because (fill in reason here.)
If you are hearing grumblings or outright complaints, it’s time for a re-design. Sometimes the plan is effective but it needs to be better communicated to shape employee expectations, explain the equity in method, and align performance with the payout.
The solution to bonus pains: Our model is to leverage the three 3C’s necessary to have a successful performance-based incentive plan- under employee’s Control, not Complex, clearly Communicated for alignment to company goals.
We have a ten step process to make sure your plan shows what is important to achieve, how each person contributes, and how they can be rewarded.
If you are interested in getting more bang for your incentive buck next year, I’m happy to chat- click here to book a phone session
Image courtesy of Stuart Miles at FreeDigitalPhotos.net
When I speak with business owners and managers, they all seem to long for this illusive state of “accountability.”
Typically they mean a desire to trust that employees are doing the Right Things, and are “kept in the loop” when issues arise or things are not being done. Instead, most report that they have to keep a close eye on everyone’s performance, chase people down for status updates, put out big fires because they are not told when a tiny spark starts, and spend a whole bunch of time following up (dare I say nagging?) to get projects moving forward.
So I ask you, is your organization allergic to deadlines? (Thanks to a client for this vivid phrase). What happens when someone is given a task? Do they keep track, report back when progress is made, keep everyone updated, agree to a reasonable deadline and then meet it? How often does this happen (just one person or almost everyone)?
After a client monthly update meeting where there was no progress to report on 6 projects (again), the owner looked at me and said “is this because of me?” Sadly, yes, many managers and owners are allowing their employees to be less than accountable. In fact, many build an atmosphere where this behavior is inadvertently rewarded.
What can you do to create an “Accountability Culture?”
Focus on results
My client was having weekly status update meetings (a great start) but people came without “doing their homework” or had loads of excuses … every week. What message does this send to those that actually hit their commitments and to those that do not? People still do what is rewarded—if going above the norm to actually completed an assigned task is ignored then I might decide not to bother next time. Conversely, if I “get away with” reporting no progress every week, this rewards me as I didn’t have to do anything extra.
Get specific- “Soon” is not a deadline
People do what is expected and measured. If a weekly team meeting includes assigning reasonable deadlines and then people report back that they completed the task by the deadline, this builds an organization with results focus. If one out of ten employees reports every week that “I didn’t get to that” what implied feedback does the one shirking Sally get? After about 3 weeks of eyebrow raises and uncomfortable silence, Sally just might be motivated to complete her tasks so she can report back they were done on time.
Set direction and “inspect what you expect”
The first step is to set expectations (results expected and by when) and then, yes, follow up. As a manager, you should have a list of all the projects and other commitments with who is assigned to each task and a deadline for each. This provides a bird’s eye view of everything promised so that you can keep track of who is doing what, and what is due this week/ month. This makes regular, routine follow-up more of a rhythm and less of a foot race.
Be flexible and solve problems
Of course, urgent requests come up and roadblocks are encountered. Make yourself accessible and helpful to re-prioritize and re-deploy resources so that key commitments can be met as much as possible.
Recognize effort and results
Especially if you are slowing moving towards full team accountability, recognize small efforts to change and celebrate even small results achieved. Remember it takes 10 positive comments to change a behavior and 4 positive comments to maintain a current one. And be careful to not publicly criticize those that miss deadlines and targets—keep the reports factual and without judgment. Just the mere reporting that something wasn’t done can be feedback enough. A good management rule to follow is the 4P’s- Pound in private, praise in public.
Image courtesy of stockimages at FreeDigitalPhotos.net