She did not understand the following:

• Increasing engagement is a process, not an event
• The reason why there is disengagement is usually due to the lack of appropriate leadership skills such a supportive culture, trust, recognition, involvement, clear expectations and accountabilities to mention but a few.
• People respond to how they are treated. If they feel no one cares, why should they?
• The key idea – it’s not so much what managers do, its who they are –it’s all about character and integrity
• Engagement is an “inside job” – more difficult for task oriented people
• To have become involved and seriously wanting to implement engagement over a twelve month period would be worth a savings of $1 – 2 million on the bottom line. I’m afraid it’s opportunity missed.
• Oh, by the way, the CEO was not present. What does that say? It all begins at the top. Who is responsible for high or low engagement – the CEO or MD.  Sorry if that’s a bit blunt, but it’s the truth!

“What are we doing to invest in ourselves, and what are we doing to invest in our people?”

Companies never remain static. They are either moving forward or going backward. A critical element in determining the direction is the development of their people. Where investment is made, it is often at the middle management level that can have minimal effect if Executive Management is not involved. CEOs who condone this by delegating (or abdicating) this responsibility to HR or individual managers do so at their peril! A high return on the investment in human capital needs to be modelled by starting at the top.

Effective leadership is about positive influence, about having followers – the art of achieving excellent results through others. If the followers are on the average 50% effective, what does this say about leadership? The challenge is much of the “good” leadership development is often aimed at middle management, while senior executives are “too busy” or claim they “don’t need it” or make some other excuse.

Having “good” middle managers does little to change engagement levels if not strongly supported by executive leadership. It all starts at the top. Some executive managers would not like to hear this. Some would be justified as they do “walk the talk” support their managers, get involved and have high expectations and achieve great outcomes. But too many don’t. The numbers don’t lie. Often when discussing mentoring and coaching opportunities, these folk think it’s a great idea – for someone else!

So what makes for effective leadership and its many forms? At its core, it necessarily includes the ability to:

• Articulate a strategy
• Establish guiding principles
• Make decisions quickly, efficiently and effectively
• Earn the trust of your people, include them in the process, treat them fairly, keep them informed and above all else communicate effectively
• Keep the organisation focussed on the positive outcomes 

Therefore a definition of Leadership –

“To maximise the expectations, the positive hope of the outcomes that come from change – while minimising the fear of change for those involved.”

Doing business with family and friends can be very rewarding. It can also be very complicated and difficult. To be successful, it always involves an even more stringent standard of etiquette than usual.

But if appropriate measures and safeguards are taken, it can make life, work and relationships a rich, rewarding tapestry that brings the best of both worlds.

As accredited Family Business Advisers we make some suggestions for maintaining familial bliss as well as a sound business:

1. Courtesy: It is as important to be as courteous to your family as it is to strangers. We sometimes become too ‘familiar’ with family members just because we see them every day. We take for granted that they’ll put up with our moods in ways other people wouldn’t understand. But other employees may feel awkward seeing these interactions.
2. Establish boundaries. Have separate family outings, holidays or weekend activities where you DON’T talk business.
3. Be professional in public or at work. Expressions of affection could make other employees feel uncomfortable.
4. If you want to be alone together or have a private conversation, go away from the company property for an intimate lunch or cup of coffee. But don’t abuse the privilege and allow either person’s duties to be neglected.
5. Have very specific policies about reporting relationships and expectations of behaviour to avoid conflicts of interest, sexual harassment, or the potential appearance of either.
6. Communication: Be sure the lines of communication to non-family employees are good. Make sure that no one feels disadvantaged for being left out of conversations and decisions that take place around the family dinner table. Keep the appropriate people (based on their role in the company) involved in all decisions.
7. Privacy: Don’t talk about your family members’ personal life with other members of your staff, except in terms that are absolutely non-controversial. (Don’t tell your co-workers that you don’t approve of who your daughter is dating, for example, if your daughter works in the next office!)
8. Free choice: Make sure each member of the corporate structure has the option to leave the company without impacting the company more than necessary. Don’t assume that a person is a “lifer” just because he or she is a family member. Whether or not they take the “exit clause,” just having one makes people feel less trapped and ensures that they are there by choice.
9. Respect each others’ decisions and authority. Keep comments appropriate for your role in the company, rather than your role in the family. And never undermine each other’s authority in front of staff.
10. Appreciate the good things about each other. It becomes easy to focus on the negative when you spend a lot of personal AND professional time together. Remember (and point out) what you admire and love about one another.

Today most commentators place coordination, cooperation and collaboration under the single banner of collaboration. But the important skill is knowing when to collaborate, cooperate or coordinate.

Some simple definitions may assist here:

Coordination

Everyone is working separately to achieve the overall goal of completing a specified task or project.  Only a modicum of trust is required (that’s trust in the system) to get the job done.

Cooperation

Cooperation is, for example, when you meet with your team to work out a project review process?

Here we are cooperating with our colleagues to deliver a task that we all know needs to be done. When we cooperate there is often a medium level of trust involved (trust in each other’s competencies and character) – the value of the activity tends not to accrue directly to the participants cooperating and, in most cases, someone else is driving you to do it.

So what is Collaboration then?

It’s when a group of people come together, driven by mutual self-interest, to constructively explore new possibilities and create something that they couldn’t do on their own.

Imagine you’re absolutely passionate about the role that performance reviews play in company effectiveness. You team up with two colleagues to reconceptualise how performance reviews should be done for maximum impact. You trust each other implicitly and share all your good ideas in the effort to create an outstanding result. You and your colleagues share the recognition and praise equally for the innovative work.

The important factor is mutual self-interest – indeed self-respect. When people create things they really want to create, and it is good for the company and its clients, it energises and engages people like nothing else.

It is also important to consider therefore the value of collaboration between synergistic firms to the overwhelming benefit of the client – this is vital, for example, in the context of working with Family firms – where the various aspects of the Family Business dynamic (the family, business and ownership dimensions) require a client centric, multi-disciplinary and collaborative approach.

100 employees averaging 70% engagement. It would take 116 employees averaging 60% engagement to get the same result of those 100 at 70%.

That is 16 more employees to do the same job!

The cost of 10% disengagement @ basic minimum weekly wage of $544 = $452,608 per annum!

(Imagine what this figure might be if it were to include on-costs and more senior employees, middle and executive managers)

The following is taken from current research that highlights the chronic condition of workplace engagement, or should we say, disengagement.

1. The Disengagement Gap – Management Issues, 2007

“It’s impossible to overstate the importance of an engaged workforce on a company’s bottom line,” said Julie Gebauer, managing director and leader of Towers Perrin’s Workforce Effectiveness consulting practice. “The Global Workforce Study establishes a definitive link between levels of engagement and financial performance and, for the first time, begins to quantify that link.

“At a time when companies are looking for every source of competitive advantage, the workforce itself represents the largest reservoir of untapped potential,” she added. The most striking data about the linkage between employee engagement and financial performance come from a study of 40 global companies that involved a regression analysis of company financial results against engagement data. It found that firms with the highest percentage of engaged employees collectively increased operating income by 19 per cent and earnings per share by 28 per cent year-to-year.

2. Understanding the True Cost of Disengagement – Hewitt Quarterly, 2009

All organizations recognise that employees are a business cost – materials, equipment, depreciation of plant and salaries appear as an item on financial statements. Beyond these tangible costs, there is another seemingly indirect cost that few organizations measure – the impact that underperforming employees have on the business. This trend can be reversed, and profitability improved, by focusing on changing employee behaviour. To help organizations understand the impact employee behaviour has on businesses, Hewitt recently  considered the issue of disengagement as part of the Best Employer in Asia 2007 study’s ongoing research.

The analysis found that organizations with high engagement are 78 percent more productive and 40 percent more profitable than those organizations with low levels of engagement. Those with disengaged employees had an average profit loss of $8,000 to $10,000 profit each year for each disengaged employee. Treating employees well may seem like common sense, but our research shows just what impact low engagement can have. Put those costs per disengaged employee into your financial analysis and you can assess the impact it has on your organization. The good news is that if the engagement issue is addressed properly, employees once again rightly become an investment, rather than a non-refundable expense.

3. Work Force Analysis – a Business Reality Check – Profiles International, 2008

What is an Engaged Employee?

• Our studies found that when employees are “engaged”, they are excited and enthusiastic about the work they do and they are focused on accomplishing the task at hand.
• They are not easily distracted and will work extra hours if that’s what it takes to complete a project.
• They eagerly volunteer for difficult assignments, routinely producing significantly more than the job requires.
• They also encourage co-workers to achieve higher levels of performance and seek ways to help them accomplish projects and tasks.
• Engaged employees are proud to be members of their organizations. They are advocates of their company’s products and services and they are very likely to stay with their company.

Competitive Advantage – a business with a highly engaged workforce has many advantages over its competitors:

• On average, they rate 86% higher with their customers
• They have 70% more success in lowering employee turnover
• They are 70% more likely to have higher productivity
• They enjoy higher profitability, have better safety records and deliver greater earnings per share to their stockholders

The Cost of Disengaged Employees – conversely, companies that lack a workforce that is highly engaged suffer with a multitude of problems that never go away. Too often they
surrender to their condition and accept it as the normal way to do business:

• They tolerate excessive employee turnover, average job performance, and situations that cause conflict and stress.
• It is estimated that employee dissatisfaction and disengagement cost American businesses between $254 billion and $363 billion every year.

4. Workers as Disengaged as ever – Australian Financial Review, February 2009

Fiona Smith reports that modern Australian management still fails to motivate workers, and it’s both infectious and costly. Here are some of her statements:

• Surely it can’t be that hard to make sure your people are happy in their job and motivated. Yet, despite the commonsense nature of the requirements of an engaged workforce, business leaders still can’t get it right. Not even nearly right.
• The most recent Gallup poll of 1000 workers showed 79% as not engaged, or actively disengaged. This poll is taken every two years. Previous year’s results were 2006, 82% disengaged and 2004, 80%, stifling productivity with a $33.5 billion cost to business!
• As the recent interviews were done last September – while people still believed recession would be avoided and before many of the retrenchments and cutbacks – these results are not likely to improve in a hurry.
• It is this depressing reading that leads Gallup to conclude that Australian managers are not an inspiring bunch … it is really scary stuff!
• Gallup consultant Dan Olson says it takes five fully engaged workers to cancel out the impact of one actively disengaged colleague.
• Another alarming revelation showed that the most experienced employees, those most likely to be used for mentorship, have the lowest engagement.
• A reason put forward for poor engagement was that managers were unable to give their attention to making sure the environment was right for their people.

They are so busy doing other things that they do not have time to talk to their people let alone mentor or develop them.

So who is responsible for such depressing reports?

In a word – leadership. Everything begins and ends with the person at the top. In their outstanding paper The State of Employment Engagement, 2008, BlessingWhite make the following recommendations:

• Maximise managers – they need to know what engagement looks like and be able to model it themselves
• Build a strong foundation – managers need to get to know their people, align personal and organizational goals, provide coaching, recognition and feedback and match missioncritical projects with employee skill sets and aspirations
• Ensure managers are engaged – If they are not inspired themselves, how can they inspire others?
• Hold managers accountable for results and development
• Weed out bad managers – Remove managers who are not willing to learn to carry out the above
• Align, Align, Align – ensure daily priorities fit with company objectives, mission and vision
• Communicate – employees need to know the “big picture” – and how their tasks fit in the greater scheme of things.
• Start at the top – Senior managers need to be crystal clear – and in complete agreement – about the organization’s priorities
• Keep talking – Strategy translation requires two-way dialogue. Employees need to know what this means to them and how they can make a difference.

What can be done?

Carnegie Management Group can assist you in developing the competencies to address the above by working with you to assist maximize the performance of your people. As mentioned earlier, at a time when companies are looking for every source of competitive advantage, the workforce itself represents the largest reservoir of untapped potential.

“Successful multi-generational families are just as concerned with the quality of their relationships with other family members as they are with financial measures – good governance can help the next generation build on these relationships.”

The Best Way Forward – A Summary of Best Practice

A requirement for the family and the business to operate professionally in their dealings with stakeholders – and especially each other – should be adopted as a key best practice outcome. This produces the “Three Cs” of family business:

• Clarity – what we are doing and why
• Certainty – how and when we are doing it
• Commitment – who is responsible for doing what we’ve agreed to do to achieve this clarity and certainty

These are already fundamental indicators used in the corporate world, supported by appropriate levels of detail, depending on the business. Companies have detailed plans for strategy, business planning, operations and delivery. Families need the same things, appropriately converted for family consumption, at levels that suit the individual family.

This will include looking at:

• Values and Visioning: who we are as a family, what we believe in, individual and collective goals
• Strategy Plans: where we’re going, as individuals and as a family, and why we want to get there
• Family Plans: how to achieve our goals; individual and collective commitments and responsibilities; timelines; wills and estate planning; financial and retirement plans
• Structures: family boards and councils; family forums and other communication processes
• Family Agreements: codes of conduct; family constitutions; shareholder agreements; leadership transition and succession plans

The Detail

What are the best practices that are used by successful multi-generational families to sustain family connection, steward their wealth and empower family members in each generation to leadership?

We suggest families define success as being as concerned with the quality of relationships, and the development of people, as they are with financial measures. They define success not just in financial terms, but also as sustaining a unified sense of family connection and developing competency and leadership in each new generation to take the family forward.

To achieve these goals, families tend to create a clear and consistent set of practices around governance. Effective governance generates a sense of direction, bringing the right people together at the right time to discuss the right things. While these practices can arise spontaneously, the most successful families who have sustained their entrepreneurial vigour and connection through generations, have cultivated and institutionalised these practices, rather than leaving them to serendipity.

The challenges facing families who share a business or financial interrelationship are not confined to any one dimension, but span all four.

Governance — Aligning Family Stakeholders

Family members manage their involvement in business, asset management, and philanthropy and perpetuate their legacies, by forming family boards, shareholders’ assemblies, management teams and family constitutions that define and implement the values, mission and expectations.

Family — Communication, Inheritance and Conflict Resolution

Families have painful issues that need healing, and differences that are hard to discuss. They influence the process of inheritance, developing capable heirs, and sustaining family connection. Family concerns include fairness, expectations between generations and healing past hurts and misunderstandings. Individuals talk openly about difficult issues and resolve conflict, establish positive family connections, and pass their legacy to the next generation.

Business — Transition for Succession & Renewal

For the business to operate effectively the focus must be on strategic planning, installing an effective management team, working with non-family executives and creating a board that allows appropriate ownership involvement and effective business development.

Individual — Mentoring for Personal and Professional Development

Growing up in the shadow of a powerful founder can be a challenging experience. Young people need support and coaching to create development plans to achieve their potential. Family members assess their personal capabilities, discover their most effective roles and find ways to make a difference in the family and in the world.

Therefore the eight proactive practices that characterise the most successful multi-generational families – spanning these 4 dimensions – are:

1. Articulate a clear and powerful vision

Central to long-term success is a strong sense of shared purpose – the vision and mission of their family enterprise – and the values that frame how the family will work towards that purpose. This provides a motivating rationale for the family to remain unified across generations. It explains why the family is in business, how it will use its wealth, what it wants to stand for, as well as a broad strategy for achieving these commitments.

Typically, the founder articulates the mission for the business. Over time, this may evolve into a set of values about how business should be conducted and guiding principles for the family’s role in community activities. They must be reinterpreted by succeeding generations to fit current realities and to integrate their values, interests and new realities. In many “clans”, for example, the responsibility falls on a committee in each new generation of young adults to re-examine, renew and reaffirm the family mission statement.

2. Cultivate entrepreneurial strengths

Many families define success as having an entrepreneurial spirit. From this spirit comes their passion for the business. Whether a businessman or a poet, family members have developed an understanding and appreciation of the entrepreneurial nature of wealth creation. Each generation understands that they have an opportunity and a responsibility to grow family assets.

Over the generations, as fewer family members are needed to participate in wealth-creating activities, this mindset is critical in sustaining unity for tough decisions. Individual family members need to agree to limit their dependence on family assets, and support the leadership in their choices and strategies. They sometimes have to put aside personal feelings about legacy investments that must be sold or new ventures about which they are uncertain. Family leaders, in turn, have to be accountable for results and not get by on good intentions. The family has to seek the best advice for their investment and focus on the best long-term development of their wealth, not just their income this year.

Families also encourage entrepreneurship through other types of activities. Some provide seed capital to young family members to start their own businesses or help trusted professionals to branch off on their own, with continued access to connections and mentoring from the family or external advisers.

3. Plan strategically to mitigate risks and capture opportunity

Many family firms that prosper have renewed or regenerated their business strategies several times. Business renewal is often neglected. Most families are motivated when the next generation starts to say ‘we are ready’ or when something happens – death or a health issue. They all have trigger events – but some families have planned for it. They are proactive.

Thus, family ownership groups should:

• oversee, directly or through a fiduciary board, the strategic business and investment planning process for their assets
• take responsibility for an ongoing “ownership” strategic planning process, including the development of educated and responsible future owners, and estate and liquidity planning for each current owner
• develop succession plans for leadership of the family ownership group, management of each operating entity controlled by the family, fiduciaries of family trusts, and boards of operating entities

4. Build unifying structures

Large multi-generational families may have scores of legal structures interrelated through ownership and management that are served by “family offices” responsible for overseeing the family’s diverse interests. Each entity possesses its own governance structure consisting of the governing agreement and board of directors or trustees with fiduciary responsibility to oversee the entity in the interest of the stakeholders.

While significant effort goes into the establishment of these structures to achieve tax, legal and financial advantages, less attention may be paid to the human aspect. Who should be chosen to fill these fiduciary positions? How well will they interact with the family members? How effectively will they carry out the mission of the family and the business, especially in the face of constant changes in the tax, regulatory, social and economic environment?

As families move beyond the first or second generation, they find it necessary to define and formalise how the various parts of the system will interact.

Successful families ensure that their purpose and values carry through into the governance of the structures they establish that connect and integrate their family, business and community objectives.

Three structures are most frequently in evidence: a family council; a family constitution; and an empowered board of directors or advisers who oversee and integrate all the financial and business entities. These help organise the family to:

• specify how and when the family meets to discuss ownership issues
• provide guidelines for major choices about investment and financial matters
• make explicit how family members are appointed to boards, their terms and responsibilities
• define the processes for effective oversight of family assets
• define ways the family and its assets are engaged in the community

5. Clarify roles and responsibilities

Each family member can wear many hats -within the family, the business and the community. These potentially conflicting roles can lead to misunderstanding and conflict. Successful families differentiate the responsibilities of family members from that of asset owners or enterprise managers and manage the challenges when individual family members move from one role to another.

In particular, ownership roles and responsibilities of ownership must be clearly understood. If not unintended consequences can affect the long-term viability of the family business. For example, a non-active owner may feel entitled to express strong opinion on tactical issues in the business. This confuses management and, over time, could weaken the ownership function. In another instance a domineering owner-manager may not pay enough attention to the needs of non-active owners and end up making them feel disenfranchised.

6. Communicate, communicate and always communicate

Communication is not just about business. It is a personal process that involves building and sustaining long-term relationships. Of course family members must know what is happening with their investments. They need not only the numbers, but also the bigger picture – how the business is faring in the community, the outcome of key decisions and trends that may affect the business.

Personal bonds are equally important. Family members must be able to communicate within a network so they feel part of an entity. If family members understand where the train is going and feel they have had input towards deciding its direction, they will climb on board for the long run. If they are denied Information and input, they tend to become suspicious.

Many mechanisms exist to help intra-family communication. Some depend on family councils and family retreats. Others may rely on newsletters and intranet sites to keep in touch. Still others have published family histories to reach out across the generations.

7. Help develop competencies

Plans, structures and processes are only as good as the people taking advantage of them. Successful families help family members acquire the skills and knowledge to make effective decisions. If families do the job right, successive generations might even be imbued with a sense of passion for the family enterprise.

Each family member must develop a strong sense of self and confidence. Successful families make sure that each family member pursues an education, develops a profession, and learns the interpersonal skills to function effectively in the family team. Family members learn that ‘being wealthy” is not sufficient as an occupation or a way to live. Successful families have learned that business is not the metaphor for the family. Each family member must learn the wisdom that ‘I am not defined by my job, nor by the family business’.

Each family shareholder must be educated in their fiduciary responsibility as owners, and attain a basic grasp of the family’s business and assets. This involves formal education but also includes at least a degree of financial knowledge. They also develop various forms of leadership from each generation – to run the many operating and investment entities and lead the family. To whom does the family head pass the reins? Who is capable of dealing with conflict and differences, supporting troubled or struggling family members, calling the troops together?

Some families insist that each young member intern at the family office for a summer. This experience helps them understand what is involved in their family’s wealth management. Among the skills learned is setting the criteria for and conducting the search for outside professionals, whether for employees for the family office, investment managers or tax and legal experts.

8. Provide independence, including exit options

Families achieve success by respecting the independence of each individual family member. This implies an ability of each member to stand on his or her own instead of relying on the family assets, and an ability to exit on terms that respect the interests of the remaining family There are situations where an individual family member needs access to liquidity – to meet estate tax requirements, fund a private entrepreneurial venture or philanthropic interests, or simply because personal objectives cease to be aligned with the family group’s. In addition, families face the issue of ‘marginal’ family members. There is tremendous energy expended by some families in dealing with mavericks. The family should be a voluntary association and be able to disconnect members who are not satisfied with the collective enterprise.

Each of these practices takes many forms for path-setting families. No family practices all of them. We are, however, of the strong belief that they indeed apply to all family businesses – large or small. Wealthy or otherwise. To varying degrees they are highly appropriate for the future. This review will hopefully help families to be more effective at creating their futures, maintaining entrepreneurial focus, sustaining positive connection and developing productive, fulfilled individuals for generations to come.

Putting it all together – the Role of the Family Business Adviser

As the advisers’ knowledge and experience of the family grows he will become increasingly confident about his process choices, which then form the blueprint to be considered for adoption and implementation. The process starts by separating and disentangling the family from the business both structurally and functionally -to provide a foundation for objective situation analysis, program planning and decision-making. Specific issues such as family conflict are addressed and resolved (or at least neutralised) to avoid later derailing the process.

The process proceeds on parallel tracks – one for family and individual issues, the other for business issues. The tracks are reunited, with clear rules of engagement, later in the process. The process is approached as a family journey, with the journey being more important than the destination. It’s planned in advance as a series of manageable, sequential stages, with subsequent stages being heavily influenced by what came before. Pragmatism and flexibility are built in, as diversions and surprises are not uncommon.

In summary -

Eight Practices for Successful Families

• Articulate a clear and powerful vision
• Cultivate entrepreneurial strengths
• Plan strategically to mitigate risks and capture opportunity
• Build unifying structures to connect family assets and environment
• Clarify roles and responsibilities
• Communicate, communicate and always communicate
• Help members develop competencies
• Provide independence, including exit options

With thanks to Dr Dennis Jaffe for some of the material used here.

Ask yourself 2 questions.

1. If you are holding a conversation and you feel good, then is the conversation more likely to have a superior outcome?
2. If you are holding a conversation and you don’t feel good does the conversation often go astray:
   • you get annoyed or frustrated?
   • and even end up in a confrontation?

Well if you have answered “Yes” then reflect on how your key people may respond. The same perhaps? If so, are there then implications for your business?

So what do your highly valued people really think?

Now consider this.

Australia in early 2008 enjoys an unemployment rate under 5%, and, as forecasts emerge of a looming talent crisis, a priority for businesses will be to recruit, as well as retain superior staff.

What makes employees content, however? Is it money? Is it training and career development programs? Is it work/life balance?

CMG maintains staff satisfaction comes down to two factors. One is money, because people won’t work for nothing. And people need to feel that they are being paid at least what they’re worth.

The other imperative is a sense of security through feeling valued, reflecting the hierarchyof-needs theory espoused so famously, and controversially, by US psychologist Abraham Maslow. (See panel image below)

People want to belong.

We often talk about Maslow’s theory and all those needs come into play if you’re going to retain staff.

You need to provide people with a good, safe, comfortable environment where they don’t get exposed to politics and poor management practices. People need to feel they belong that’s a very big part of your business.

A new survey also suggests Australian employees are not overly happy, with lawyers and bankers topping the list of malcontents.

The CMG research reveals that 55 per cent of people working in the legal sector and 52 per cent in the banking and financial sector are either “unhappy” or “very unhappy” with their current job. 45 per cent of staff across all employment sectors and wage brackets are unhappy.

Therefore money is not the only solution. People earning more than $150,000 a year are most likely to be unhappy at work, with 49 per cent of such respondents confirming their career frustrations.

The risk, of course, is that dissatisfied staff will walk out of the office one afternoon and not come back.

Bosses and senior managers must provide employees with a sense of purpose. Executives should be determined to create a positive environment for staff – that way they stay longer.

[diagram]

Often people get to the point where they think ‘Why am I doing this? Why am I heading in this direction? What am I seeking to get from all of this?’

It is essential that companies provide some of the answers.

If employees have a deeper sense of purpose, then often they’re more motivated. You can find in organisations very talented people who at times in their career get lost, stuck and confused. Often in those times they think the solution is to leave the company. But if you look at the career options available to employees, there are actually 10 options and option number 10 is to leave the company. A lot of people miss one to nine and go straight to number 10.

Companies should double their efforts to retain employees who are undergoing extra training or studying for a degree such as an MBA.

A natural reaction is ‘Once I’ve got an MBA, I’ll look for a job’. And sometimes there’s a lot of opportunity right under their nose in their current organisation.”

Paying for the privilege

There is little doubt that the hunt for good staff is heating up. The 2007 Sensis Business Index found that a chief concern for small and medium-sized businesses is finding good staff.

One option is simply to pay valued staff more money. A 2007 salary survey shows that Australian firms are paying about $1500 more on average for office workers this year compared with 12 months ago, representing an increase in average wages of 3.81 per cent. More significant salary rises are expected over the next 12 months.

For small businesses, matching the salary packages of larger corporations is difficult. SMEs have to overcome salary limits and offer staff alternative, non-monetary rewards such as training, fresh challenges, social and community connections and a family-friendly environment.

Most people don’t think about how much they are being paid when they open their eyes in the morning. The majority of staff departures are the result of an emotional or cultural misfit. It’s almost never about money.

However, on balance, not all agree. Recruitment specialists will always argue that pay will be the deciding factor when people choose a job. Work/life balance, job location and career prospects may be important, but they say, a great salary will seal the deal in most instances. A survey from one recruiting firm of more than 1500 workers shows that 84.7 per cent of respondents say they would take a high-paying job even if they had doubts about the boss or other staff in the workplace.

We would add here it is in their interests to promote this view.

CMG, devoting much time to workforce alignment and retention, contends too little attention has been paid to the issue of retention. Partly the reason for that is until recently the whole issue of retention has been a fairly grey one and there hasn’t necessarily been the tools and the metrics to provide a more scientific approach or diagnosis.

On this issue we have developed diagnostics called Executive Team/Self Assessments. A questionnaire based on a model of the psychological contract that examines the employer-employee relationship and can quantify retention risk. Our studies indicate that staff leave an organisation for three reasons:

• because it is dysfunctional
• they get a better offer
• or for personal reasons divorce from the company.

Employee engagement and satisfaction are two critical drivers of retention. In other words, if you’ve got more engaged and more satisfied employees, then you’re more likely to have higher retention rates. But not only that – you’ll have higher levels of performance, less stress and higher levels of customer satisfaction.

Professional relationships with senior management are also a key factor in retaining staff. Some organisations boast that there are no personal assistants for managers. The door is always open. Or for many companies the barriers to senior executives are too high.

When you try to speak to the chief executive you get the PA, and when you say you’d like to speak to the chief executive you get almost a blank look of horror that the CEO would even deign to speak to you.

Plotting a career path

People’s personal and career values change with time. So as people get into their 30s and 40s, things like altruism come into play as a core value. That, in itself, creates some challenges in the workplace. Companies need to map out a framework of customised and sustainable solutions for highly valued employees so they can aspire to different experiences and gain a sense of purpose.

The previously mentioned CMG (ongoing) study identified a work aspect preference scale, of some 1000 executives. It identifies key drivers for staff: the first is self development, the second is creativity and the third is money.

At one level it’s surprising, but, increasingly, money – and even Maslow talked about this – is only a motivator until it’s become accepted. If a boss gives an employee an extra $10,000, they are motivated only until they get used to having that amount and are thereafter driven by other factors. So money is not a sustainable motivator – it’s a short-term motivator.

The key is to get the package or the “deal” right, including the tangibles and intangibles.

The challenge for companies will be to meet an increasingly diverse range of employee needs. Work/life balance will be important for some, while money, roster flexibility, training and development will be the focus for others.

The often-ignored difficulty for companies is that low staff turnover does not guarantee that they are retaining the right people. In some government departments, for instance, staff may be staying on for superannuation payouts or long-service leave and become dead wood.

Therefore you’ve really got a workforce that’s disengaged and dissatisfied and they’re hanging in there for different reasons. So one needs to be careful in looking at turnover in isolation. On the other hand, some turnover can be desirable in terms of refreshing the gene pool.

Accordingly many say going to work should be fun. The atmosphere is conducive to making friends, so Monday-itis is less of an affliction. There’s great interaction and that should be encouraged. It’s important that their esteem is looked after – that other people think well of them. Spend a lot of time coaching and training to make sure that people are more than capable of doing the work so they can do well at their jobs, so they’re not under pressure or stress all the time or living in an environment of failure.

However dispute the notion that workplace cultures cannot be sustained in fast-growing businesses. If it’s entrenched in your culture from day one and if you really believe in one attitude, one team, one set of rules, one set of values and that flows from the top right down to the bottom, then it’s much easier to sustain a positive workplace culture and high levels of staff engagement.

In Summary

If you agree that people as employees are your greatest strength, then how do you manage them to deliver a great return – for all?

Remember these basic tips to get you where you want to be –

• Ask – ask your employees lots of questions
• Listen – listen carefully to their responses
• Help – help your difficult employees as much as possible
• Be Informal – strong relationships are not built across a boardroom table – get out to their workplace
• Be Personal – stop talking about work all the time
• Respect – an environment of respect should be upheld at all times
• Therefore Engage People – to increase people’s discretionary willingness to go “the extra mile”
• Create a Trusting Environment – through open and frank communication and dissemination of information based on integrity and the need to confront tough issues
• Coach and Mentor – instil this practice throughout the whole organisation

A Postscript

The claim that Australian workers switch off too quickly after work is also challenged by the recent study.

The survey revealed that 79 per cent of employees lose sleep thinking about work or find themselves obsessing about work during their personal time.

A total of 55 per cent said they find it difficult not to work on weekends and evenings and 68 per cent reveal that they work unnecessarily long hours at their job.

35 per cent of respondents actually classified themselves as workaholics. Further, 54 per cent said they found it hard not to check their emails or other communication devices for information whilst they are not working.

The information age has created the 24/7 worker and demands from employers mean there is little rest from the office. This needs to be constantly in the forefront of people management for the business owner and executive.

Effective leadership, both personally and professionally, will take many forms. But at its core, it necessarily includes the ability to:

• Articulate a strategy – for yourself and the Organisation
• Establish guiding principles
• Make decisions quickly, efficiently and effectively
• Earn the trust of people, include them in the process, treat them fairly, keep them informed and above all else communicate effectively
• Keep yourself, people and hence the organisation focussed on the positive outcomes

Therefore we believe a definition of Leadership could be -

“To maximise the expectations, the positive hope of the outcomes that come from change – while minimising the fear of change for those involved.”

And the 10 Ways to be your Best are

• Ask yourself – am I fulfilled
• Reflect on what you really want to do and achieve
• Devise a Strategy to achieve your goals
• Work hard at that strategy – right now
• Identify and overcome limiting patterns and thoughts
• Don’t be dissuaded or sidetracked
• There is no success without hard work
• If needs be, seek a mentor or motivating coach
• When you succeed, reward yourself
• Be proud and celebrate in the new you!

So what do we do – what is our Intent – to facilitate this focussing & clarity?

“What do we do? Well it’s all about People – Strategy Development and Execution. Managing transition, we work with Business Owners, Executives and Managers to get them to where they really want to be.

As Goalkeepers we don’t kick the goals – we work with them on how to kick. We re-focus, plan and then keep them on track to achieve their goals.

We recognise and respect that in life, we can only realise meaning and purpose, when we know, that our dreams are directions, and our minds are our means. Success is indeed a journey, not a destination. We also know quite well that without a plan, we are tourists.

We firmly believe it is the greatest mistake of all to do nothing – because then you can only do little. But first you must know for which harbour you are headed, if you are to catch the right wind to get you there.

Importantly we have to go for what we think we’re fully capable of, not limit ourselves by what we’ve been in the past.

We fervently maintain, that as adults, we have a responsibility to:

• find our area of specialty
• develop it into an area of excellence
• apply it to the benefit of others
• believe in what we are doing and believe in who we are.”

What strategies and skills must you employ to make the most of this potential? What is the best way to lead a crop of great people?

By assembling a great team, you’ve already put yourself ahead of the game. Rather than jump-starting the company on your own, you’ll have the easiest time, the most fun, and probably the most success by developing the team and letting the team develop the business. You just have to organize them and point them in the right direction.

Have you ever worked in a really high-functioning team? In great teams, each member brings their best to the party. They only do the things they’re best at, and they do them superbly. The work gets divided to play to each person’s strengths.

Identify your team’s strengths

Get the team together and explore each other’s backgrounds, expertise, likes, and dislikes. Match your discoveries to the work, so tasks go to whoever is most likely to finish them well and quickly.

Does a team member have contacts, industry experience, or experience in specific companies that will be valuable to the group? Put them on related tasks. Experience in a functional area or two can make a resident expert in those areas. Those with great people skills should be doing people work, while those who prefer to work behind the scenes can do research and build infrastructure.

Mental traits become great strengths when matched with the right challenge.

Don’t limit yourself to obvious business strengths. Mental traits can be even more valuable over time: long-term thinking, short-term thinking, idea orientation, data orientation, comfort with stress, technological comfort, people skills, strategic thinking, ability to challenge assumptions. There are hundreds of ways to slice mental traits, but whatever your framework, know that mental traits become great strengths when matched with the right challenge.

For example, some people prefer to follow established procedures. The business press worships “innovation,” “disruption,” and “destroying old paradigms.” Well, guess what? “Out-of-the-box” disruption is great for occasional big conceptual leaps, but it’s the established procedures that drive a successful business. And when boarding a plane, who really wants a disruptive, out-of-the-box pilot, anyway? Give me a pilot who loves completing their sixty-point safety checklist today with the same precision and care they used the first time they went through it.

A strength is nothing more – and nothing less – than a skill so well matched to a task that the results are stellar. Know your team’s skills, and you can all begin turning those skills into strengths.

Use your team to hone direction

Once you have the right “who,” the team can pool resources to choose the “what.” You’ve chosen a business, and your team can hone the strategy and tactics you’ll use to make it successful. In the book Good to Great, Jim Collins suggests that a team choose a single concept—your “hedgehog concept” —to unite the business. The hedgehog does only one thing: roll into an ironclad ball. But the strategy works so well that it’s invincible on its own turf. Your hedgehog concept comes from a brew of your individual values, skills, competencies, and a healthy dose of business sense.

Passion

Rally your company around something you can be passionate about. If you’re all deeply devoted to children, youngsters, and family, for goodness sake, don’t concentrate on publishing HTML reference manuals. Publish books for teens, young adults, and families. Choose a strategy that unleashes your collective inspiration!

Being the best

Your hedgehog concept should be something at which you can be the best in the world. It doesn’t mean you are the best, just that you can become the best. This can be trickier than it seems. Your team members and their skills will contribute to deciding where you can excel. Competition can also affect your choices. Even if you have the perfect team, existing players may have locked up areas of opportunity. If I were starting a grocery store, for instance, I’d be careful about hedgehog concepts that put me head-to-head with Wal-Mart. “Huge stores with great service” is a concept that’s taken. Even a superb team probably couldn’t be best in a world dominated by Wal-Mart.

Economic viability

Your hedgehog concept should make money. You should also be able to identify your economic drivers in the form of a measurable “profit-per-x.” Often, the “x” is not obvious. For your strategy to make sense, you may choose a subtle “x.” Collins relates the story of a company whose strategy was to cluster stores in one geographic area to be most convenient for customers. Rather than measuring profit per store, the company realized that profit per neighbourhood was the key to driving operations, compensation systems, and organizational learning in pursuit of convenience for their customers.

Monitor the commitments your team makes

As you begin implementing your strategy, pay close attention to the commitments you make. Commitments provide flexibility and focus, but can also bind you to a long-term course of action. Since your venture is quite young, you don’t have a lot of operating knowledge to choose commitments wisely. So keep yourself as flexible as possible until you’re fairly sure of your course of action.

Commitments come in all shapes and sizes, but some of the most powerful are the agreements you make on how to frame the world. Your beliefs about what customers want and how they behave, if propagated throughout your company, are a very powerful frame. Ken Olsen, founder of Digital Equipment Corporation, was famous for rejecting IBM’s frame that computers meant room-sized boxes that were only useful to large corporations. He built DEC and revolutionized the industry by inventing the minicomputer. Unfortunately, he got caught in his frame of the minicomputer being The Answer. Oops. In the late 1990s, his once-leading company was acquired by upstart PC maker Compaq.

Supplier and distributor relationships can become commitments. Decisions to vertically integrate (or not) can become commitments. Deeply held cultural values can become commitments. Large capital expenditures can become commitments. One entrepreneur recently told me his company had perfected the ability to open a new market and quickly achieve a 25 percent-plus profit margin.

Unfortunately, while going up their learning curve, they built factories several times their optimal size. The company’s survival is still touch-and-go – not because it’s a bad business, but because early commitments have saddled the company with unproductive, expensive assets.

Become a leader, not a manager

Finally, spend regular time leading rather than managing. You’ve got a good team, and you’ve jointly chosen a direction. Now your job is keeping the company on track. Keep your team working well together, and make sure you’re building a company where everyone plays to their strengths. Know your hedgehog concept, discuss it regularly, and make sure it guides the company’s daily decisions. Spend time thinking strategically with your management team. Have them project the hedgehog concept out one, three, or five years into the future, and steer the company and its commitments towards that reality.

Know your team’s skills, and you can all begin turning those skills into strengths.

Your job is creating an environment where your employees can do their best. Give them all the credit. Recognize and celebrate their accomplishments. When they screw up, lead an “after action review” to help them learn. Remember that you’re building a culture that brings out and amplifies everyone’s strengths, so use mistakes as an opportunity to re-examine the strengths of the team and change your tactics, your assumptions, or your organization.

For now, focus on getting your company off the ground. You’ve hired the crew; together you’ve charted the course – and as a suggestion print out the next page as your navigation guide of the 12 key cornerstones of a successful and dynamic start-up. And don’t forget – you can’t do it all yourself. So for all you entrepreneurial “buy & sell” creative folks, a good CEO/GM would not astray either – as your “Chief Implementer”.

Now stand back and let them bring the dream to fruition.