Some years ago I sat down and analysed my client base with a view to defining the ingredients that made my most successful customers profitable and stable. Overwhelmingly my finding was that the owners of each business had built up a solid management team, invested in improving their skills and provided them with the administrative tools to allow them to analyse and improve their areas of the business.
I identified too that investment in staff resulted in lower staff turnover as people felt valued, challenged and motivated. Moving to the present day, we often come across businesses who under invest in their staff and administrative functions with a resultant impairment in business profitability and staff satisfaction.
A common reason for the under investment is that business owners often see spending in these areas as an expense rather than an investment. Below are several tips to help turn staff expenditure into an investment:
Identify strengths and weaknesses of Key Staff Are you fully utilising the skills and talent of the staff at your disposal? We often find employees fulfilling roles that do not suit their strengths.There are many proven personality tests available that can identify a particular individuals strengths (for example Myers-Briggs).
People generally fall into one of four categories:
• Structured and like to follow and adhere to predefined procedure
• Creative and action orientated
• Analytical and innovative
• Idealistic and value orientated.
We recently came across the case of a structured employee who was employed to setup a new department. This role required creativity not a strength of the individual. Both the employee and the employer were dissatisfied with the individual’s performance in the role.
Once we had determined the individual’s structured preference they were moved onto a project where they had to implement rules and procedures defined by an outside consultant. The employee’s enjoyment and confidence increased and the implementation of the project was a success.
In another example we identified that a creative person was carrying out debt collection and financial account reconciliation for a company. This type of position is structured and procedurally based. We moved the person to the sales office where they have constant customer contact, in addition they were given responsibility for managing the company’s computerised inventory system, as a result of these changes the employee is thriving and the company has benefited by utilising the employees strengths.
Implement operational software and train staff how to obtain value from the software. Have you fully embraced technology including maximising the benefits of existing technology?
Business should always be looking at providing employees with effective technology to enable them to be more efficient and productive. It is essential employees are properly trained to use the technology.
There is software available and affordable to most market sectors now. Expenditure in this area can produce real returns in efficiency and profitability. We recently assisted in the implementation of a computerised inventory system. Due to daily price updates the company has increased their average margin on sales by 4%. This is worth $150,000 in increased profitability on an annual basis.
Business Owners should look at their strengths and weaknesses
Owners should periodically perform a self assessment of their own strengths and weaknesses.
The skills required to create and grow a business often differ from those required to manage the business once it is fully established.
As an organisation grows an owner will be exposed to a myriad of functions and problems they have never before encountered. One of the most underrated skills is people management. Many business owners suffer real stress and anguish due to ‘staff problems’. Many of these problems come down to a lack of understanding of how to manage the strengths and weaknesses of individual staff.
Owners must take time to understand the best ways of obtaining performance from key staff.
Owners need to look at their strengths and appoint people who cover well for their weaknesses. Do not be afraid to honestly assess yourself as an owner and work out your strengths and weaknesses. Do not be afraid to appoint people who are better than you in some areas.
Owners should look upon the business as a collective whole with the ability to carry out all functions well. No rugby team will ever consistently win games without a goal kicker even if the captain is very skilled in their individual position. Investment in growing the knowledge of yourself and key staff is often the key ingredient that moulds the organisation into a top performer in its field.