In this edition of The Voice of Business Growth:
- Discover how to grow your business in a down economy
- Find out why people are NOT your company's most important asset
- Learn the keys to getting a payoff to your hiring process
- Discover why listening to lost employees or lost customers is more of an art then a science
Check out our recently launched new website at www.mcassociatesinc.com.
Growing Your Business in a Down Economy
Business growth is rooted in the value a company delivers to its target markets. Growth occurs when potential buyers perceive that the value offered by your company is greater than the value offered by your competition. So growth can only come from identifying, creating, and delivering value. It's important when the economy is growing but is absolutely critical when the economy languishes. When times are tough, there may also be additional ways to differentiate your offering.
Growth requires both an understanding of perceived market value and an organization that is capable of deliver greater value.
If you don't have a solid value proposition that makes a difference in target markets, now would be a beneficial time to create one. The best value models confirm the components that drive customer loyalty and market share and are not based on customer satisfaction alone. Research by my colleague, Reg Goeke of Market Value Solutions, shows that the variance in customer loyalty can be attributed to 3 factors: perceived quality, company brand or image, and price. Quality in his models could includes the full range of product or service performance characteristics, such as delivery performance, service levels, product quality, ordering ease, etc. You can create a value model from an internal perspective but they invariably do not match models that are based on customer feedback - existing, lost and competitor's. If you don't have the resources for value model research, take the time to make or improve visits made to key customers. Train teams to follow your product or service through the customer's process and identify, quantify, and propose value-driven opportunities.
If your company has developed its value proposition for targeted markets, a down economy is a great time to evaluate and continuously improve the processes that deliver that value. Look at each step of the value stream . . . evaluate customer feedback, look at lead times, analyze inventory levels, drill into supplier performance variances . . . and kick off organized improvement efforts. If you don't use Six Sigma or other improvement tool, take this time to learn and apply these tools. It's tough to recover from a layoff so use idle talent capacity for improvement work instead.
Is your organization capable of delivering value? Find out by asking some key questions. What positions or functions are pivotal to growth? Who are your high potential employees and are they placed in the pivotal positions? Do you have adequate back-up to pivotal roles and are specific plans in place to retain, develop, and align those key back-ups? If you can't answer these questions, nows the time to put a process in place to make sure you have the talent to deliver value and grow your business, no matter the economic situation.
People are NOT your most important asset!
Check out almost any consultant's website or the opening lines to a presentation at any HR conference and you'll see the phrase "People are your most important asset". The phrase is tiresome, overused and I believe it contributes to a perspective on talent and organization capability that is misguided.
If you look at data on what the marketplace perceives as a company's value, it is not people. A recent article in the Wall Street Journal pointed out that, more and more, intangibles are driving the valuation of a company. The three most important intangibles: Customer Base, Brand or Image, and Intellectual Property.
Wait a minute . . . aren't people the asset that create those intangibles! That's right, but it's not just anyone or all your people. To me, the more precise assertion would be "The RIGHT people are your most important asset". The RIGHT people being high impact "Game Changers" in the pivotal roles, processes, or functions that generate greater-than-average customer value and wealth for your business. Pivotal positions are usually a small percentage of your total jobs and require talent that is often a rare commodity in the labor market. A significant investment in this talent will usually have a clear return for the business.
My updated phrase isn't just quibbling or splitting hairs. It helps make the point that a savvy talent management process should be based on a thorough analysis of the business's driving force and an understanding of what creates value in the market place. That process also not only include a valid, reliable way of selecting or identifying high potential employees but also the means to deploy, develop, connect, and align that talent.
As Ram Charan and Barry Bossidy point out in their book Execution, " . . .over time, choosing the right people is what creates that elusive sustainable competitive advantage."
Significantly Improve the Return on Investment in Recruiting and Selection
A client recently complained to me that he had spent months going through 27 candidates to find a single programmer analyst that ended up being just an average performer. Clearly, he did not see a payoff to this effort. My experience indicates that the culprit is likely a poorly designed and administered selection process.
One of the easiest ways to improve the return on hiring investment is to increase the selection ratio - the number of candidates that you consider versus the number hired. Though it seems counterintuitive, the number of likely candidates should be kept as large as possible, as far down the decision process as possible. Research by folks at Michigan State has shown that an improvement in this ratio can significantly increase your hiring payback, particularly if your interview process is not the best at identifying top talent. See the process as screening-in rather than screening-out. Look for potential in candidates, don't screen on technical knowledge that can be easily picked up by learning agile candidates.
How you manage the interviewing process can also impact your payoff. For a big change, schedule all the interviews on the same day. Have candidates show up at the same time, one group in the morning, another in the afternoon if necessary. The candidates hear a pitch about the company and the job as a group then go through a series of individual interviews. Each interview focuses on a unique set of competencies (selected in advance), assessed through behavior-based interviewing techniques. Interviewers meet at the end of the day, review their results and make their screen-in decisions, in a priority order.
I've seen the group interview approach work very effectively in a number of settings. It comes across to the candidates as being very professional and organized, helping to improve your hit rate on offers. (One of the biggest interviewee complaints is that different interviewers asked them the same questions.) It also avoids the "context effect" that occurs when interviews are scheduled over days, weeks or months. This effect, discovered in interview research, showed that interviewers will adjust their internal scale based on the capability of the last candidate reviewed rather than the real standard for the position.
Effective hiring can have a significant payoff, particularly if productivity improvements in the role have a benefit to the company. Research has shown that the productivity differences between average and top performers is significant, sometimes 100 to 200% higher. You should know your top performers and model the hiring success profiles after them. Top performers should be part of the selection decision, especially interviewing. Do not relegate this critical task to just anyone.
So . . . screen-in to improve the selection ratio. Manage hiring like a project. Know what success looks like and make efforts to improve the reliability and validity of interviews. The war for talent that we're experiencing now makes the change in thinking all the more critical.
Listening to the Lost
By Lou Musante
Nationally recognized on customer satisfaction and loyalty research
President, Echo Strategies
Whether listening to lost employees, lost sales analysis, lost job candidates or lost customers it is more of an art then a science and one of the most challenging forms of survey research.
Current U.S. Business Environment: The subject itself is an indication of the current business environment. Talent Wars are upon us since the supply demand balance has shifted once again in favor of the employee. Echo is predicting an even crazier recruiting environment then in the late 1990's before the bubble burst. But this war is predicted to go on for a very long time.
Talent Supply Shortage: Today in the U.S. for every two people leaving the workforce only one is entering. And the supply of the coveted 25 to 35 year old demographic will shrink 15% over the next 15 years according to the Bureau of Labor Statistics. In the IT, engineering, accounting and other specialized occupational clusters in health care and marketing research, the supply side is sparse.
Online Surveys Suck: How does one get a handle on why employment candidates decline an offer? Although it is easy for employers to send out web surveys it is not that easy for candidates to fill them out because most online surveys suck. Even the short surveys are a pain and most good surveys usually ask someone to type answer(s) to open-ended questions, which produce the best intelligence, but only about 3 in 10 people can touch type. With all that said you might get a 5% to 25% response online.
The question is the resulting sample representative of the population you are interested in and are the responses valid. The # 1 reason given in lost whatever research is money or price in the case of lost sales. Our follow-up lost research experiences for dozens of clients indicates that money is rarely the real reason. Maybe 30% of the times max but it is the easiest answer to give.
Sit Back and Tell Me: It is easier to track the candidate down on their cell phone and ask for 3 to 5 minutes of their time. Most (70%) of the people would rather kick back, take five and dialog with you. Then comes the hard part how do you get them to tell you what they really think. Most people won't tell someone they have bad breath. Furthermore what is in it for the candidate to take the time to answer? They already wrote your company off.
Incentive to Share: Even if you have made it easy for the target to share via telephone or an easy to do online survey what's the incentive for them to be open and honest? Well, money talks and it is amazing what a few strokes to the ego can do too. Money gets their attention for few seconds and says you really care about their opinions. The real es money if you could have changed one thing about our offer or proposal what would that have been? Then probe for a second reason or change idea. Finally, ask relative to money or price how far were we off. Don't' be surprised if the overall answer from your survey is less then 15%.