I got to spend a couple hours talking about hiring last week with Miche Rayment, who runs The Hire Effect and wrote a book by the same name. Since we’ve both worked with growing companies to define hiring processes and hire key positions, we shared some stories and developed some tools to help people decide how they should approach hiring.
I had the most fun when we were brainstorming what to call the “hiring strategy” of the many companies that, well, don’t have a hiring strategy. It went something like this…
“They just decide they’re going to hire someone, and start looking, and then find somebody and hire them.”
“It’s like they just go pull someone in.”
“It’s like a vacuum. They flip a switch, and then wave around a tube that’s sucking in whatever gets near it.”
“That’s it – it’s the Suck Strategy of hiring!”
“How do you hire? We suck! Hahahaha.”
That was the most fun part of the conversation. The most interesting to me was when we talked about how much time a company should spend on a hire.
Let’s be honest – most companies don’t have the flexibility or discipline to go through a highly rigorous process with every hire. (Some hiring guides espouse taking months with each candidate! That is just unrealistic for most companies.) On the other hand, some roles and situations demand a lot of structure and steps in the hiring process.
So, what are the factors that a small company leader should look at to decide how much time to spend on a hire? There are just a few I look at:
- Importance of the role: bigger impact of the role = more time hiring
- Newness of the role: uncertainty of what the role is and what kind of person to hire for it = more time hiring
- Availability of talent: hard to replace a bad hire = more time hiring
- Pace of growth: faster growth = more growth issues coming up faster = more need to hire the right person = more time hiring
- Degree of competition: more competition = higher need to perform = more need to hire a strong performer = more time hiring
There are many situations when a company can just Suck to find an acceptable employee. But if any of the factors I list above apply to you or a position you have available, you should spend the “extra” time in your hiring process to find the right/best person. In those situations, the consequences of hiring are significant.
I recently gave a webinar for the SPARK.grow program on high-potential employees – how companies can identify, foster, and be attractive to high-potential employees, and how high-potentials can identify, develop, and be attractive to high-potential roles. (The recording of the webinar is here.)
I described a “High-Potential Talent Stack.” That stack has 6 levels – the bottom 3 are the factors that enable someone to perform at any job, and the top 3 levels are the factors that enable someone to perform as a leader. I want to describe each level…
Performance – this is how well the person gets work done
Results Focus – this is the ability to not just put in the effort, but to figure out a way to go around roadblocks and keep at a task until you get the result that is needed
Learning – high-potentials are always expanding their toolkit of skills, and learning about the work they do
Investment Thinking – this is the ability to think in terms of Return on Investment
Maturity – high-potentials handle themselves well, in different situations and with different people
Leadership – this is the combination of skills that are needed to get a team to perform at a level and in a direction that they wouldn’t get to on their own
This stack is a powerful tool. It shows what a company can look for when hiring new staff, and what they can train and develop to improve their high-potentials – and shows high-potentials what skills to develop for further growth.
Each level of the stack has 3 more specific components. The target is to score a total of 12 or higher when each of those components is rated on a 1-5 scale. Scores of 4-4-4, 5-4-3, or 5-5-2 would all qualify; scores of 5-3-3, 4-4-3, 5-5-1 would not qualify. It’s a high hurdle – but the people that meet that standard are often the “10x-ers” – the ones who have 10x the impact on your business than your typical employee.
Almost universally, small businesses underinvest in their high potentials. There’s too much potential ROI for you to do that.
Most people recognize that markets don’t stand still. Customers, competitors, and technology are constantly changing.
Although most people recognize that, many don’t appreciate the imperative that that dynamic places on them as leaders. The simplest way I’ve learned to describe that imperative is this…
Your business model is a depreciating asset.
In other words, the way you do business – whether that’s how you find customers, how you produce what you offer, how you deliver what you sell – is losing value every day.
Like other depreciating assets you have – your house, car, refrigerator, computer – you have to maintain it simply for it to keep working the way it’s supposed to. And you have to more-fundamentally change or replace it on some kind of predictable cycle – 3-4 years for a computer, 5-10 for a refrigerator.
How quickly your business model depreciates is mostly a function of the degree of change in your market. And, since there’s more change in every market these days, we all need to put our leadership teams on notice that we’re going to have to reinvent our business model sooner than we’re used to. Rule of thumb: the cycle is probably half what it used to be. (So if the model used to last 10 years, it’s best to plan for it to last 5.)
If your leadership team is skeptical when you tell them this, offer the following true story. I know a smart, tech-savvy teenager who has a nose for online businesses. He found an opportunity last Fall that he liked. Here’s how that played out:
- Week 0 – discovered opportunity
- Week 1 – supply chain set up
- Week 2 – open for business
- Week 5 – profits to date: $200K
- Week 11 – profits to date $500K
- Week 13 – rejected offer to purchase business for $100K
- Week 16 – competitors raise cost of advertising to a level that the economics no longer work, business model no longer profitable, business closed
To summarize, that’s a business model that was able to net $500K in 4 months – I know $15MM businesses that aren’t generating that profit for the year – but whose value depreciated to $0 in that same 4 months.
If you talk about markets changing, it seems like something “out there” that may not impact you. If you talk about your business model depreciating around you week by week, it gets much clearer that you need to act with some urgency.
It’s Valentine’s Day – a day when we celebrate the role that marketing and sales plays in our personal lives. And in honor of Valentine’s Day, let’s take a look at a new trend in marketing and sales.
Many of my clients love sales and hate marketing. Sales is short-term, tangible, clear – what’s not to like about sales?! On the other hand, marketing is long-term, more subtle and intangible, and much less clear. Unfortunately, many business owners never get past that black/white dynamic to see that marketing is one of the most important pieces of the puzzle to grow a business.
Good marketing – at the small/mid-sized business level – has always been about driving revenue – getting more people to buy more, sooner, at higher margins. But that’s often overlooked when marketing focuses on tweets and clicks and likes and pretty graphics.
Fortunately, there’s a new trend that focuses more on the good kind of marketing – that trend is Sales Enablement.
Sales Enablement is how marketing helps sales – it’s the tools, systems, content, and support that salespeople use to engage prospects efficiently. Because there is more competition today than there used to be, businesses cannot afford the inefficiency in the sales process that used to be OK. Marketing brings scale, consistency, and clarity that brings down the costs of making the sale.
At a recent marketing and sales retreat I led, we reviewed a Hubspot video on Sales Enablement. It said that 70% of the buyer’s decision is made before they even talk to a salesperson. In other words, most of “sales” actually happens during the phase that is usually handled by marketing.
What does the trend toward Sales Enablement mean for you?
- Most small businesses are overinvesting in salespeople and underinvesting in their marketing.
- Sales needs to describe to marketing what it’s hearing from prospects and customers, and what it needs to address buyer concerns.
- Marketing needs to create for sales standardized tools and strong, consistent messages to make the sales process more efficient.
- You need to appreciate what a strong connection there is between educating prospects about their needs, and making sales. Buyers are making their decisions while they’re learning…in fact, because of what they are learning.
Sales Enablement can help you generate more revenue more efficiently. If you think your sales and marketing are not keeping up with the times, you should use the topic of Sales Enablement to open a discussion among your leadership team about how your approach could change.
I was in a meeting this week with a client, and they were talking about the gigantic case they take to trade shows – which is called “The Coffin” and may have cost an employee a finger (the story wasn’t clear and I didn’t want to ask). The person who bought it, and still saw it’s utility, countered the jokes and jabs by saying, “Well, actually, it’s light if you have a forklift.” I’m not sure if it was a joke or a legitimate argument, but it got me thinking…
There are a number of pitfalls that will trip up people who don’t have a lot of experience with strategic planning. One of the more regular ones – especially in retreats where people are asked to free their thinking – is not taking into account limited resources.
All kinds of amazing things are possible to dream up if you assume you have unlimited time, effort, strength, brainpower, flexibility, etc.
That case is light (if a forklift is available where we’re going, and we have the money to pay for it)
That metal is flexible (if we have a sledgehammer and the strength to wield it)
That market is accessible (if we have the VP of Sales who knows the right people and can use their trust to benefit our product)
That new initiative is going to be easy for people to support (if we have a culture that is very adaptive and a leader who consistently pushes it)
Options that look good with unlimited resources often look terrible when limitations come into play. So it’s important to take resources – money, bandwidth, expertise, relationships – into account when choosing a strategy.
Overlooking resource constraints is just one form of a broader category that undermines strategy – the hidden assumption.
There’s no way to avoid hidden assumptions – we all have them lurking in our blindspots. But there are things you can do in your planning to reduce the likelihood that assumptions will lead you into a bad decision:
- Include people with different perspectives in your discussions – and listen to them all
- Ask, “Why is this a stupid idea?” or “Why would this fail?”
- Think of other decisions that ended badly and were driven by hidden assumptions, and assess if there are similarities
- Clarify the criteria that you use to evaluate your options
One of the things that separates good strategists from poor ones is the ability to see what’s missing and hidden. It’s a hard skill to develop – it takes knowledge and experience and inquisitiveness and discipline.
But it’s a really valuable skill. If you reflect on the worst decisions you’ve made, they are usually built on top of a hidden assumption that turned out to be way more off base, and way more important, than you’d have imagined…if you’d known to think about it.
As a small business coach, I’m always interested when the conversations I’m having in my client strategy meetings are echoed in news from the Fortune 500. And we had one such example last week – ESPN’s transition of their on-air talent from specialists to generalists.
Specifically, ESPN’s President John Skipper said, “Dynamic change demands an increased focus on versatility.”
Many of my clients are professional services firms – they are selling their people’s skills and thinking. Several weeks ago, in a quarterly strategy meeting with a 40-person services firm, the leaders asked me what I thought about a shift they were considering to organize themselves in specialized teams that could create deep expertise in certain areas. Here’s what I said:
- There is a lot of uncertainty in the market. That means that you don’t know what kind of work will come in, or when it will come in. (I am seeing this across my client base.)
- As a result, you have to have flexibility in who you assign to different jobs, because your talent assignments are probably not going to work the way you plan them.
- The only way you can have the flexibility you need to handle work in this uncertain environment is to actively develop cross-discipline agility – you have to make sure that people’s “downtime” is spent developing new skills.
In other words, you need to have a talent base that has a lot of flexibility in what and how it works – which is exactly why ESPN is making the shift they are, to multi-dimensional on-air talent.
Creating a flexible staff is no small task for small businesses. The large majority of small businesses under-develop their talent – that is to say, their talent development is mostly opportunistic and accidental assignments that happen to build new skills. That’s often OK – but it’s less likely to be OK these days, and companies who don’t get better at talent development are going to feel the pinch and pain of less-agile workers more and more, since the market will continue to be an uncertain place.
What’s needed to actively develop your people? How should they fill their downtime? Have your people…
- Explore new areas by looking through trade publications or surfing industry web sites
- Hold regular lunch-and-learns for your staff to educate each other
- Shadow each other doing work that’s new to them
- Sit in on internal or customer meetings that involve new areas for them
Are you developing the generalists your business needs – the ones with the skills and agility to navigate the uncertain environment we all face?
Small businesses are often dealing with situations in which performance has not met expectations. It’s not really a failure, per se, but there has to be a change. A restart.
It might be the European division, or the HR department, or the implementation of the new CRM. When the gap between where the initiative is supposed to be, and where it actually is, is big enough, a restart is needed.
(Hmmm, you say, how will I tell if my situation is “big enough” to merit a restart? The answer is different for every situation, but basically, it comes down to whether the business can handle the underperformance for however long into the future you want to look. A failing overseas office in one company might continue to bump along if the rest of the business can prop it up, while a similar office in another company is a crisis because it’s sucking too much cash that other parts of the business also need.)
When I’m faced with this situation in one of my clients, I work along 4 paths to do the restart:
– A credible though possibly uncertain understanding of our value, and an informed belief that people want what we offer, and a vision for why it makes strategic sense to “play that game” as opposed to focusing on something else
– A leader or leaders who can inject the energy needed to change things and break new ground
– The funding needed for the plan…and the mistakes we’ll make as we learn the flaws with the plan
– A story that refocuses the team from the failure and the pain, to the vision and the hope
As a leader, you know what these kinds of situations are like. Not clear. Not simple. Not easy. But if you have those 4 pieces, you’re well on your way to a successful restart, even if the results don’t come right away. And if you don’t have those 4 pieces…then that’s the first thing you need to work on!
Making Better Goals with a Strong Annual Planning Process
Although it seems like just yesterday that the days were hot and we were at the local swimming hole, this is the time to start thinking about annual planning. Some of my clients have small, simple businesses and handle their planning in an afternoon. Others are larger and more complex, and we spend 4 days over the course of 3 months.
No matter the extent of the process, they all have the same underlying process:
– Assess the environment and identify areas that have potential to improve the performance of the business
– Select the areas that have the best potential impact, and create initiatives to address those areas
– Define and justify the investments needed for the initiatives
– Develop action plans
– Launch the initiatives with managers and staff
There’s a rich set of best practices and tools for each of those steps. For example, many people like to use the SWOT framework to assess their situation. But I’ve found that reviewing hits and misses often provides better insight into areas of improvement.
On my Monthly Strategy Slice webinar, we’ll be looking at a small slice of the annual planning process – how to make sure you have a strong set of initiatives to focus on. On the webinar, we’ll talk about tools to evaluate your initiatives along 4 dimensions:
– Are you focusing externally (e.g., developing new markets), internally (e.g., reorganizing), or a combination of both?
– Are you focusing on initiatives with short-term payoff (e.g., a marketing campaign to existing customers), medium-term payoff (e.g., hiring an important new position), or long-term payoff (e.g., launching a new product)?
– Do you have a mix of initiatives that will have a big (transformative) payoff and smaller (incremental) payoffs?
– Do you have a mix of initiatives that have different investment profiles – some requiring relatively little investment, and others needing heavy investment?
We’ll talk about how to evaluate annual priorities, and how to apply the evaluation tools to your business on my webinar – please join us if you want to see these in action.
I’m going to be talking about sales process on my webinar this month, and I want to focus in on the most interesting part of the sales process for this article – creating a “mash-up” of assertiveness and empathy to engage a prospect about the needs they have.
But before I do that, I first have to talk about an important part of the sales process. If you want to get paid the value you deserve for the expertise you have, you have to make sure that your discussions with prospects start with a collaborative dialogue about their needs. If they’ve already defined their needs, and they’re just talking to you about a solution, then you will not get the value you deserve.
The problem is, though, that most prospects think that they’ve already defined their need.
So, how do your salespeople provoke prospects enough to change their thinking – to throw them off the path they’re already on for a solution, and get them to think more about their needs? To do that, your salespeople need to be assertive – they need to prove that they know as much about the prospect’s situation as the prospect does, and it will pay off for the prospect to listen to the salesperson. But your salespeople need to do that carefully – if they’re too assertive, then they’ll probably be dismissed. So they also need to be empathetic.
And that’s the hardest challenge your salespeople have today – how do you be assertive enough to get people to talk with you, and empathetic enough that they want to talk with you? That’s the sales process mash-up that every growth business needs to figure out.
We find the answer to this challenge in the playbook of a Trusted Advisor. Trusted Advisors have independent perspective that the person values (that’s the Advisor part) and the connection and understanding that reassures the person (that’s the Trusted part).
I’ve worked with several clients recently to create “Trusted Advisor Tools” for their people to use in sales discussions to build trust and provoke prospects to question how they’re thinking. I think every business needs these tools.
The salespeople usually see immediately how valuable these tools are and are enthusiastic to start using them. And many are actually relieved because they haven’t known how to push back against prospects in a supportive way.
We’ll develop some sample Trusted Advisor Tools on my webinar – please join us if you want to see these in action.
If there’s one thing in Stage 2 companies that does not take a lot of thinking, it’s identifying who your “High Potential” staff are. They come to mind immediately whenever I ask leaders who they are.
But, as much as it’s a no-brainer to get the most out of the people who offer the most, Stage 2 companies do a consistently horrible job of actively developing their High Potentials. Why? Because the Well-Oiled-and-Balanced Wheel is easy to ignore (and besides, it has a lot of weight to carry and can’t afford much “down time”.)
The first step I’d recommend in developing your High Potentials is to come up with a model that you can use to identify your High Potentials. Since it’s always obvious who they are, why would you need a model? Two reasons.
First, you need a program to develop your High Potentials, both to get the benefit of the full value that they can give you, and to keep them engaged and hopeful about their future at your company. And in order to have a program, you need to explain to people who is part of the program and who is not.
Second, you also have people who are Good Potentials. Most of them will never make the jump to High Potential – but some of them will. And to do that, they need a model of what they’re aiming for – what a High Potential is.
I have a 1-page model for talking about High Potentials. It’s a graphic that you can put in front of High Potentials to talk about why you value them so much and how you want to continue to develop them. And you can show it to Everyone Else to explain in simple terms what it takes to be (and be treated like) a High Potential.
If you want to see my model and learn some tips for using it, sign up for my upcoming August Strategy Hour webinar (even if you can’t make it you’ll get a copy), or go to the Contact Us page and reach out to me to request it.