Monday, August 27, 2012

Employees as Logistic Decision. Marketing Secret 24/101

View employees as cogs in the machine...don't treat them as such

My Grandfather T.W. Kirk was the source my entrepreneurial gene.  He, like me, also had a saying for everything.  One I remember was that in a new business, the first hire is the hardest.  By this he meant that when starting out, the addition of the first payroll overhead is a major drain on resources, and therefore must be decided very, very carefully.  He also said that no owner should be doing work that can be hired for $10 an hour (then it was probably 25¢ an hour).  So you see the conundrum.

The logistical issues around the people in your employ is clearly of huge importance, and in most cases, the most complex of the day-to-day management process.  This is because, well, people are ….funny.  They want a stable company to work for where they expect a long career filled with advancement potential, but then they leave when a better offer comes along.  They want the to be paid on time with good funds, but they are not as concerned about maximizing their half of the deal with on time and good performance.  I could go on...and on.

Many business owners would see the people as being one of the best parts of owning a small business. It is common for owners to develop lifetime relationships with their employees. However, it is critical that you are able to step back and see each paycheck as a part of your logistical decision making process.  

I have seen really good companies go out of business because they failed to cut hours or people fast enough in a downturn.  Expansion opportunities can be missed if hiring and training is delayed too close to the planned expansion.  Customer service or quality can suffer when skilled positions are not filled quickly enough in good times.  Competitors may be going offshore for labor while you try to be a good guy and hire Americans to do the work here. 

One larger company I know decided to move out of an expensive part of the country that had high taxes and lots of regulations to a different geographic location that had much less of those negative issues.  They had over 1000 employees.  They found that the quality of the employees in the new locations wasn't as good as the more expensive spot.  They had to offer substantial bonuses to lure current staff to the new spot.  And the move took years longer than expected.  They will still be better off, but the logistics regarding people provided many expensive lessons that might have been avoided with a bit more investigation. 

Do you look at your employee's as a chess pieces in your game of business.  Seems cold, but it is the best for THEM!.  The first time I ever had to lay people off, I was crushed, sad, upset.  Over time, I came to realize that I was saving the jobs of those who were not laid off.  It made no sense to keep folks on staff during slow times if those payroll dollars might weaken or kill the company.

Clearly, we could do 40 days just on hiring, firing, and managing people in a business. All of my books go into great detail on these issues. The critical issue for this day in our 40 day journey: You need to calculate the cost of every hire carefully, be clear on the objectives of every hire, manage the staff as you would any other element in your business with a goal toward maximizing effectiveness at the lowest reasonable cost, and cut back or fire as necessary. 

Years ago a very good friend of mine evaluated the way we were running the company. His recommendations included cutting our art department by 33% and our accounting department in half. The savings were considerable. Do you have too many people in one of your departments? Do you have the wrong people?

Action steps for day 24:
  1. No matter how small your business is, give each position a title and a clear written job description
  2. Lay out a chart of your staff showing clear lines of authority
  3. Review each an every position (not person) to see if you have too many or too few in that position for your current circumstances
  4. Review every person (not position) to see if each one is executing on the job description of their position, or whether they should be reassigned, retrained, or even let go
  5. Review the pay scale for each position to determine if you are unnecessarily overpaying or underpaying. Either can result in problems.
  6. Consider the working relationships throughout your business to see if there are any disruptive individuals who may be more trouble than they are worth.

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