Rise and Fall

Posted by on Jun 14, 2013 in Blog, Featured, HR | 0 comments

The following is a fictionalized version of real events at one of Ken’s businesses.

Rise and Fall

By Ryan Carter

It was a hot, dry day in California’s central valley.  Steve was skateboarding with his friends on a Saturday afternoon.  While sipping on sodas, they sat down on the curb.  “Steve, when are you going to get a real job? It’s been two years since we graduated high school,” one of his friends inquired.

“Actually, I just heard about a beginning job with a local electrical company. I think they install the large pumps to irrigate the valley,” he responded.  “I am supposed to meet with a guy on Monday.”

Steve, though young, was enthusiastic and driven.  He had a certain charisma about him that was hard to ignore.  Catching the eye of Bob, the regional manager, he was hired on the spot.  He reported for work the next day.  The work was hard, the days were hot, but he liked it.  It was rewarding to see the water flow through the fields and he felt like he was learning a meaningful trade.  Under the tutelage of a more seasoned journeyman, Steve quickly learned the ropes.  He absorbed new information quickly and had a knack for figuring things out.  After two years he was promoted to a technician and could perform work from his own truck without any direct supervision.

In his new role Steve excelled even further.  He liked having the extra responsibility and did well under pressure.  He understood that the business relied on getting the company’s name out in the public and he did well at finding new customers.  The regional manager started to hear good things about this budding star in the company.

“Tom, how is Steve coming along in his new position?” Bob asked his branch manager.

“Bob, he is doing great.  We took a bit of a risk on him in the beginning, but I think the potential we saw in him is starting to show.  He has already brought in 3 new jobs this month,” Tom replied.

Four years after Steve started, the branch manager decided to leave the company to take another position.  Despite having the least experience, the other employees in the shop expected Steve to take his place.  They’re assumption was correct and the regional manager called on Steve to take over.

“You know, there will be a lot of weight on your shoulders.  You have shown that you care for the company and I believe you have what it takes to be a leader,” Bob told Steve.

Along with his new responsibilities as branch manager came a healthy pay increase, which Steve was glad to receive.

During Steve’s first year as manager things were going great in the company.  The economy was good and there was a lot of work to do.  The branch even had to hire a couple of extra people to keep up with the demand.  Steve’s charisma helped him motivate the crews and he was well liked by the other employees.  They started having company barbeques on Friday evenings after work.  Steve treated everyone like family.

Steve continued to bring in new customers and bid on even bigger contracts.  He successfully completed several large jobs, netting the company some healthy profits.  Bob was pleased with his choice of branch manager.  Shortly after his first year, Steve had a meeting with Bob.

“Things are going pretty well at the shop and I feel like I am helping the company make quite a bit of money.  I think I deserve a raise,” he told Bob.

Bob recognized that Steve was doing well, but he also recognized that Steve’s compensation was already very competitive in the market.

“I think you are doing a great job, I think it’s time we talk about some type of bonus structure and profit sharing,” Bob stated.

He then went on to explain that a certain percentage of Steve’s compensation would be tied to volume and profitability at the branch.  With the way things were going in the company, Steve was very happy with the amount of money he would be making.

A year later, the economy began to slow and the branch began losing profitability.  Bob met with Steve to show him some of the numbers.  An investigation in the accounting books showed that the number of billable hours had declined, yet the employees were still taking home full paychecks.

“We need more billable hours to support the number of staff we have.  Either you find some more business or we will have to start cutting back hours,” Bob said.

Steve was dismayed by the fact that some of the employees might have to reduce their hours.  He was also frustrated that his compensation had diminished due to the falling profitability.  He had difficulty understanding why he was being paid less because the branch was not doing well.

As time passed by, things did not improve.  The economy and the subsequent amount of work continued to plummet.  Steve was not able to find enough customers to create sufficient billable hours to keep all of his employees busy.  Rather than cut hours, Steve would put two or three people on a job that only required one person.  This would result in going over budget on large contracts and the company would lose money.  Additionally, he would bill smaller customers more hours than necessary because the extra manpower was inefficient.

A series of monthly meetings convened between Bob and Steve.  Bob was very concerned about the financial state of the company.  During one meeting he said, “We are losing a lot of money.  We just can’t keep all these employees.  In order to cut cost we need to lay off the part-time secretary.  One of the secretaries from the other branch can take over her duties.”

Nearly infuriated, Steve shot back, “We can’t lay her off!  She is like family.  What will she do now?”  Steve understood the situation, but he was starting to feel a lot of animosity towards Bob.

Unfortunately, things at the branch went from bad to worse.  The poor economy had all but halted any new work from coming through the door.  Likewise, the company was losing a few of their valued customers from the overpriced labor charges.  Steve reluctantly reduced some of the hours among the employees, but he had not completely done away with all of his questionable managerial practices.  Things came to a head when Bob informed Steve that the company was losing too much money.  He had to lay off a particular employee that was underperforming.  This employee was brought on by Steve himself, and happened to be his roommate.

For Steve this was the final straw.  He did not want to see another employee let go.  Steve knew that there was no one else in the branch that could take over as the manager.  He also knew that his knowledge of the branch and its customers was extremely valuable.  His rapport with certain high-dollar customers was understood and Bob knew it would be tough to replace someone like Steve.

Steve called Bob into the office for a meeting.  Putting all his chips on the table, he looked Bob in the eyes and said, “If he goes, I go.”

Bob had no choice but to call his bluff.  Steve and the company parted ways.  The company eventually moved on and made it back to pre-recession volume.

About a year later the secratary answered a call.  “Michelle?  Hi, this is Steve.  How are things going at the shop?  Are you guys looking for extra help?”

 

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Mind Readers

Posted by on May 23, 2013 in Blog, Featured, HR | 0 comments

The ability to read another person’s mind has been a fixture in popular movies and books for at least a century.  Characters like mutants, aliens, vampires and mad scientists are usually portrayed using this power for evil.  People are rightly uneasy with the notion of having their most intimate thoughts plucked from their minds and exposed for others to see.  Likewise, you can understand how these inner-most-thoughts could easily be exploited.  I would like to inform you that a mind-reading device was invented over a decade ago and its use has recently exploded in the last 5 years.  Stalkers, news organizations, global corporations and even the government have access to this device and will use it on you if you are not careful.  Strangely, the device of which I speak does not extract thoughts through compulsory means, but rather, individuals reveal their thoughts voluntarily.

Twitter, Facebook, and to a lesser extent LinkedIn, are broadcasting our collective thoughts 24 hours a day.  I find it funny, and at times disturbing, how often I see news of a celebrity apologizing for some Tweet they posted while tired or utterly inebriated.  It’s even more unbelievable when they are perfectly coherent.  Does your iPhone need a breathalyzer? Do we need a driver’s license for social media?  Maybe not, but your company does need a solid policy for social media.

We all have crazy thoughts, but some people just can’t keep them to themselves.  In the past, this would have only caused an awkward moment at a social gathering, but today, thousands of people will know about these unfiltered thoughts in a matter of seconds.  This poses a huge risk for your company.  Your hard-earned reputation could go down the tubes because of an off-color joke or socially insensitive remark carelessly posted by one of your employees to all his followers.

It’s obvious that anything coming from the official company account needs to checked an rechecked before it gets posted.  This type of work should not be pawned off on the volunteer intern.  This is your company’s image and you should take great care in making sure it’s correct.  There are tools available that will delay a social media post for a predetermined amount of time just in case you want to retract your words before its too late.

What your employees post in their personal time is an entirely different beast.  Your policy on such behavior should be clear.  There are many legal and privacy questions around this subject.  Many companies have policies that limit what high profile employees can say on their personal accounts.  Some companies even state that their executives are not to have personal social media accounts at all.  The bottom line is that you need to mitigate this risk to your company by implementing a policy that makes sense for your industry, your business and your customers.  Once something hits the Internet it is impossible to erase it.

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A Word on Employee Motivation

Posted by on Feb 7, 2013 in Blog, Featured, HR | 0 comments

How do you motivate your employees?  Wearing many different hats, business owners may forget to take the time to evaluate what motivates their employees and whether they are getting the intended results.

Pay and Compensation

Many people assume that a high salary is a good motivator.  After all, the biggest reason I come to work is to receive a paycheck, not because I care so much about the company.  But I don’t think about my salary on a daily basis.  It gets direct-deposited into my bank account and over time, I start to feel like I am entitled to it just for showing up.  It is important to understand that base pay is used to attract talent and retain current employees.  It does nothing to make sure they are working hard each day they come to work.

Incentive (performance) pay, on the other hand, can be used to link rewards to outcomes deemed positive for the company.   This can come in the form of profit sharing, stock ownership, or bonuses based on performance appraisals.  Whatever you use, make sure the performance pay motivates positive behaviors, not just results.  Picture a scenario where a bonus is linked to a business metric, like market share, but the the employee uses poor behavior to achieve the goal to the detriment of the company.  Lastly, remember that incentive pay is the most effective near the end of the period when business results are evaluated, usually quarterly or annually.

Benefits

Typical benefits, like medical, 401K, paid time off, have a similar motivating effect to base pay.  They really only matter during the hiring process.  However, nontraditional benefits can be highly motivating.  These might include things like flexible work hours, dogs at work, on-site daycare, or a company vehicle.  These things offer daily reminders that great results are the expectation.  Most small businesses are not able to afford these perks, but there are other things that can be even bigger motivators.

Growth and Advancement

Growth and advancement opportunities are essential to high employee satisfaction.  Satisfied employees stick around longer and work harder.  Showing them that you are willing to invest in their careers will also build trust, which tends to reinforce behaviors that are beneficial to the company.  Take time to sit down with employees and find out what their career goals are.  Put together a plan that includes training and mentorship programs that enable them to reach their goals.  While this sounds reasonable, some business owners may be tentative about developing an employee to the point that they require a raise.  In this case, it is essential that the training and advancements align with the company goals.  If they do, any increase in salary will be overshadowed by the added value to the company.  Finally, hiring an over-qualified individual with little room for growth is a recipe for dissatisfaction and poor performance.  This is especially pertinent during a down economy with many desperate applicants.

If you see it, say it

One of the most powerful motivators is also the cheapest.  Recently, I was given a new role with an important, but tedious task.  I completed the task and emailed out the week’s results to the team.  My boss sent me a quick reply with the words “this is good stuff, I like this”.  This was an easy, yet powerful way for my boss to show me that my work was appreciated.  The boss will always notice the big new client or the completion of a huge project, but how often do they notice the little things?  If you let good work go unnoticed, it will eventually go undone.  So take ten seconds and tell your employees you like what they are doing.  I know how much this simple gesture did for me and I know it will allow you to motivate your employees to achieve success.

What motivates you to work hard?  What motivators should managers consider for their employees? Share your ideas with a comment!

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