Outlaw eReport

BUCK THE TREND AND WIN
How to gain more Profits for Your Company

On Friday April 6 unemployment figures revealed that unemployment was up to 4.3% which was the highest in the last 20 months. While this may have had a significant impact on the stock market when it was announced, it has little impact on employment in most businesses and their practices. Despite the weakening economic trends, there still is a strong demand for talented, motivated workers, especially in the hospitality, construction, and service sector.

In short, there is more demand for talented workers than supply. Look at the level of service you receive in many customer oriented businesses. Look at crafts or trade oriented companies such as construction. Have you tried to get a repair done on your home lately? How long did you have to wait, if it was done at all? High-tech workers are being laid off in places like Silicon Valley but many jobs go unfilled in the rest of the country.

With high profile companies trimming jobs by the thousands in recent months, it has created the impression that this is occurring across the board. According to a press release by the Labor Department, "the weakness in March was widespread with losses at bars and restaurants, department stores, car dealers, and employment services." In our contacts with clients, we are still hearing that "it's difficult to find talented people to fill key positions." Even with weakness in certain companies, industries or locations, there are still plenty of jobs unfilled or filled with persons that are not performing up to the company's level of expectation. In the early 90's we talked about under employment where people could not find jobs to "fully utilize their skills", knowledge and experience. However, today we have a vast number of employees who are over employed. These individuals received their position because of a lack of candidates that could "fully meet the expectations of the job." Managers were even "held hostage" because they felt that if the employee was asked to perform at the level the company expected it could contribute to or cause the employee to quit. Fear of open positions or turnover caused managers to settle for lower job performance or accept behavior that would otherwise be disciplined.

Now is an excellent time to focus on individual employee productivity. (It makes sound financial sense to improve productivity to increase financial results; because more employees will want to solidify their employment and job security, managers can make needed changes.) For example, if employees are not keeping pace and developing the skills needed, then now is an excellent time to begin a skill development program. If employees fail to meet company expectations or standards and managers are afraid to enforce policies and practices, then now is the time to raise the bar and tighten up discipline. Begin by having each manager take a look at the employees and develop ways to improve individual productivity.

Solid prudent management practices are a sound business investment no matter what the economic trends or business climate. Recently Workforce Magazine published a biannual survey of management practices in public companies in the US. It compared the bottom 10% and the top 10% of the companies. It is interesting to examine what companies are doing but more interesting to ask, "what does a company's ranking have to do with what they are doing."

Here is a selected listing of practices.

HR PRACTICES BOTTOM 10% TOP 10%	42 Firms	43 Firms
Qualified applicants per position	8.24	36.55
Hired based on a validated selection test	4.26%	29.67%
A formal HR plan including recruitment, development, and succession	4.79%	46.72%
Hours of training for new employees (less than 1 year)	35.02	116.87
Employees receiving regular performance appraisals	41.31%	95.17%
Workforce whose merit increase or incentive pay is tied to performance	23.36%	87.27%
Workforce who receive performance feedback from multiple sources (360)	3.90%	51.67%
Eligible workforce covered by a union contract	30.00%	8.98%

 

You are probably asking these questions: How does your company compare? What does the practices relate to what they are trying to do? Let's see the results of these selected practices

HR OUTCOMES BOTTOM 10% TOP 10%-Note: Each of the variables in the "HR Outcomes" section is scaled from 1-6, where 1="not at all" and 6="to a very great extent."	42 Firms	43 Firms
The average employee understands how his or her job contributes to the firm's success	3.40	4.21
Senior management sees employees as a source of value creation versus a cost to be minimized	2.80	4.00
The firm attempts to provide job security, even if confronted with declining financial performance	2.71	4.11
Line managers generally believe that effective diversity management is a business imperative	2.45	3.65
Top management shows commitment to and leadership in knowledge sharing	2.99	4.05
The firm has developed and communicated measures of financial performance	3.38	4.63
The firm has developed and communicated measures of learning and growth	2.26	3.12

 

You may be saying, now isn't the time to consider this because we need to produce better financial returns for share-holders for a public company or share-holders for a private company. You can't delay doing the right thing and do better. Here are the results of companies using these practices.

FIRM PERFORMANCE BOTTOM 10% TOP 10%	42 Firms	43 Firms
Employee Turnover	34.09	20.87
Sales per employee	$158,101	$617,576
Market value to book value	3.64	11.06

Turnover is lower by 13.22%, sales per employee is $459,457 higher. The value of the company is three times greater for those who use these practices. Now there are more factors than these in a business success and final performance, however, it makes a convincing case for "now is always the time to do it right."

The typical first response in an economic downturn is...

These steps are a more productive response. Remember if an investment has good returns you can't afford not to make it. Use value and return of an investment to guide decisions not reduction and constraint.

It is an opportune time to increase quality and strengthen the workforce. If the economy improves quickly, a more capable and productive workforce will allow the company to capitalize on the growth. If, and we hope this is not the case, the economy does not improve quickly, a more capable and productive workforce will help the company to weather difficult situations by producing better products, delivering better service and doing it with less cost.

RE-RECRUIT TOP PERFORMERS
To keep the top talent in the organization its very important to keep them involved and informed. Take the time to re-recruit your top performers. As the times become somewhat uncertain, and if the news has indicated some lack of instability in the industry, you can reassure your employees of their job stability and they can control or assist to insure it stays that way.

KEEP INFORMED
If your company has problems that must be addressed, or the change in business climate has caused instability, its best to be candid, open, and optimistic. Many top executives want to hide the fact there are problems in the organization, yet employees know this only too well. They appreciate your candor and it gives them confidence to weather a difficult period.

FOCUS ON RESULTS
It is easy to focus on expense reduction and ways to cut cost. This strategy is only a short term fix and cannot be repeated. It is critical to increase the effort to get new customers and expand business with existing customers. For more information go to www.wayneoutlaw.com/lasttofirst.htm.

STRENGTHEN CUSTOMER RELATIONSHIPS
When difficulties occur the most successful strategy is to focus on the customer, especially in troubled or tumultuous times.

It is the best strategy to get close to the customer. Remember that everyone is looking for relationships of value that can help them prosper. Not only should you re-recruit your top performers, you should also re-recruit your top customers. Take the time to let them know they are appreciated, and most importantly, let them know what you are doing to help them be successful. For more information go to www.wayneoutlaw.com/programs/ultimatecompetitivestrategy.htm

FOCUS ON THE FUTURE
When change occurs, and uncertainty is the watchword, leadership is essential. All too often managers and executives become focused on the past and on managing their specific processes that got them to that point. If the future needs change, managing past processes wont get you there. It may be time to step back and look at the problem in a new light and ensure decisive leadership occurs.

CAPITALIZE ON CHANGE
I remember hearing an economist say that more millionaires per capita were created during the depression years than any other time. Even during troubled times money is still moving from company to company and from individual to individual. The companies and individuals that provide the greatest value will prosper. As an individual and a company, look for ways to increase the value you provide. For more information go to www.wayneoutlaw.com/runningonquicksand.htm

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Outlaw Group, Inc.

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