Small businesses are a tricky thing – there are lots of mistakes that business owners can make.  Not paying attention to their customers, not keeping up with technology, constantly trying to be a hero, not understanding cash flow!  All of these will eventually kill or cripple your business, but the biggest impact, the mistake that most business owners make is not addressing their ‘People’ problems.

Because of their size and the need to be part of a community, a small business is driven (good and bad) by the quality of the people and with only a few employees (relative to big corporations) there’s no where to hide!

Let’s say you’ve got a small company with 10 employees…and 2 of them are problems.  That’s 20% of your work force!  But it’s actually worse than that – typically people problems bring everyone else down as well – so those 2 issues might have you at 50% effectiveness.  It’s doubtful you’ll be around long at that pace in this economy.

What exactly are people problems?  Let me know if you’ve heard of any of the following issues in a small business:

• A salesperson who doesn’t actually bring in any new business
• The employee who brings lots of extra personal ‘drama’ to work every day
• Slackers who do as little as they can possibly get away with
• Someone who lies, cheats or steals
• The me-first politician, positioning themselves ahead of the team
• The second cousin to the owner of the business who just doesn’t get it
• The stubborn critic who really doesn’t like change
• The employee who everyone likes, but who doesn’t actually get anything done
• The strong performer who’s had a bad year…3 years in a row!

I imagine you can add to that list from your own experiences – it’s safe to say there are a lot of  potential ‘people’ issues.  However here are the questions to ask:

“Do we have any of these kinds of people issues at our business?”

If you’re like most business owners, the answer is ‘Yes’, which leads to the next question:

“What am I doing about it?”

Again – if you’re like most business owners, the true answer is probably ‘not much’ or even ‘absolutely nothing’.  You’ve accepted it, and that is the biggest mistake that business owners make! If that sounds like your situation – read on!

What’s the impact of these People problems?

We’ve established that most businesses have some sort of people problems, but what does that actually mean – what are the impacts?  Here are just a few of the things that are likely happening at your company because of your people problems:

• It’s costing your company money
• Your best employees are tired of picking up the slack and thinking of leaving
• Your customers are being impacted negatively (poor service, poor products, mistakes, no communication…the list is endless)
• You can’t grow because of the dead weight
• Your stress and frustration is high due to poor performers and the impacts
• The poor performers are trapped in a bad situation (most people don’t like to fail)

Can you think of other impacts?  In short, your small business is headed in the wrong direction because poor performance and people issues impacts everything and everyone around them.

Why do People problems continue?

Obviously these people problems are serious, but in most cases they continue indefinitely.  Why?  Let’s look at some possibilities:

• No time or the energy to really address the issue
• I’m hoping they will just quit and save me from having to do anything
• I don’t like conflict and they will be offended if I bring it up
• I really like this person, I’m sure they’ll start doing better
• I believe in loyalty
• I’m not perfect…how can I expect more out of someone else?
• They’re family, I’m stuck with them
• They might sue if I fire them

Do any of these reasons sound familiar?  If this line of thinking is making you uncomfortable, then you seriously need to take some time on this issue because:

If you aren’t addressing the people problems in your company, then YOU are a people-problem!

It might be hard to hear, but if you really want the successful business you’ve worked so hard to build, you have to address the people problems in your business.  They won’t go away on their own and without a proactive purposeful plan the people problems will persist and eventually bring you down!

What to do about the people problems?

The first step in solving a problem is admitting you have one, so if you can acknowledge that you have a poor performer (or several), then you’re on your way.

The next step is to be very clear on what’s needed from that person in that position.  Analyze to see if it’s possibly the right person but in the wrong seat.  If it’s generally a great employee that’s well liked but just not performing in this job, is there a role where they could shine?  If so, figure out a way to move them.  If you can’t move them then you’ll likely need to start the conversation and process of letting them go (see below).

Once you have documented expectations of what they should be doing, how they should be acting and how you’ll measure success, then you need to schedule time to meet with them.  Start out the meeting by being very clear that there is an issue and you need to have a constructive discussion on what it will take to improve things.

Your ideal goal is to help them find ways to improve and become a productive, strong performer on the team.  You’ll cover several points:

• They need to understand the problem and the impacts (it’s not a debate)
• Be straight with them and as unemotional about it as you can be
• Be specific about what’s not working and what you need to see going forward (have very clear and measurable outcomes that you’re looking for)
• Take as much time as you need – you both need to be on the same page
• Be clear on expectations and the measurable outcomes that they will need to reach
• Be clear on what happens if they don’t meet expectations
• Make sure there’s a specific action plan for all parties
• Have a signed and written commitment on the action plan

I would suggest a 30 day period for improvement with a follow-up meeting to see if they’ve turned things around and met your requirements.

Here’s the key to this – you have to follow up and follow through! If they haven’t shown enough improvement, you MUST follow through – that likely means firing them or offering them a different position.  Whatever the impact, you will make things much, much worse if you don’t live up to what you said needed to happen.

People issues are never easy to deal with, but they don’t get better with time.  Take action and do what you can to help them turn things around…and if they can’t, won’t

or don’t turn things around, you have to cut your losses and move on without them!  And you have to do it NOW!  Just like taking that band-aid off quickly, it will hurt initially but it’s soon over.

The reality is that you and your other employees will see a huge lift in energy when the people problems go away!  Your people can either make or break your company!  Replacing a bad employee with a great employee is a huge shift for the better.  Even if you just drop a bad employee, you’ll improve the company (addition by subtraction).  Adding a great employee on top of that will really make a difference!

Do you have any people problems?  What’s keeping you from addressing them?  What could you do this week to address the issue?  I’d love to hear your thoughts on this topic – did I miss anything?  What people problem parables do you have?  Share them in the comments below!

Shawn Kinkade  Kansas City Business CoachSimilar Posts:

• Confronting the Brutal Facts – Employees
• How to stop herding cats (and get more done)
• Do you have the Right People on the Bus?

A lot of thought over the years has gone into what makes a business great. In the business classic “Good to Great” by Jim Collins, 5 years of painstaking research led to a lot of interesting conclusions about what separated great companies from good companies (and all the rest).

Some of the key drivers included things like great leadership, and disciplined focus but one of the fundamental keys to a great business is that they have great people. In other words, using Collins terminology you have to get the right people on the bus if you want to succeed.

But what are the Right People?  How do you evaluate them?  Let’s hear from Jim Collins first:

Right People

When it comes to getting started, good-to-great leaders understand three simple truths. First, if you begin with “who,” you can more easily adapt to a fast-changing world. If people get on your bus because of where they think it’s going, you’ll be in trouble when you get 10 miles down the road and discover that you need to change direction because the world has changed. But if people board the bus principally because of all the other great people on the bus, you’ll be much faster and smarter in responding to changing conditions.

Second, if you have the right people on your bus, you don’t need to worry about motivating them. The right people are self-motivated: Nothing beats being part of a team that is expected to produce great results.

And third, if you have the wrong people on the bus, nothing else matters. You may be headed in the right direction, but you still won’t achieve greatness. Great vision with mediocre people still produces mediocre results.

- Jim Collins

The Right People are different for every company.  You’ve got to have people who want to be with you (on your bus) – they need to share your core values, they buy into why you’re in business and they like the other people that you’re bringing on around them.

I wrote previously about the importance of uncovering your company’s Core Values. Using those core values to identify the ‘right people’ is one of the most important things you can do in terms of building a foundation for growth.

Even for the entry level ‘paint by numbers’ jobs, having an employee that genuinely ‘fits’ with your company will have a lot of long term benefits. They will stay around longer, they will do better work because they appreciate the company and fit in and they will help to positively influence everyone around them.

You also have to have people who are motivated, not only do they want to be in the company, they also want to accomplish things…great things. It’s possible to externally motivate people, for a while, but nothing compares to the output of a self-motivated person who can and will run on their own.

Finally you also have to have the Right People in the Right Seat. They have to have the skills and abilities needed for the job (which implies that you have a clear understanding of what jobs and roles are needed…food for another post).

How to evaluate the Right People?

The most straight forward way to evaluate if you have the Right People is to simply compare them to your top 5 Core Values.  Do they consistently display those core values?  Do they occasionally display them or do the never display them. 

Set a benchmark on what you think is acceptable and see how many employees make the grade.  If they don’t hit your minimum benchmark then you probably need to work with them or start the process of letting them go.  It will be painful if you have to cut employees, but if they really don’t fit with who you are as a company then you need to let them go or risk losing your identity.

What do you think about the importance of having the Right People?  Are you familiar with companies who have made this a priority?  How about those that haven’t?  I’d love to hear your thoughts – share them in the comments below.

Shawn Kinkade  Kansas City Business Coach

Similar Posts:

• Are you using your Core Values to stand out?
• Finding your Mission and Core Values
• Serious Insights from a Toy Company

Why do you do what you do?

What motivates you (or your employees…) to work really hard, come up with great new ideas, do the hard work of leading, planning, making things happen?

The traditional business school answer is that you’re motivated by money and / or the fear of getting fired.  If you want someone to work harder or get better results, you offer them a bonus or threaten them.

However if you’re a business owner…or if you’ve spent much time out in the work force you may have realized that the simplistic (but widely held) belief of the carrot and the stick as the only way to get employees to do things doesn’t really ring true.   (photo by oakleyoriginals)

If you ask most business owners why they got into business for themselves the most likely answer is that they wanted to be their own boss.  I know dozens of people in the corporate world who willingly gave up promotions in exchange for being able to work from home.  It’s not about the money (or at least it’s only partially about the money).

It’s that break between what’s commonly practiced in business motivation and what experience (and as it turns out science) tells us that Dan Pink’s latest book Drive is all about.

I really enjoyed this book…for several reasons.

It’s interesting and it has a good beat

Sadly many business books are…to put it nicely…a bit dry.  They might cover great ideas or give you great tips, but if you have to force yourself to get through the next chapter, then it’s not much help.

Drive has a lot of stories and interesting facts and the author does a great job of flowing everything together very conversationally with a spirit of discovery and fun.

It’s challenging but with some real scientific basis

There are a lot of interesting, even provocative ideas out there – many of them may even be true, but most of them don’t have much backing to them – leadership theories, marketing theories, get everything you want out of life theories.  A lot of strong ideas that may or may not be true.

Drive has a very provocative theme…how business has been motivating people since the beginning of the industrial age no longer really works in today’s world.

But what I find really cool about that is that the author approaches the entire thing as a review of established science that backs up his point.  It’s not like he found one study…he cites 1/2 dozen different studies and prominent scientists and really backs up his assertions.  I’m very comfortable that this is real world, real stuff.

It’s got some real, practical applications

The whole point of the book is that business needs a new understanding of what motivates people to perform…motivation model 3.0 as he describes it.  (1.o is basic survival instincts, 2.0 is reward and punishment).  But this isn’t a theoretical concept, there are businesses, very successful businesses out there today that are using at least parts of this new motivation model right now!

This new motivation model is made up of 3 components:

Autonomy – the ability to do what you want to do, when you want to do it, how you want to do it and who you want to do it with.  He gave a great example of the Results Only Workspace Environment (ROWE) that’s used at Best Buy Corporate Headquarters where they don’t have standard office hours, choose when and if they want to come into the office and whether they want to go to meetings or not.  Oh and by the way, their productivity is up and costs are down since implementing this!

Mastery – The ability to practice and perfect skills (of your choosing) and really taking the time to master them.  It’s the pursuit of Mastery that enables people to get into a state of Flow (basically get into the zone of whatever it is they’re doing).

Purpose – The idea that people want to work for an idea or something that’s bigger than themselves.  Given a choice, most people would much rather work for a company that’s doing something cool and making a difference.

Obviously it’s not easy to build an organization that fully embraces these ideas, but it is totally possible to start building these ideas slowly into your company culture…there are things you could start doing today that would make your business a more motivating place to work at.

Finally I think biggest reason why this book really resonated with me is the idea that there are workplaces out there where you are compensated fairly (it’s always partly about money), you have a strong level of independence, an opportunity to really grow into what you like doing and you’re doing something bigger than you could pull off by yourself!  Shouldn’t all business be like that?

Compare that to the dreary, downtrodden, uptight corporate environments that populate most large companies and it makes for an exciting idea.

Here’s a link to Dan Pink’s TED speech on Drive to give you a better idea of what it’s all about.  If you can’t see the video below – here’s a link:  Dan Pink – TED

Have you read Drive?  Would these ideas work for you?  Share your thoughts on how your employees are motivated or what you’ve seen work or not work in the comments below.

Shawn Kinkade  Kansas City Business Coach

Similar Posts:

• Another look at Drive – cool presentation!
• Want your business to perform 259% better?
• An updated look at Social Media NOW!

Plan for success photo by WorldIslandInfo at FuturistMovies

About 1/3 of Small Businesses fail in the first 2 years, and just over half fail within 4 years (according to an SBA Study done in 2005).  These are always controversial studies – how do they define Small Business?  How do they define failure?  Wouldn’t there be a big difference (higher?) failure rate in the last 2 or 3 years?  All great points, but in general we can agree that there are a lot of businesses that don’t make it.

On the other hand, there are also lots of examples of businesses that are still in business but aren’t really making it.  I ran across an interesting article in Fortune Small Business that initially caught my eye because it was about a local Kansas City business.  The article on ‘Why Small Businesses Fail‘ is about a home furnishings boutique in Prairie Village called the Curious Sofa (caution the site loads with music on).  If you haven’t been, Curious Sofa is a great store with lots of interesting stuff  to look at.

Here’s the part from the article that I thought was really interesting:

Dusenberry’s financials explained clearly why her business has potential – and why she’s in trouble….But here’s the thing: Her statements show that she’s lost money eight years in a row.

Every year, Dusenberry said, she told herself that she was going to work harder and sell more stuff, but working harder doesn’t fix a broken business model.

Working hard, loving what you do, and having a skill or product that other people want enough to pay for are all part of the puzzle, but there are other things that are even more important and if you don’t figure them out, it can be a long way down.

Part of why this story caught my eye was because I had a very similar conversation with a business owner last week.  They had been in business just over two years and had started out of the gates with a lot of money in their personal bank account.  Their operation grew quickly, had a lot of happy customers and is generating decent monthly revenue.  The kicker is that the owner has yet to take a salary and is now out of money in the savings account – they have lost money every month for 2 years!

What are the missing ingredients?

Every business is different (which is why my job is fun), but I think you can summarize the biggest missing ingredients into 3 areas – People, Systems and Planning.

People

One key area that small business owners often overlook is the importance of the people around them – employees, vendors they buy from, advisors, people they network with – all of these have a huge impact on overall success.

If you’re not going through a thorough process for most of the people that you hire, you are probably destined for a rough ride.  Small businesses don’t have the luxury of easily handling a bad hire – best case it’s an expensive mistake (to the tune of $30,000 or more depending on the position – see this calculator from ADP).  Potentially it can sink your business.

Equally important are the people that you are networking with and getting advice from.  If you are not routinely being challenged, receiving candid feedback and brainstorming with people that have a different background than you do, then you are not performing up to your potential.  There are a lot of ways to a address this – whether it’s meeting with a group or with an advisor, I have some suggestions that might be worth considering.

Action Point – What are 3 things you could start doing to improve the people that you’re hanging out with or working with?

Systems

A system is a set of steps and procedures that you or your employees follow to get things done.  You can (and should) have a system for how you order office supplies, how you market your company, how  you create your product, etc.

The benefit of a formal written system is that you can easily get other people to operate the system once it’s created (so you can move on to other things) and by having it documented, it becomes possible to incrementally improve the system over time – which is where the real long term benefits come in.

I wrote a post last fall that spelled out how to get started with systemizing your business – it’s not rocket science, but it is amazing the number of businesses that don’t routinely use documented systems and just make things up as they go.

Action Point – What are 3 processes that you or your team do routinely but isn’t documented?  How could you get started implementing some system improvements?

Planning

I probably have these in the wrong order because Planning needs to come first.  The single biggest issue with 2 examples above is that neither business had a clear plan on how they make money.  One of my coaching colleagues in the PBCA is Adam from Cleveland and he recently wrote a great article on the Profit Planning approach they do with their clients.

The Profit Plan is the answer to how to make money in your business. If you can’t plan it out on paper, chances are you won’t be able to do it in real time with your hectic business.

I’ve been working with my clients on this approach for quite a while as well, but I really like the terminology of the Profit Plan (thanks Adam).  The key point is that you should be able to clearly state your plan for how much money you are going to make (and spend) in the next 12 months and just as importantly, where that money is going to come from.  If you’re in early growth phases or if you are launching a new product, then you may have to guess more than your comfortable with, but a guess is better than not having a plan at all.

The other important point of the plan is to remember is that it’s not how much you make, but how much you keep that really matters.  You might have great revenue coming in, but if that’s not translating to profitability, you are still destined to fail (it just might take longer).

Action Point – Can you create a monthly projection through at least the end of the year that includes costs and revenue (and where that revenue is coming from)?  If not, what would it take to do that – contact me if you’d like help on that.

What are other key ingredients to business success?  Do these match up with your experience – share your comments below and start a conversation!

Shawn Kinkade  Kansas City Business CoachSimilar Posts:

• Simplify to succeed? Reduce your risk by 10X!
• There’s a System for that…
• How to carve a pumpkin – or why systems are key!