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Letting an Employee Go

Have you ever struggled with letting an employee go or working to keep them.

You might spend hours, days or even weeks in emotional discussions with business leaders trying to understand how to get various employees to acceptable levels of performance, but to no avail. This article focuses on providing a clear framework to diagnose whether you have an opportunity to fix a less-than-ideal employee performance situation or whether more drastic measures are needed.

With the current employee shortage it is always tempting to retain every employee possible rather than letting an employee go. However, the retention of one weak link can cause ramifications that may become detrimental to the entire team or business. Thus, it is always better to remove these weaker links because the cost of retention will always be higher than the modest void an exited employee will create in the short term.  

Step 1 for Letting an Employee Go – Core Values

Deciding who is worth the effort to retain versus those better removed is actually quite easy when you approach the decision-making in a well-proven way. The first step to letting an employee go is to measure the employee in question against your company’s Core Values. 

This will be difficult if you have not developed well-established core values to promote and demote team members. But thankfully it is never too late to start. If you understand the necessity of Core Values and how they work within organisations but you have yet to implement this strategy into your company, put this article aside and spend the time necessary to implement them effectively. You will be grateful you did and it will always be time well spent for long-term gain.

If you have identified your company’s Core Values then ask yourself how frequently you observe the employee in question embodying them using a criterion of Frequently, Sometimes or Never.  For an employee to align with your organisation there shouldn’t be any Nevers, with a mix of Sometimes and Frequently. It can be personally confronting to exit your first employee using Core Values as a decision-making process but when you see the impact on the rest of the remaining team you will realise that your decision of letting an employee go was wholly justified.   

Step 2 for Letting an Employee Go – Ability

After you determine whether the employee in question aligns with your Core Values, the next step is to identify whether they have the ability to deliver what is required in their position or seat. In order to do this both objectively and effectively, it is important to have the employee’s position or role well defined. For this, three things should be addressed:

  1. What are the position’s key deliverables? This explains ‘why’ this position exists and how you know it is being done well.  
  2. What are the main activities for the position? This should provide insights into what the person does for much of their time.
  3. What are the main Key Performance Indicators (KPIs) for the position? This will avoid any doubt in what the expected level of activity and performance needs to be within the role.

With this review of the employee’s position in hand you are now ready to evaluate your employee by asking yourself three questions:

  1. Do they fully Understand their position? Often times there can be a fundamental misunderstanding regarding what is important about a position versus what is simply ‘nice to have.’ When you have a clearly-defined role as described above this is less likely, but most businesses don’t do a great job of defining in writing what is critical about a role – the position’s key deliverables. If you have any doubt whether they fully understand the position you need to invest some time in ensuring this is not the issue.
  2. Do they have the Capacity to perform at a level that is required for the position?  Although one could use sophisticated cognitive assessments to determine this for some roles, typically you as a business leader can often get a good impression simply by asking yourself this question. By answering yes to Question One you know they understand what is expected of them, now it comes down to whether they have the skills, disciplines or time management capabilities to do so. If the answer is no then the employee is likely not a fit for that position and you either need to redefine their position or consider letting an employee go.
  3. Do they have the Desire to perform the necessary activities required for the position?  Up to this point you have confirmed they both understand and have the capacity to do what is necessary to be successful within the position, the question is whether they want to. This is an important final hurdle to clarify because people can get tired of things that they are really good at. Problems answering this question in the affirmative require collaborative discussions with the employee to find a win/win, potentially adapting their job description in order to keep them enthusiastic and motivated while still fulfilling the original role. These types of challenges can often be resolved quite easily if diagnosed and addressed early on. Often times a great employee leaves a company without warning with an explanation that they became bored and wanted to find new opportunities.
Letting an Employee Go
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Company culture and your core values aren’t just common topics in the pages of business management books, they are well-proven strategies for growing strong and profitable companies. Clearly defined position descriptions aren’t simply an HR requirement, they should help you and your employees clearly understand what is required of a role and how to measure whether a staff member is fulfilling that role proficiently.

Letting an employee go is never easy, but by following this process to assess your employees we are confident you will develop a happier and more productive team.

Enjoy the process!

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The Value in Asking for Help

The Value in Asking for Help

If you are like most of us you are not a big fan of asking for help. 

Although you might utilise this strategy in an effort to cultivate creativity, research shows that not asking for help is most often our default reaction, rather than a choice, due to a fear of possible rejection or disappointment. 

This article’s aim is to remind us of our choice and bring attention it some of the limiting beliefs many of us have developed over the years around asking others for help.

To be clear, I am a recovering addict of self-sufficiency. Amanda Palmer’s book, The Art of Asking helped shine a light into a corner of my emotional world I had been keeping partitioned off since childhood. 

In the spirit of keeping this article short, one big idea on this topic of asking for help is to realise that we have wrongly associated asking for help with vulnerability and rejection. 

Misunderstanding Asking for Help

We’ve mistakenly learned to ask for help from a belief that the person we are asking holds the power in the exchange. So the request is coming from a position of shame or weakness rather than a more empowered mindset.

On the flip side, at other times we have asked for help coming from a point of expectation which happens when we feel power over another person. This often results in a feeling of disappointment in the asking process and possible resentment on their part.

The reality is that asking for help should be seen as a collaboration between two parties where both can receive value in the exchange. This type of asking can come from a place of respect, one that focuses on helping one another where there is no judgment tied to the outcome. There is a request and a response that becomes mutually beneficial for, or at least equally appreciated by both parties. 

Whether help is ultimately given in the common form of time or money is immaterial. Sometimes people will decide to help and other times they won’t feel able to. What matters is whether you are approaching the request from a place of respect and that you remain open to whatever choice the person makes.

Asking for Help in Business

So what can this concept of asking look like in business? Obvious examples can be seen in sales. You likely know some salespeople who don’t ask their customers to buy their products and services out of fear of rejection. Others set their expectations of their customers far too high, inevitably leading to disappointment. Whichever perspective they may take, most salespeople could improve their ability to have win/win interactions with customers where they share what is important to them and elicit similar insights from the customers. 

This skill of asking for help reaches far beyond sales, applying to all aspects of company dynamics. How about a boss asking a direct request for help on a project? Often the boss doesn’t want to be disappointed in the employee so they never ask in the first place. This can lead to the mentality of “if you want something done right, do it yourself”, which in turn can create frustration, annoyance and sheer exhaustion. Other bosses might not want to inconvenience the other team member because they are already busy or there may be fear around looking incompetent or admitting one’s own shortcomings. 

All these scenarios don’t end as well as if the boss were simply to be open and able to ask for help in a collaborative and respectful way. At the very least, they demonstrate their humanity to another team member and likely gain more goodwill with them even when no help can be given. Others may result in the boss receiving some additional and unexpected support. 

How to Ask for Help

To be clear, just asking for help isn’t good enough because when it is done poorly it is often detrimental to relationships, appearing demanding and irresponsible. Our opportunity here is to gain more courage in receiving what we really want and need by asking for help in a way where that creates value for both parties with a lack of judgement on the outcome. Respecting a person’s willingness to help, regardless of the effectiveness and ultimate results of that assistance, is the first step to a stronger, mutually accepted relationship.

So get out there and ask people for what you really want. Just be sure you do it in a collaborative and respectful way!

And until next time, enjoy the process!

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Effective Financial Management | Blind Spots Part Five

5 Common Blind Spots Leaders Have Are Not Seeing How To:

Company Planning Collaborative Accountability

Blind Spot #5 – Managing the Financial Aspects of Your Company

This article focuses on the fifth of five blind spots many business owners have when trying to grow from 5 to 50 employees. In our previous article, we discussed the first blind spot: not seeing the value around consistent company planning. The second blind spot focussed on how to maintain employee accountability, while the third highlighted seeing the importance of high-quality weekly management meetings. Last week, we highlighted the importance of efficient company performance monitoring, which brings us to the final blog of our series.

The fifth blind spot involves not managing the financial aspect of the company. Too often business owners begin their business on a shoestring and adapt to monitoring cashflow by how much money they have in their bank account. Although this is never advised it can work initially when the financial numbers and expenses are small. This quickly changes however, and when revenues and costs go up it becomes impossible to manage cashflow based on your balance. 

Financial Management Pitfalls

The most classic miscalculations come in the form of tax bills and annual costs that are not amortised over the whole time period. These ‘lumpy’ sporadic bills often drain the business accounts unexpectedly. If too many of these surprises sneak up on you, the business rapidly develops significant issues.

Too often, the first strategy used by entrepreneurs is to forgo paying their taxes. The tax department then transitions to becoming a lending institution, with excessive rates of interest that only slip you further down the slope. This dynamic often continues indefinitely. When the company does well enough on the sales side of the ledger, it can work its way out of debt, but too often the weight and stress of the tax bill become too much for the company and owner. This self-perpetuating dynamic continues, and eventually becomes too much for the company to endure.

Outsourcing Financial Management

It doesn’t have to be that way. We find that eliciting the help of an outside entity like a virtual CFO can dramatically improve both the dynamics and likelihood of business and financial success. A CFO-like advisor can act as an objective third party by removing the financial management blind spots and quickly implementing objective checks to monitor how the company is financially performing. This gives you greater accountability and streamlines the process of managing your outgoing financials.

A more specific financial management blindspot that virtual CFOs can help with is with cashflow forecasting. Even the most basic types of financial disciplines involve monitoring financial results in the form of monthly and quarterly financial reporting. Looking into the future is as important as looking in the rearview mirror at how a company has performed.  Effective forecasting offers insights into how the company will perform, providing all-important feedback on what adjustments need to be made now to assure future financial success.

Financial Management: Conclusion

Both strategies help a business owner and their team be more realistic in terms of how the company is performing.

In conclusion, it is important to recognise one’s desire to guess how their company is performing. This avoidance of objective and predictive information exposes an owner and their business to a great deal of unnecessary risk. Virtual CFOs are wildly cost-effective. Thus it is fitting to say, ‘an ounce of prevention is worth a pound of cure’!  Remove the financial management blind spot today and start better monitoring both what the company’s needs are now as well as how it will likely be performing over the next 30-60 days.

Until next time, enjoy the process!

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Performance Monitoring for Your Company | Blind Spots Part Four

5 Common Blind Spots Leaders Have Are Not Seeing How To:

Company Planning Collaborative Accountability

The aim of this blog series is to remove these common business leader blind spots by focusing your attention on each issue and bringing visibility and understanding to concepts that will be easier to see and, therefore, improve over time. Let’s take a look at the benefits of Collaborative Accountability.

Blind Spot #4 – Lack of Consistent Company Performance Monitoring

This article focuses on the fourth of five blind spots many business owners have when trying to grow from 5 to 50 employees. In our previous article, we discussed the first blind spot: not seeing the value around consistent company planning. The second blind spot focussed on how to maintain employee accountability, while the third highlighted seeing the importance of high-quality weekly management meetings.

The fourth blind spot lies in not realising the importance of consistent overall company performance monitoring. This exists for two main reasons:

Business leaders think they mentally maintain their company performance monitoring & don’t need ‘reports’ to tell them how things are going.

This may be true to some extent but this belief comes unravelled when things become more complex or detailed. Mentally maintaining a general idea of the sales volume is more manageable than tracking the gross profit on a specific type of work. Additionally, we tend to forget how numbers are trending even when they are important to us. Utilising efficient, documented performance monitoring, such as with a company scorecard, retains performance information objectively so it removes our tendencies to remember things the way we’d like versus what actually occurred.  

Business leaders mistake financial reports for company performance monitoring.

I agree with most business owners that there is minimal value (though certainly some) in reviewing numbers that occurred in the previous month or quarter. It is like thinking you could affect the outcome of a game by watching the replay highlights. Effective company performance monitoring is about reviewing numbers where the results indicate how the game is going to end if things continue on the current path. This gives the business the all-important opportunity to take preemptive actions that can affect outcomes. This is the difference between a KPI (key performance indicator) and KPR (key performance result). An Indicator attempts to predict the future while a Result is something that cannot be changed or affected.

Even when business leaders realise they can’t effectively monitor their business without first monitoring KPIs, it still requires work to obtain an effective scorecard for a company.  

The goal is to keep your performance monitoring scorecard to between 7 and 10 statistics, though when beginning that number is often more like 15-20. Over time and consistent performance monitoring, companies settle into a scorecard that has around 10 numbers that include mostly KPIs but a few KPRs. The management team develops a level of trust and comfort that when the numbers are good the company is actually doing well, and when numbers fall off, they are highlighting issues that need to be resolved in order to keep the company’s financial results on track.  

When business leaders invest the time and energy required to generate effective company performance monitoring it allows them to better predict what’s coming and to be able to navigate the inevitable issues that arise in business from time to time.   

Scorecards should add fun and objectivity to a business and its management team. Start visually tracking more of your critical performance numbers consistently and see what happens to your ability to identify problems sooner and begin resolving them faster. After all, problems usually get bigger the longer they are left unattended, so the sooner you spot them, the easier it will be to resolve them.

Until next time, enjoy the process!

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