The Growth Track Benchmark score gives you a real feedback based on your business' current status. It also allows you to see the areas of improvement and allow you to focus on the implementation of initiatives driven in the direction of improvement.
Your business ABSOLUTELY needs a strategic plan.
What is a strategic plan?
A strategic plan is a prioritized list of initiatives that have been heavily researched, planned with careful attention to process and resources and fits snuggly into your business model that can be executed to meet goals over the next three to five years. And it’s kind of important to have it ON PAPER!
What it’s not is a list of acquisitions, a to do list for your ongoing operations, a spring cleaning list to organize the shop, or many other things. Stick to those things outside of your current operations that can result in a calculable ROI and be completed within some time frame (even if that means it becomes operational).
We’re going to go over a few basic ingredients you’ll need to bring to the kitchen (Strategic Planning Kitchen) and then we’ll put the ingredients together for the meal, and I’ll come by your office to ensure that everything is cooked the way it should have been.
It is an inherently simple process.
Let’s get some definitions and “ingredients” out of the way
Mission - what is your organization’s purpose in the world. Short and Simple.
Vision - where are we going to be, what do we want the organization to look like
Goals - quantifiable hard numbers by a certain time. Agressive but Pragmatic
Core Competencies - What are you Great at?
Guiding Principles - how do you want your people behaving. Clear enough that everyone understands them and can apply them to even the smallest actions.
Initiative - Something you’re not already doing that will propel you toward the future you see for your business.
Strategic Filters - Applying values to the Mission, Vision, Core Competencies, Goals, and Guiding Principles to quantify the metrics that are important to you and your organization. You should be able to categorize your list from 6 to 12.
Hard Filter - If something doesn’t meet this criteria, it is eliminated from the list.
Soft Filter - Initiatives are valued on a scale from LOW to HIGH that allow you to compare initiatives for viability and allow you to prioritize.
Make sure your mission and vision statements meet the definitions listed and are robust enough to meet your needs, but concise enough to not bore your audience - shareholders, clients, employees.
Ensure that your goals are quantifiable and have a due date (not necessarily a specific date, year or quarters are ok sometimes).
Ensure that your goals are ambitious, but not impossible pipe dreams.
Your core competencies should be what you do best - You should really focus on 2 or 3 top items that YOUR COMPANY (not you) REALLY masters!
Having guiding principles may seem daunting, but it’s a basic “morality” guide to how your business and everyone in it behaves.
You’ll make filters mainly sourced from these basics so make sure they’re air tight for the next step.
Forming Your Strategic Filters
When looking to form Strategic Filters, first take all of the things you might evaluate an initiative by and jot them down. If you want to involve staff (small business) or a board, this is a great time for brainstorming. Throw ideas out, jot them down on a whiteboard, and then when you hit a lull in the conversation send everyone out for a break. You want to involve your Mission, Vision, core competencies and guiding principles in these filters.
During this time, look for common themes and group those ideas. Try to come up with 6-12 common themed items, and then work on the phrasing that would either serve as a hard filter or a soft filter.
An example of a hard filter in a non-profit organization may be translated from a guiding principle to “help the community”
The filter would say “Does this initiative HELP the community or Hurt the community?”
Obviously here, if it hurts the community in any way, that organization may deem that as a “No” and fail the initiative. You would not sort this into the soft initiatives.
Soft initiatives are important but have different values. A high or low value would be given to initiatives in order to compare them to each other.
An example of a soft filter is “What is the annualized ROI on this initiative” - one initiative may have an annualized ROI of 17.467% and another may have an annualized ROI of 13.72%.
Understand that your filter may be as broad as “does this pass the smell test” or “does it give us the ‘warm and fuzzy’ feeling” - which is really either a Hard or a Soft filter depending on your organization’s needs, OR as specific as an ROI criteria that it has to be at LEAST 23% total ROI in order to meet our financial goals.
What ideas do you have that would move you toward your goals. It’s amazingly simple. Come up with a list of things that might move you toward your goals.
Use the filters to narrow your initiatives down and prioritize them.
BOOM! You’re done!
Well almost, Here are some helpful tools and videos!
Downloadable PDF Worksheets
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LEAN Operations are important, for small businesses.
Fortune 500 companies use very technical methods to save $1 because it equates to millions over time. As a small business, that $1 is important for future investments, cash flow, and all kinds of other issues.
Understanding the micro and macro actions you are doing as a business owner that are those revenue generating items are important. Even to the extent of “Why are we pursuing these particular clients?”
Let’s increase your bottom line by looking at your actions, how to observe the behaviors on paper, and then remedy the shortcomings with solutions.
Critical Path Method
LEAN Six Sigma
Critical Path Method (CPM) - The series of tasks that must finish on time for the entire project to finish on schedule. Each task on the critical path is a critical task. • The sequence of activities that represents the longest path through a project, which determines the. shortest possible duration.
Program Evaluation and Review Technique (PERT) - A PERT chart is a project management tool used to schedule, organize, and coordinate tasks within a project. PERT stands for Program Evaluation Review Technique
Operations Costing Analysis - Using CPM or PERT to understand the costing of each step in an operation. Used to understand how much an entire operation costs in overhead and direct cost, and assign tasks according to cost of production.
Heuristic Task - the process of gaining knowledge or some desired result by intelligent guesswork rather than by following some pre-established formula.
Algorithmic Task - A task in which you follow a set of established instructions down a single pathway to one conclusion
Autonomous Tasking System - When Humans or Technology is assigned tasks without further instruction or intervention by humans or some type of outside decision making. An example of this would be that an employee finishes a task and goes to the list to find the next task to be assigned to ANYONE.
Hidden Factory - Activities that reduce the quality or efficiency of a manufacturing operation or business process, but are not initially known to managers or others seeking to improve the process. Six Sigma initiatives focus on identifying "hidden factory" activities in order to eliminate sources of waste and error.
LEAN Operations - The means of running an organization by focusing on providing greater customer satisfaction while using as few resources as possible
Six Sigma - A set of management techniques intended to improve business processes by greatly reducing the probability that an error or defect will occur.
LEAN Six Sigma - A methodology that aims to improve operational performance by systematically removing waste and reducing variation.
Operational Excellence (Opex)- The execution of the business strategy more consistently and reliably than the competition.
Continuous Improvement - The on-going effort to improve an organization's processes, products, or services
Cyclical Process - Doing something again, or passing through the same point multiple times. Cyclical processes create waste, think of the concept of touching the package one time. This is illustrated in the graphic below labeled “Once Waste is Identified”
The first step is to identify your processes and how they work. Once you identify each process in your business and have an outline of the steps involved, you can begin to standardize and eliminate waste.
Operational excellence is how you’re doing a process internally that competes in the market - once you understand that your inefficiencies are not competitive and affect the way your clients perceive your business you can' begin to make operational decisions that compete.
Start to delegate tasks that you don’t absolutely need to do, and outsourcing those tasks that your team doesn’t absolutely need to be doing. It’s a great way to eliminate unnecessary burden on you and your team.
Identify those task you’re doing that aren’t making money / producing revenue. Why are you doing this task? (If it’s an indirect revenue production like a loss leader, that IS earning revenue).
Pursue your best potential clients with purposeful attention to those that are quick to buy versus those that are big payday but take months to close a deal.
Your Process and the Critical Path Mapping Method
Each individual process you are evaluating should be “drawn” in the critical path method.
This method will identify the tasks within the process that need to be accomplished in a timely manner and those that don’t. It also identifies the order in which steps must be accomplished, called dependencies.
When using the critical path method, each task should be indicated with a “Node”. Each node should be placed in the order in which it is accomplished during the process.
In each node you need to indicate:
Early Start Date/Time
Early Finish Date/Time
Late Start Date/Time
Late Finish Date/Time
You can break down your processes in Days or Hours - Depending on the process’ length. you must remember that if a Project get’s handed to another node (physically, digitally, or otherwise) it may be in queue and may not be the primary objective of the employee so that lag time should be calculated.
This can be applied to operations, sales, and any other processes you are currently undergoing as a company.
Putting the process together in steps.
this illustration may be a simple process, but it shows that you have 3 nodes that must happen before the second iteration of nodes.
This also identifies a possible bottleneck, if that second iteration can only be done by one worker, or with one machine.
This is the mock up of a sales delivery, in other words, the sale has been made and the project manager must deliver the final product.
Critical Path are those tasks that absolutely need to happen on time.
How Do We Improve the Cost of This Process?
If the order doesn’t need the client’s signature, why is the Project Manager handling that task? Can the Salesperson, or an ordering specialist get paid $14/hr for that “algorithmic” task? (REF F)
Can the Salesperson improve the organization and Standardization of the file so that the Sales Manager, Engineer, and Project Manager do not take so long to review?
How can you effectively get the client response time down? Sometimes this is outside of your control, sometimes more frequent contact may assist in speeding the process.
After the engineer helps the salesperson create the documents to make the initial bid, does the engineer need to review the documents again?
We simply pay more attention to the scheduling of the critical path nodes to ensure they’re completed in a timely manner. This will improve our ability to keep the schedule within the process.
LEAN Six Sigma
What is Lean Six Sigma and why is it necessary?
The basics here of six sigma is that out of 1 million opportunities for error you are aiming for no more than 2 errors. An opportunity is any step that can result in an error. Standardization in the workplace as well as honing each step to acceptable criteria is the only way to decrease the amount of defects that will occur in your company.
An example in manufacturing
A cereal box from start to finish may have 100 tasks (for simple math purposes) that need to be accomplished to get it to the grocery store shelf. Making the cereal may have 20 steps from selecting good raw material, to the glazing of a frosted flake properly. Then the packaging weight, packaging glue, shape, box labeling and printing, followed by box cutting, gluing and shape.
Manufacturing 10,000 Boxes of Cereal (multiplied by the 100 tasks) results in 1 Million Opportunities for an error. Out of the 10,000 boxes, only 2 will have errors causing the boxes to be deemed unworthy of the shelf.
Not very costly.
An Example in the office
You sell 3 products. Each product your office sells needs to be ordered in a timely fashion. There are 14 different people that fill in blanks on forms along the way. Each employee varies on how many blanks they need to fill in, but the average is 12. Finally the client must sign off on the product before taking delivery (Quality Assurance by the client).
There is technically 168 blanks on the forms that need to be filled in, on top of the successful and timely handoff between each of the 14 employees. 182 steps before the client sees the product.
Only about 5,900 items need to be sold to reach 1 million opportunities for an error.
If you sold that many items in one year, and made one mistake for 1/2 of those products that cost a worker making $12 an hour 30 seconds to fix, then fixed the mistake by re-printing 1 sheet of paper for 3 cents, it comes out to about $678.50 in “rework” per year.
What could you spend $678.50 in labor on?
So how could you improve this or mitigate the risk?
Have clients fill in blanks electronically and automate document production.
If an “error” is something that can be fixed by the lowest paid employee, empower them to fix it. (It will lower the re-work cost")
i.e. if a client is angry at Pizza Hut, any employee has $5 to remedy the situation without involving management - retaining a client by pleasing them, and resolving the issue without elevating it to higher cost employees.
Automate and Standardize as much as possible, even with creative projects. You may not be able to standardize EACH step, but possibly each phase, and how each phase is delivered to the next person.
i.e. The data in the packet may be different, but each packet contains dividers that indicate what information is where. Every time a packet is handed over to another person Divider A is Warranty Information, Divider B is Operation of the Equipment etc.
the Goal here is to eliminate the chance for any of the 8 wastes, standardize operations as much as possible in order to eliminate the ability to make an error, and in return you will see smoother operations with more productivity.
Algorithmic tasks are tasks that can be easily guided with a step by step manual. These tasks can be learned by just about anyone and should be automated if possible.
An example of an autonomous task is putting lug nuts onto a wheel at a car manufacturer. Each car gets 6 Lug Nuts Per Wheel and every car has the same size of nuts on the same size of bolt. You simply grab the nut and use a tool to screw it onto the bolt.
Heuristic Tasks are tasks that cannot be easily guided. They are those tasks that cannot be put together with an algorithm. Think of these as the creative tasks. How do we weigh decisions, office politics and people management. Not everything is cut and dry.
An example of a Heuristic Task, is painting a picture. It’s completely up to you, what you paint, what style, what colors, and what medium you use, there’s no algorithm or instructions although there may be “best practices”.
What tasks are each of your employees doing? Does it fit their personality? Do you challenge them with heuristic tasks?
Is the lowest paid employee doing mainly algorithmic tasks, or heuristic tasks?
In all - evaluate what is making you money, what is not. Identify your best customers by looking at who is the quickest to sell to and makes the most money. Ensure you are standardizing anything you can in order to eliminate waste on the operations side, and find those processes that are cyclical and remove them.
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Implementing Culture and being a great leader is tough, we know.
What many have believed for a long time was the “Great Man Theory”. Well, there’s a lot left to be desired with this theory.
This theory basically states that due to genetics and birthright you are or are not a great leader.
We don’t believe that way, we believe that anyone can harness the power of compassionate and servant leadership while catering to the underlying purpose of business, to make the business grow.
Engagement in employees, doesn’t happen overnight, it’s a long systematic process of earning/building trust and implementing a great environment for employees to thrive. It also doesn’t “un-happen” overnight either. If you’ve got a disengaged workforce, it’s most likely because of systematic de-motivation over a period of time.
Summary Conclusion & Homework
Motivation - the reason or reasons one has for acting or behaving in a particular way.
Employee Engagement - the emotional commitment the employee has to the organization and its goals. This emotional commitment means engaged employees actually care about their work and their company.
Disengaged Worker - employees who are unhappy at work and do not feel challenged or otherwise “engaged”. These workers fit the stereotypical clock in, work, clock out mentality with little regard or see no advantage to go above and beyond.
Actively Disengaged Worker - Actively disengaged employees are defined as employees who aren't just unhappy at work; they are busy acting out their unhappiness. Every day, these workers undermine what their engaged co-workers accomplish.
Mastery - comprehensive knowledge or skill in a subject or accomplishment. control or superiority over someone or something.
Goldilocks Task - A task that is not overly simplified or overly complicated for the individual worker. Some tasks are too simple/trivial for a person with a PhD, versus giving a worker with a GED and no experience an engineering project would be overly complicated and frustrating (typically). “challenges that are not too hot and not too cold, neither overly difficult nor overly simple.” - Pink
Zone of Proximal Development - an area where an employee may perform a task with guidance in order to develop new skills or learn new material. This “area” sits between what the worker can do without guidance, and what the worker cannot do with or without guidance.
Goals - an idea of the future or desired result that a person or a group of people envisions, plans and commits to achieve. People endeavor to reach goals within a finite time by setting deadlines.
S.M.A.R.T. Goals - Specific (Goals must be clear and unambiguous). Measurable (Results must be able to be measured in some way, for example, the number of products sold each week, or the percent completion). Attainable (Goals must be realistic and attainable by the average employee). Relevant (Goals must relate to your organization's vision and mission). Time-bound (Goals must have definite starting and ending points, and a fixed duration)
C.L.E.A.R. Goals - Collaborative (Goals should encourage employees to work together collaboratively and in teams). Limited (Goals should be limited in both scope and duration). Emotional (Goals should make an emotional connection to employees, tapping into their energy and passion). Appreciable (Large goals should be broken down into smaller goals so they can be accomplished more quickly and easily for long-term gain). Refinable (Set goals with a headstrong and steadfast objective, but as new situations or information arise, give yourself permission to refine and modify your goals)
F.A.S.T. Feedback - Frequent, Accurate, Specific and Timely feedback on activity by your employees. Whether the behavior is good or bad, feedback using this method increases engagement and productivity by showing that YOU are engaged in the process, as well as showing the way that activities should be performed with positive reinforcement and corrective constructive conversations in the instance of a missed goal.
Purpose - the reason for which something is done or created or for which something exists. Have as one’s intention or objective.
Reward - a thing given in recognition of one's service, effort, or achievement.
Results Oriented Work Environment (ROWE) - a human resource management strategy co-created by Jody Thompson and Cali Ressler wherein employees are paid for results (output) rather than the number of hours worked.
Intrinsic - belonging naturally; essential. (Not to be confused with “Intrinsic Value” defined within the constraints of valuation)
Extrinsic - not part of the essential nature of someone or something; coming or operating from outside.
Type I - Intrinsic motivation directed from internal/personal motivators, as defined by Daniel Pink, dependent on Autonomy, Mastery, and Purpose. Type I behavior is self-directed. It is devoted to becoming better at something that matters. And it connects that quest for excellence to a larger purpose. The basis of Motivation 3.0
Type X - Extrinsic Motivation, the basis of Motivation 2.0. Directed behavior from outside forces of positive and negative reinforcement.
Centralized Management - All decisions are made by a centralized person or manager. Work may be performed by employees, but changes, customer care, and other non-algorithmic tasks must be performed by a designated decision maker.
Decentralized Management - Business Decisions are pushed to the lowest possible decision maker, including employees that typically perform algorithmic tasks.
Leader-Member Exchange Theory (LMX) - a relationship-based approach to leadership that focuses on the two-way relationship between leaders and followers.
Autonomy - freedom from external control or influence; independence.
Cross Training - Training multiple employees, in roles not typically included in their job description in order for all employees to be able to do most if not all roles at any given time. Cross training helps with continuity in the event of an absence, and removes the “Silo” atmosphere from departmental separations by exposing someone to processes they may not have previously understood the complexities of.
Dependence - the state of relying on or needing someone or something for aid, support, or the like. In the office, Dependance can be a detriment in the event of an absent, occupied, disengaged, or actively-disengaged worker.
Flat Organization - an organization structure with few or no levels of management between management and staff level employees. The flat organization supervises employees less while promoting their increased involvement in the decision-making process.
Hierarchical Organization - an organizational structure where every entity in the organization, except one, is subordinate to a single other entity. This arrangement is a form of a hierarchy.
What is engaged? What does that look like and what does it mean to be engaged?
On the large scale, it looks like productivity at a high level. At the microscopic level, it looks like employees that want to give their all, they aren’t afraid of coming up with creative ideas to improve their (and the team’s) productivity. During meetings, engaged members of the team actively put forth great ideas. They’re not stifled by Management and can feel free to take action, as opposed to asking for permission. Things actually get done.
Disengaged are those workers that come to contribute only what the absolutely have to. They’re the employees that clock in, pursue their tasks, and then clock out at the end of the day, without doing anything outside of the scope of essential tasks. These people can be heard saying “it’s not my job to do that” and will turn away or avoid a client when it’s their turn to go on break in 30 seconds. These team members do not speak up or put forth ideas during meetings.
Actively Disengaged, are workers that are a true detriment to your team. They’re sometimes called “Toxic” because they are set on poisoning your team’s mind, and “Drilling Holes” in the boat. They often have cynical attitudes toward management and other team members.
As you can imagine, there are benefits of an engaged workforce and detriments of having a disengaged or actively disengaged employee or set of employees. Engaged employees increase revenue, they decrease overhead expenses, and they outperform disengaged and actively disengaged workers by a long shot.
I couldn’t do a better job than this engagement video - it’s probably the best tool in teaching about engagement.
Employee Engagement Stats:
36% of businesses see engagement as a top challenge. (Globoforce)
78% of companies have a documented employee engagement strategy and nearly 50% measure success. (Maritz Motivation)
Organizations with high employee engagement outperform those with low employee engagement by 202%. (Business2Community)
37% of engaged employees are looking for jobs or are open to new opportunities, as are 56% of not engaged employees and 73% of actively disengaged employees. (Gallup)
Disengaged employees cost organizations between $450 and $550 billion annually. (The Engagement Institute)
The industries with the highest employee engagement are heavy manufacturing and financial services. (Modern Survey)
The industries with the most disengaged employees are hospitality, government, and light manufacturing. (Modern Survey)
The most popular methods to actively manage and drive employee engagement: drafting employee engagement surveys (55%), creating culture committees and events (29%), and offering employee resource groups (20%). (CultureIQ)
Belief in senior leadership is the strongest engagement driver, with growth and development as the second. (Modern Survey)
53% of HR professionals say employee engagement rises when onboarding is improved. (SilkRoad)
Top sources of workplace stress: Heavy workload/looming deadlines (33%), Unrealistic expectations of managers (22%), Attaining work-life balance (22%), Coworker conflicts (15%). (Accountemps)
92% of employees say that having the technology to do their job efficiently affects their work satisfaction. (Ultimate Software)
80% of employees felt more engaged when their work was consistent with the core values and mission of their organization. (IBM)
Employees who use their strengths, skills, and abilities every day are six times more likely to be engaged at work, 8% more productive, and 15% less likely to leave their jobs. (Gallup)
83% of employees with opportunities to take on new challenges say they’re more likely to stay with the organization. (ReportLinker)
70% of employees ranked being empowered to take action at work when a problem or opportunity arose as an important element of their engagement. (SHRM)
Employees who feel their voice is heard at work are 4.6 times more likely to feel empowered to perform their best work. (Salesforce)
82% of employees say they would be more loyal to their employers if they had flexible work options. (Flexjobs)
45% of employees would feel more engaged with their job if their employer helped them better understand the impact of taxes and deductions. (Kronos)
92% of employees say showing empathy is an important way to advance employee retention. (Businessolver)
70% of employees say that motivation and morale would improve massively with managers saying thank you more. (Reward Gateway)
85% of employees said they were likely to stay longer with an employer that showed a high level of social responsibility. (Ultimate Software)
Highly engaged business teams result in 21% greater profitability. (Gallup)
Employee engagement programs can increase profits by $2400 per employee per year. (Workplace Research Foundation)
Companies with engaged employees see 233% greater customer loyalty and a 26% greater annual increase in revenue. (Aberdeen)
People are all different with different internal motivators. Some are artistic, some mathematical. Some Free Spirited, and some are rigidly adherent to a routine and schedule. There are all sorts of personality tests that will define what people’s “brain” is doing, but the basics of motivation can be defined fairly simply here and then in more detail in Daniel Pink’s Drive: a surprising Truth about what motivates us.
Motivation 1.0 - Maslow's hierarchy of needs - Survival
The early days of motivation were basic Physiological needs, and safety needs. As work became commoditized and economies began to develop, those needs were met with basic hourly labor and less of a concern for 20th century work. This Motivation still prevails in 3rd, 4th, and 5th world cultures.
Motivation 2.0 - Carrot / Stick - Seek Reward and Avoid Punishment
Late 19th Century and early 20th Century, method of motivation for the industrial age. Employees Seek rewards while avoiding punishment. In order to cater to this mentality, a structure must be put in place by the Management.
These rewards and punishments can be as low on the hierarchy as taking away pay by separating employment and giving bonuses, putting the physiological needs back on the table, and as high on the hierarchy as esteem needs by praising or shaming.
Motivation 3.0 - Drive toward autonomy and mastery of one’s own sphere of influence
Takes the basic needs out of the equation. Once the employee is secure in those needs they can focus on Purpose, Mastery, and Autonomy. These meaningful thought processes to each person ensure an engaged workforce because they’re completing tasks they’re in control of and making decisions they have the power to. They’re independent entities working toward a common company goal.
This includes more of an Intrinsic Motivator or TYPE I personality. These types of people are very motivated by having the purpose, autonomy, and mastery. They have been given Autonomy of Time, Task, Team, and Technique to get their job done.
Leader-Member Exchange Theory
Think about your team, as much as you would like the ideal environment of treating all members of your team the same, that assumption that implies you treat all of them in a collective way is most likely false. Using an average leadership style for all members of your team would leave some lacking guidance while others would be overwhelmed by your intrusion into their autonomy. You, nor your managers, act this way (more than likely).
With LMX a series of vertical dyads annotate relationships between the leader and the subordinate. Each leader interacts “down” with the subordinate, whereas the subordinate also interacts “up” with the leader. Each relationship is denoted with a vertical Dyad. Understanding that each Leader has an individual relationship with each subordinate is important.
Once you’ve established this thought, you can start to understand and elaborate on the description of individual relationships. Who do you interact more with? This includes both positive and negative reinforcement. Who doesn't get attention from you at all?
Which members of your team return interaction and which do not?
Within organizational work units (most small businesses are about the size of a work unit even if they have drastically different departmental roles) subordinates become part of an “in-group” or “out-group”. Personality and other characteristics play a key role in determining this standing. Membership in one group or the other is dependent on how subordinates involve themselves with the leader. Subordinates that are willing to involve themselves in more responsibility become part of the “in-group” whereas those who do not, typically become part of the “out-group”.
You will find a moderate to strong correlation between “in-group” and “engaged” workers, and the converse “out-group” and “disengaged” workers.
Denoted in the illustration - Leaders that engage with subordinates (denoted with a +3) cyclically receive a positive engagement in return. employees that are engaged by leadership (preferably using FAST feedback) are more likely to take on more responsibility and be more proactive, and productive.
Out-group members don’t go above and beyond to try and “Impress” the leader, and those typically do not, in return, get in the good graces of the leader.
The big debate on how to interact here is based on preferences of leaders and data from the Pareto Principle. Pareto refers to about 20% of your workforce is doing 80% of the work. Logically, this results in 80% of your workforce only contributing 20% to your bottom line. You could probably triplicate all 3 of these principles together.
Engaged - In-Group - Top 20% doing 80% of the work
Disengaged - Out-Group - Bottom 80% doing 20% of the work
There are studies that show that you will always have that disengaged, out-group bunch of employees. Do you start the cycle of pushing leadership on a few of them and try to get them into the cycle of In-group engaged behavior, or do you just let them be? It’s probably more of a personality question. If you engaged this individual, would they return the engagement? How can you motivate this particular out-group individual to be part of the in-group?
We used to (and I still do) call this “drinking the kool-aid” - Some people never will, they’ll always be introverted personalities that have a “buck the system” attitude. Sometimes the best thing to do with them is to let them be and just understand that every business has them.
The overarching thought is that you’ll get more productivity if you have 30% doing more work - but is it worth the effort to bring them into the in-group?
In this model, leadership is “implemented” dependent on the subordinate’s level of competence, and commitment. The competence and commitment are typically tenure and relationship based. It’s also very task based. This isn’t necessarily how you would treat someone All of the time, but rather how they are to be lead based on an individual and the task in front of them.
A leader must evaluate the employee and assess how competent and committed they are to perform a given task. Matching the leadership style to the person’s competence and commitment of the subordinates is the basis of this technique.
Development level of subordinates is the degree to which subordinates have the competence and commitment necessary to accompish a given task or activity. Has the person mastered the skills to do a specific task and do they have a positive attitude regarding the task? (Blanchard et al., 1985).
What task are subordinates being asked to perform?
How complex is the task?
Are the subordinates sufficiently skilled to accomplish the task?
Do they have the desire to complete the job once they start it?
Placing each task and employee on the “matrix” above would determine what role the leader should take. An inexperienced but motivated new employee would fall in the D1- Level and should be lead in S1, where the leader would have a heavy involvement in direction of the task, but a lower role in motivating the already driven employee.
Similarly - a seasoned veteran maybe just needs a task delegated to them, they know how to perform the task, and they have a high level of motivation to do so.
These two models are important techniques to look at the interaction between employees and leaders with the goal of motivation and keeping the employees engaged. Although there are many leadership techniques to actually implement tasks at them micro level, these two stick out as motivational and fit within the topic of culture for this module.
Other models and theories can be found in Leadership | Theory and Practice by Peter G. Northouse
Implementing a decentralized work environment begins with understanding what centralized work environment is, and similarly to a 12 step program, admitting that you are implementing that antiquated hierarchical system.
Hierarchical organizations and Hierarchical decision trees are not the same thing. There are no organizations that have zero hierarchy, nor should there be. What does exist is strategic decision making hierarchy that allows the lowest person on the totem to have autonomy over certain decisions without needing to ask for a judgement from a superior in the hierarchy.
A great example of this is YUM! foods, better known as the conglomerate that owns Pizza Hut, Taco Bell, and KFC. They have a company wide policy that allows ALL employees $5.00 in discretional spending in order to please a client. For example, a client’s order is incorrect, the employee has $5 to spend to remedy the situation immediately without permission from a manager.
Similarly - we implemented a policy at one of the companies I worked for where the supervisory management could completely direct any project up to $25,000 without any managerial supervision, any particular purchase within that project did not need the signature of a manager. The idea is that they simply don’t care, they’ve got “more important things to deal with” such as a $37,000 single part purchase for an industrial engineering project. That’s kind of important to get it right, the right part, the right dimensions, the right materials, the right tensile strength, and many more engineering factors. If a supervisor needed to spend $300 on some engine coolant (yeah big engines) for a project, the management has the confidence in that supervisor to make the right decision and the responsibility to be “top cover” when something goes awry. The supervisor should not be afraid of repercussions, they have a responsibility to make the right decision and the ability, knowlege, and motivation to do so.
A decentralized governance is only viable if the team is motivated to perform at a high level. Decentralized leadership should coincide with a highly engaged workforce.
Depending on certain employees, or equipment can be detrimental. Having valuable employees is truly great, but when they’re gone they can really hurt your bottom line. Training and cross training should be a goal for everyone in your organization. it’s a multiple fold strategy to include the factor of motivation.
Improved employee awareness of organization's roles and functions.
Increased flexibility for scheduling.
Increased opportunities for employee advancement.
Opportunity to strengthen customer support with more knowledgeable employees.
Ability to keep employees motivated and "fresh" through assignment rotation.
Potentially reduced absenteeism and employee turnover.
Increased ability for managers to evaluate employees across an array of roles.
Decreased Silo behavior through decreasing knowlege gaps of partnering activities and their complexities
Continuity during absences
Cross training prevents a lot of “bad”, and creates an additional intrinsic motivation by employees by continuing their curiosity and learning of other roles. Depending on one person to do a single job, is ok for the role they are the best at, however, you should always keep a backup, and train others because they will now understand the complexities of the role.
It’s as simple as a risk mitigation protocol, and as complex as integrating knowlege throughout the institution.
Additional Reading and Materials
The hope from this module is that you will be able to understand some of the basic motivators of employees and management from a philosophical standpoint, as well as implement behavioral leadership techniques within the organization based upon the two main theories listed. There’s a lot of material here, and the cultivation of the material took years, don’t beat yourself up if you’re not a master overnight. Mastery is an asymptote.
Expectations for your meeting is to journal some interaction with employees and understand where they stand by plotting your management style or interaction with them using the vertical dyads and the situational approach. the second expectation is to come up with one policy that will push down some decision to your employees using a metric similar to the examples given from YUM! foods and the company I worked for. You don’t have to implement the policy letter just yet, but let’s discuss something you could change in your business.
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Communicating effectively takes many forms and affects all sorts of areas of your business. When you communicate effectively you can motivate the people you’re communicating with to do different things. Whether it’s communicating a sense of customer service, communicating the need for a task to be completed, or allowing a “pull” style communication, there are all sorts of communication and we’ll go over some of those methods, reasons, and work on your communications.
Customer Satisfaction is key right? Well, not exactly. It’s definitely one of the key ingredients, but how you bring your service to market is complex, so we’ll go over it here.
By the end of this lesson, my hope is that you will have a few lightbulbs turning on about how to look at your customer experience, a few (or many) changes to make, and you’ll soon start cultivating an army of clients that would bend over backward to continue doing business with you (Not that they’ll ever have to).