People Relationship = Success or Failure

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As a small business owner, the growth of your business is most likely at the top of your the agenda.

The hard lesson about growth is to understand that you cannot do everything yourself. The time will come, whether tomorrow or in five years, when you’ll need to hire skilled staff to hand over to and manage the responsibilities that you’re probably used to doing yourself, and your way. The challenge is to find the right people for the role, those you can trust to get the work done with as much passion and enthusiasm as you have towards the business that you built from scratch.

Employing someone in your small business is about so much more than just adding to your headcount. Your first hire effectively doubles your staff complement – and directly impacts on how your company culture evolves. It’s also the first time that you will have to trust someone with your ‘baby’, and it will be the test case for how you hire staff in the future.

Every new hire is important, but your first few even more so, as they will determine the future success of your company. Miles Jennings, CEO and co-founder of, writing for the MasterCard Business Network Blog says that ‘your ability to hire and retain great employees will determine the success of your company.’

Here is some useful advice to consider when it comes to growing one of the most important assets of your business – your people.

The team you hire needs to share your values
Building a team is one of the most difficult things to do because you need to be sure that the people you hire share your commitment, integrity, agility and determination to deliver quality products or services.

Choose the right people
Not everyone you hire is going to be good at everything. Small business owners need to choose the right people and personalities for each role and ensure they are tasked with duties they enjoy, but more importantly that they are skilled at. They also need to choose people that they can trust – whether they are employees or business partners.

It’s equally important to choose suppliers carefully. Dealing with unreliable suppliers will put a strain on relationships with your staff and customers. Fortunately, it is becoming easier to deal with suppliers. Portals such as the MasterCard Business Perks website makes it easier for small business owners who are members, to find and purchase goods from suppliers at a discounted rate. This not only simplifies the process of purchasing, but also saves your business money.

Invest time in your staff
As an employer, do not over-estimate the skill levels of new employees. Just because they have the skills to do the job on a practical level, they may not necessarily understand your industry, know what you do, or how your company operates. Be prepared to show them the ropes – and be patient as they gain new knowledge.

Set clear expectations on deliverables
Make sure that your staff are aware of your expectations, and that they are accountable for their roles in the business. They can only do their job well if they know what they’re supposed to be doing with clear deliverables in place. Job descriptions often give very little information on the day-to-day aspects of a job role, so it’s important that you convey a positive message about your company’s prospects, values and team. Your aim should be to attract potential employees by making the job sound engaging, positive and important to the company’s growth.

You should build your small business with future growth in mind. Your skills and values, together with those of your staff and your business partners, should complement each other so you build a successful business you can be proud of. Make sure that you give recruiting and hiring the attention it deserves as your future, and the future of your small business, depends on it.
In the go-go eighties, “Chainsaw” Al Dunlap’s enthusiasm for aggressive cost cutting and massive layoffs made him a corporate superhero. Later on, his indictment and conviction on fraud charges caused people to question his character, but not necessarily his methods.

Poor Al would never survive as a CEO today. Social media would eat him for breakfast. Today’s corporate executives need to mind their P’s and Q’s, because any stray word can instantly go viral, damage the stock price and diminish shareholder value.

These days, most corporate executives pay lip service to the idea that people come first, but beyond nice sounding platitudes, relatively little has changed. Boardroom discussions mostly focus on financial data and the need to be “practical” about people decisions Yet smart firms value their people not out of altruism or fear of a backlash, but because it’s good business.

People Create Value

In How Google Works, Eric Schmidt and Jonathan Rosenberg argue that people are essential for creating value. More specifically, they focus on hiring, developing and empowering “smart creatives”—professionals with the technical skills to solve problems as well as the imagination to dream up new ideas.

Many hard nosed, profit seeking executives would say, “Sure, Google has a search engine that prints money, they can afford to be nice,” but that’s not how Schmidt and Rosenberg see it. They point out that while senior executives strategize and plan, those plans always fall short. “Since the plan is wrong, the people have to be right,” they write.

The truth is that there are only two ways for a business to consistently earn profits above its cost of capital: Innovating to create new value and rent seeking. To create new value, you need people to invent new products and processes. To do effective rent seeking, you need a powerful lobbyist and those are people too (well… sort of).

Those that do will easily create ideas, develop cutting-edge products and services, and disrupt the status quo. In a companion survey of over 3,100 business and IT executives worldwide, Accenture found that 33 per cent of the global economy is already impacted by digital.

People Create Efficiency

Notwithstanding Google’s success, many would point out that Schmidt and Rosenberg have the luxury of working in a growing industry, while many firms have to compete in stagnant or even shrinking markets. Managers in those industries, so the story goes, need to optimize for efficiency and that means watching costs.

Yet MIT’s Zeynep Ton, author of The Good Jobs Strategy, has found in her research that well-trained employees are not a cost driver, but a sales driver. A higher paid workforce results in less turnover, better customer service and greater efficiency. So even in declining industries, investing in people can lead to more profitability.

Anecdotal evidence supports her point. Southwest, which competes in the brutal airline industry, regularly tops lists of best companies to work for and has maintained healthy profits for decades. A study comparing Costco and Sam’s Club found that by investing more in front line personnel, Costco was able to gain an edge in productivity.

Consumers Are People Too

A focus on people also tends to spill over into how a company treats its customers. It’s no accident that Google, Southwest and Costco are not only great places to work, but also rank high in Net Promoter Score, which is probably the best measure of customer satisfaction. Employees that feel cared about tend to care about others.

On the other hand, firms that show a lack of caring pay a social tax. Scandals such as Dell Hell and Apple’s Foxconn issues created a fury and forced major corporations to change their policies. Even innovative young startups like Uber are finding that public sentiment can seriously affect their business.

So not only does a focus on people produce more innovation and efficiency, consumers tend to penalize firms who they see as cynical and calculating. Clearly, spreadsheets and strict financial analysis don’t tell the whole story. Some of the biggests risks that firms face are social in nature.

What it Means To be Practical

Many managers say that they take a “practical approach” to business by focusing like a laser on profits. Yet, as we have seen, a mindless pursuit of profits actually tends to reduce profitability. Others who are aware of the profit paradox say they pursue “enlightened self interest.” Yet that begs the question, “enlightened by what?”

The truth is that for any business to prosper it must continually innovate how it creates, delivers and captures value. For that you need people. Not just people who come to work to perform tasks, but people who come to work inspired by the mission of the enterprise.

They also need to be healthy, have adequate vacation time, a strong family and social life and be active in their community. Many top firms, such as General Electric, actively encourage participation in civic organizations, because they understand the value of having a committed workforce.

The best companies see people as more than a mere means to an end, but an end in themselves.

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