By Michael Walsh

Over the last 25 years, the Gallup organization conducted interviews with business owners, sales managers, and division managers in a number of different companies.  They interviewed over 1 million employees and over 80,000 managers.  The biggest single survey ever done.

The 12 Questions

The people at Gallup made a discovery that measuring the strengths of a workplace can be simplified to 12 questions. These questions don't capture everything that you may want to know about a place, but they do capture the most important information. They also measure the core elements needed to attract, to focus and to keep the most talented employees. So when you are looking at building or growing an effective team, you don't want to overlook these questions.

Here they are:
 

1. Do I know what's expected of me?
2. Do I have the materials and equipment I need to do my work right?
3. At work, do I have the opportunity to do what I do best every day?
4. In the last 7 days, have I received recognition or praise for doing good work?
5. Does my supervisor or someone at work seem to care about me as a person?
6. Is there someone at work who encourages my development?
7. At work do my opinions seem to count?
8. Does the mission or purpose of my company make me feel my job is important?
9. Are my coworkers committed to doing quality work?
10. Do I have a best friend at work?
11. In the last 6 months, has someone at work talked to me about my progress?
12. This last year have I had the opportunity at work to learn and grow?

They found that many of the questions contain some version of an extreme. Notice it doesn't say do I have a friend at work, it says best friend. They looked at the wording of the question and distinguished the best from the rest. Question three says every day. They also used an answer scale of 1-5.  Five being strongly agree and one being strongly disagree, with 3 as neutral.

What they found is that the places that are hitting 5 on these questions are stellar environments.  The correlation was very, very high.

Marcus Buckingham and Curt Coffman published the results in 1999 in the book, First Break All the Rules.  What they're saying is that there are no rules for effective management. Different people manage differently, but the long and the short of it is, "What are you doing to foster your employees?"

This falls right into line with treating your people and salespeople like customers. Customers need certain elements of support concerning the goods or services that they purchase from you. Your people also need this support.

Some of these questions are simple. Do I know what's expected of me at work? Do I have the materials, etc.? Do I have the opportunity to do my best each day? Straightforward questions but Gallup did not often find situations where people were answering fives on a consistent basis. The places that did had results that kicked butt over the competition.

Nowhere on this list does it say anything about money. Money is a satisfier, it's not a motivator.

There are certain things that are motivators and others that are satisfiers. If you're 20% below the market, you're going to have disgruntled people and problems. You also don't have to be the highest paid to keep great employees.
One thing is that people join companies and leave managers.

There is not just one corporate culture in a company; there are as many cultures as there are managers. You might think that since you're a small company and you only have 11 people, you have one culture. If you have two or three managers, you have two or three corporate cultures.

The manager's actions make a huge impact on the culture within an organization. Now, putting the wrong people in the wrong role generates frustration as well. So it's not just having this pleasant, cushy environment. Have you got the people in the right roles and are you looking at how to support them and run interference for them?

You want to have the above questions filled out and handed in after a meeting. Take the time to see where you stand on these things.
You don't want to be surprised by this.

A danger is, if I was an employee and my employer handed me those questions and asked me to fill it in, I don't think I would answer it honestly. If someone from outside came in as an evaluator, I would be much more honest. You might want to bring in an outside evaluator to provide some confidentiality.

This is about supporting the person, demonstrating care, and allowing them to do their best. It's not only about tracking numbers, etc. It's about making sure that they feel supported and praised. It's making sure that those things are done and that the person feels that that is how they are going to access the best performance.

It's interesting because we focus on measuring and managing.
Clarity on your numbers and on what is happening, both at the level of activities and results, certainly makes a huge difference.

When you set goals together on your outcomes and you support your staff and sales staff on their processes to meet their goals, it does make a big difference for the financial productivity of the company.

Business valuations have more to do with the human capital component then ever before. The number is up to 35% of the valuation of a business, especially for larger businesses. It is based on factors other than just the things that show up on a financial statement. As a result, people are getting serious about the impact of human capital on the value of a business.
 
You might think that the question which asks, "Do I have a best friend at work?" is controlled by the individual. On the surface it might look like that. Yet the manager can generate environments that are more conducive to that.

Will they become best friends? Hard to say. I agree that in many ways, it's still left to the individuals. You can keep an eye on the interpersonal dynamics between and amongst various people. If somebody has a best friend at work, they are less likely to quit.
In small organizations it may be tougher. However as an organization grows, people bond with each other.

For example, if you're frustrated, you'll speak to the person that you know and trust in the business. They'll temper what you come up with. Where an outsider might say, "Yea, yea, you should just quit."  Someone inside the company can settle you down, interact and can relate to where you are. That has an affect.

No organization is perfect all the time. There are ways that you can get people together to interact with each other. Get them to know each other better so that you foster a friendly environment.
In a small company it's harder, but by keeping an eye on those things you can encourage it.
 
If you have somebody who is actively disengaged, walk through this list about that person. You might find that the answers are woefully inadequate.  This gives you access to some of the things specifically that you could do, that might make a difference.

Source: Business Development

By Michael Walsh

Step 1: Thinking Through the Bigger Game

The first thing to do when you're thinking through the growth of your business is to picture how the business will run at $3 million.  How will it be attracting customers?  How will the customers buy at that point?  How many people will you have working for you?  What size of facility will you be in?  What will the geographic span be to achieve your new, larger size?

All of these questions and more need to be addressed.  By thinking these things through, you will start to see much more clearly what the infrastructure will need to be to support your organization at its new, bigger size.

Step 2: Draw it Out

It is one thing to answer these questions to yourself, or on paper.  Now, draw out your current organization chart, followed by the organization chart that your new company will need to look like, for you to achieve and sustain the sales levels you desire (in this case the $3 million).  Don’t worry about exact names in each of the roles that will be needed.  Start with the roles themselves.  The visual of how many people will be working in what roles will give you a good idea of space requirements, and other supports that you will need.  Don’t worry about getting it perfect.  You can, and will, adjust this as you grow.

Step 3: Do the Math

After you have a potential organization chart, now it is time for the calculator.  Sit down and figure out what your future Profit and Loss Statement will look like.  You may need your accountant’s help with this, but it is worth it.  You already have a rough idea of how many people you will need, from your organization chart.  Now, through the financial statement, you can figure out the space requirements, the sales support needed, as well as all the other levels of infrastructure you will need to achieve the $3 million in sales.  This is critical to catching all that you will need to address, so don’t skip this step.

Step 4: Develop the Transition Plan

You know where you are currently, and you now have a plan for what the future might look like, at triple your current size.  Next is to sort out the transition plan.  You still can’t afford to add all the pieces at once, but you can decide how you will phase them in, as you grow.  Check to make sure you are funding the steps in a manner that makes sense to you.  This is another area where your advisors can really help.  By making the infrastructure changes event specific (i.e. when I hit $1.5 million, that’s when I add the next salesperson, for instance), you can afford your growth along the way.

The difference is that you will have thought it through, including the pieces that most people miss.

By following this approach to large scale growth, you will find it easier to overcome the fear and tap that internal fire in the belly to grow your business consistent with your dreams.

Source: profit and loss statement

By Michael Walsh

When people talk about large scale growth for small business, most business owners have a two-sided reaction.  The first is a spark in their eyes that lights a fire in their belly over the notion of having the larger business of their dreams.  The second reaction is quiet revulsion in their gut, quelling the fire, over what it would take to grow the business to that next level.

The source of these mixed feelings isn’t a mystery…  didn’t it take a lot more than you expected to grow your business to this point? 

It’s one thing to have the skills to deliver exceptional value to clients and customers as you grow. Then there are all the things you had to learn about sales and marketing, about finances and of course, about hiring and working with people… how will those also grow as your business grows?

Traditional Growth

You now have your business running at a level that pays you well, and that seems to be working (though you still put too much time into the business for your liking).  To go through more to get it bigger, that just seems brutal . . . and tantalizing all at the same time.

Think about it for a minute.  Usually, a small business will naturally grow fairly quickly up until the point of getting to full capacity in one area or another.  Let’s say you get to $1 million in annual sales.  You have a system that seems to be working, so you decide on a 15% increase, pushing sales to $1.15 million.  Then the next year, you grow a little again, going to $1.25 million.  Then up to $1.4 million.

However, there is a problem here.  Whatever that “natural capacity level” is that was at full capacity… is now getting stretched.  You’re stretching your existing structures past their capacity levels.  That’s when people start to get spread too thin.  They start getting tired, and making mistakes.  Then you try to solve that by adding more people, only to find that the efficiencies you enjoyed at $1 million have gone away, and your costs are getting out of hand, while your customer service levels are slipping.

What’s Missing is Infrastructure

You know you need more infrastructure to make this work – some major capital expenditures, whether it be new software, a new piece of equipment or new space for your people.  But with the increases at the size they have been, you can’t afford to make big changes. If you are at $1 million in annual sales, an  extra $150,000 might only leave you with $30,000 after expenses.  That’s hardly enough to spend the $40,000 to $50,000 on that new piece of financial and accounting software.  It makes no sense.

Anytime you decide to grow by little bits, unless you have excess capacity in all areas – including your own time, by the way – then something will get stretched and possibly break, making the whole growth thing that much more difficult.

The Good News

The good news is that it is actually easier to double or triple a business than it is to grow it by 10% to 15% per year.  Yes, that’s right.  I said easier.  The reason is that while you may delude yourself that you can get by with small growth without changing your systems, there is no way that you will think you can run a $3 million company the same way your now run your $1 million business.  You know that it just can’t be done.

Instead, what people do when approaching large scale growth is to think through the bigger game.  You may not be able to afford that new software program at $1.15 million, but you know for certain that you will need it before you hit $2 million, and definitely by the time you get to $3 million.  And, there are lots of other changes that will need to be made too.

Later this week, I'll be posting Large Scale Growth for Small Businesses (Part Two)

Source: capacity level