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How HR Impacts Your Business

HR Impacts Your Business

Not too long ago, the Human Resource (“HR”) function was a clerical position that focused on helping the management team set appointments to interview prospect employees looking for work. Or they kept track of hours worked for a company. But those days are gone. HR impacts your business in ways that it once had no influence over. In fact, the HR role has evolved to include advancements in management, technology, and legal issues.

How HR Impacts Your Business

After having served as CEO and CFO for a couple different companies, I learned first hand that those two executive roles are really about managing people. Sure, we have our budgets, board meetings, bankers and analysts to deal with day-in and day-out. But what took up a significant part of my time in different companies was managing people.

Part of a wingman’s responsibility is to know what impacts your business. The CEO needs to know how every area, like HR, impacts your business. Click here to learn how to be the trusted advisor your CEO needs with our How to be a Wingman guide.

Science of Managing People

There are two sciences involved in managing people:

Psychology = the science of mind and behavior; the mental or behavioral characteristics of an individual or group

Sociology = the science of society, social institutions, and social relationships; specifically: the systematic study of the development, structure, interaction, and collective behavior of organized groups of human beings

We are clearly dealing with people in our management roles. As if that was not complicated enough, then add the legal system to that. This includes complex laws like the Affordable Health Care Act (“Obama Care”). Also consider things like American Disability Act (“ADA”), HIPPA, U.S. DOL,  Medicare, EEOC… And if you have a 401K or a pension plan, then you are regulated by a host of other laws and regulations.

Get the feeling yet? This is not a simple environment that can be administered by just an admin. The science of managing people requires a HR professional.

Today’s HR Function

Today, the HR function is a significant area of your business that needs a professional looking over it whether you outsource the HR function or if you are big enough to hire someone in house. Do not minimize this role in your business. HR professionals today have a variety of certifications and credentials and a good understanding of labor laws.

HR Impacts Your BusinessHow the HR Professional Works With Management 

Whether you are a small company of 20 employees or of 2,000 employees, your HR professional should be close to the executive team. In a typical company, this position may report to the CFO or even the CEO.  Executives: keep your HR professional close to you. Have at least a weekly standing meeting to discuss HR issues with that person. Have your HR partner develop and keep dashboards with key information that you want to see relate to your labor force. With the complexity of the HR regulations and labor laws, we need a cooler prevailing head to be at our side as management.

The larger your organization is and the more employees you have, this is ever more important. In addition, larger organization have more moving parts, and that includes HR. As an executive, having your pulse on the moral and culture of your organization is critical.

Have a pulse on the company and advise your CEO in their strategy and decision making. Click here to learn how to be the trusted advisor your CEO needs with our How to be a Wingman guide.

Managing Employee Turnover

In good times, we are building, hiring, growing, and asking more of your employees. You need to have your employees following you as the leader. In bad times, there is uncertainty, You are letting people go. You may also be asking more of  your employees. But you need to find the balance between not promising to much and asking employees to deliver. That is where a solid HR person will be worth their weight in gold. If you are a stable company that isn’t growing or shrinking, then you want to keep a stable workforce.

I recently saw a statistic that the cost in the U.S. of employee turnover is on average $65,000 per employee. Think about the loss of an employee and what it involves… Disrupted departments, time and cost of recruiting/training, learning curve for the new person. It really adds up. I have seen clients with high turnover, and they are simply bleeding cash. What is odd, is that I can’t believe that there are executives that simply live with the high turnover and do not address the issue.

Growing companies really need to keep HR at the top of the list. To be a successful growing company, you need to offer competitive benefits, develop policies, employee files and have a steady pipeline of additional resources when needed. There needs to be a lot of training so that employees follow company policies and labor laws. Believe it or not, State and Federal labor laws change frequently. As a result, your operations people must stay trained up to know what to do or not to do.

Quick Case Study

I was in a situation with close to 1,500 employees. The company entered into a financially distressed situation. We had to lay off half of the workforce while keeping the moral up for those staying behind. We restructured the operations of the business and shut down a whole division. Without a strong HR team, I am not sure we could have pulled it off. A reduction in force of that size involves special notices to cities, counties, and states. It involves severance benefits, angry people, sad people, and transitions of workload.

You can’t afford not to have an HR professional at your side, especially during drastic workforce changes.

The cost of violating the laws, regulations, or getting involved in a lawsuit around HR matters can be devastating to a company.  Not only is there a financial cost, but there is a branding and reputation cost as well. I once saw a large multinational company cancel a contract with a smaller supplier of supplies because the smaller supplier had pretty serious HR violations and was involved in litigation. The benefit of having the right HR partner at your side will far outweigh the cost. Your HR professional or financial leadership should be the wingman to the CFO. It’s time to step up into this trusted advisor role! Access our How to be a Wingman guide here.

HR Impacts Your Business

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10 Reasons Why You Should Bother With Networking

When I was a young accountant, I always wondered to myself… “Why should I bother with networking?” It seemed like a waste of time and money.  As I grew from an accountant into a business owner/CFO, I learned that networking is a vital function of doing business.

But for some, networking can be a daunting task.  Introverts, especially, can convince themselves that going to luncheons, breakfasts, or cocktail hours are unnecessary and pointless tasks that CEOs require of their financial leaders.  Most of all, they fear “death by networking.”

Networking Events: The “Necessary Evil”

Whether you’re looking for a job or finding new business, it will most likely come from your network –  not a resume pool or a cold call. If you’re looking for growth in any area, having well-honed networking skills is critical.

Instead of feeling like you have to bother with networking, be excited that you are in a field where people skills matter.

Remember… It’s not always what you know, but who you know that matters.

Seek Growth

By attending these networking events, you can expect growth in some form. This can include growth in profile, confidence, connections, business, etc.  Regardless of what your intentions are going into a networking event, you can seek and even expect growth.

bother with networking

HINT: Don’t Go For The Speaker

Whatever networking event you decide to attend, do not go just for the speaker.  It’s possible for a networking event to be successful for you even if you get nothing out of the speaker’s presentation.

One of the chief reasons I am a part of membership associations and organizations is simply to network. They could have the most spectacular speakers or the most boring of events, it doesn’t matter.  What matters most to me are the people that attend and the connections I make.

10 Reasons Why You Should Bother With Networking

#1 Make 6-12 Sales Calls in a 2-Hour Period

Sales calls are daunting for most of us, especially financial types.  Networking events provide the opportunity for you to knock out the equivalent of 6-12 sales calls in one short period.  Let’s face it, meeting someone face-to-face is totally different (and better) than picking up the phone and calling someone.

When you attend a luncheon or a breakfast, try to walk in with the expectation of getting work done. So many inexperienced business people fail to recognize that a networking event is simply a playing field where you can make your sales calls. Within that 2-hour period, you are able to meet with at least 6-12 people.

As an income producer in your company, utilize this opportunity to convert cold sales to warm or hot. Long gone is the tactic of just collecting business cards and not doing anything with them.

#2 Being There Gives You The Advantage

Being at a particular event may spur someone to give you an opportunity they would otherwise give to someone else.

Last week at a networking event, I found myself connecting a client of mine to someone else simply because she was at the luncheon. Previously, I was going to call her superior. Instead, she gained a hot lead and potential client by just being at this event.

Don’t be the person sitting at their desk suffering from FOMO (Fear Of Missing Out) instead of making connections.  You’ll never know what leads you may have missed out on if you don’t go.

#3 Confirm Your Assumptions About The Market

As a business owner or the financial leader of a company, you must stay ahead of your market. Since there is no magic genie that can predict the future for you, you have to make assumptions.

It’s not news that the oil & gas industry is not doing so hot.  As a business owner whose clients are impacted by this downturn, as an investor, as a native Houstonian, this matters to me.  I have to make assumptions about how long it’s going to last, what sort of impact it will have, how it will influence client behavior, etc.

Networking events are a great way to confirm your assumptions about the market.  Go in with your assumptions in mind. Start to listen before you speak.  There are a few questions that I ask at these types of events:

  • How’s business?
  • What are your thoughts on [insert market]?

People have the habit of talking about more than what you asked.  Take that knowledge and confirm or adjust your assumptions.  You know your assumptions are sound when you start to hear the same thing from people in different markets and industries.

#4 Identify Trends That Could Impact Your Company

bother with networkingIn addition to confirming your assumptions, start to identify trends that could potentially impact your company.  At any given event, it’s a safe bet that all those represented are working in a particular industry or market (middle market, oil & gas servicing, etc.) OR have the same purpose (turnaround, corporate growth, etc.).

#5 Polish Up Your People Skills

Some folks naturally have great people skills. They can charm the pants off even the worst of people! But some of us need to polish up our people skills.

Some of the most important people skills that any successful leader needs to have include:

The five characteristics are focused on one’s ability to be able to cultivate human relationships – professional or otherwise. By polishing up your people skills and further developing the skills listed above, you will be more successful in your professional and personal relationships.

If you’re an introvert (or a curious extrovert) and find yourself struggling to polish up your people skills, download your free Networking for Introverts guide here. 

#6 Connect with Connectors

bother with networkingConnectors love to network and connect people!  Networking events are their playground.  Not only do these “connectors” like to put two people together, but they see it as a challenge.  The more people they can connect together, the more their success meter goes up.

You don’t necessarily have to be a connector. But in order to successfully cultivate your network and make more sales, you have to connect with connectors. Think about it this way, any cable or cord is essentially useless unless it is connected to something. Put yourself out there and the connectors will naturally make the connections.

#7 Even If You Don’t Realize It, You’re in Sales

We often talk about how financial leaders and CFOs should see their position not as simply an overhead function but as an income producing function. In addition to your role’s function being different, it’s important to realize that you are in sales.

What do I mean by that?  Well, you have to sell ideas and initiatives to your key management team, Board, and your employees. As a financial leader, you are also responsible for selling your company to bankers, vendors/suppliers, and customers.  In order to truly elevate your role, you must add value to your company.  One of the ways you do that is by selling both internally and externally.  Networking helps you hone those skills and build valuable connections.

#8 Make New Friends

Not only are you feathering your professional nest by attending networking events, but you’re connecting with like-minded people and will have a friendly face for next time.  It’s highly unlikely that you are the only uncomfortable person in the room.  Seek out others who share your apprehension and strike up a conversation.  Chances are that when they need someone who does what you do, they’ll be more comfortable calling you rather than the “pushy salesperson”.

There are countless organizations that you can join that have monthly, quarterly, and/or bi-annual events that you can attend. Some of those that I have been a part of over the past 25 years include:

  • Turnaround Management Association (TMA)
  • Texas Society of CPAs (TSCPA)
  • Association for Corporate Growth (ACG)

Find your local chapter of any organization that you find would be beneficial for you. Continue to attend those meetings, and soon enough, you’ll find yourself with a group of friends.

WARNING: it’s easy to fall into a habit of only talking to the same people. Try to talk to 3 new people for every 1 friend you catch up with. This will continue to grow and cultivate your network.

#9 Get Free Advice

People naturally love to feel like their advice is valued, especially when they see themselves as your mentor. That’s the wonderful thing about networking events! You get free advice on literally anything from how to structure your financials to how to react to market fluctuations to where you should be eating lunch.

#10 If You Don’t Go, Your Toughest Competitor May Be Sitting In Your Seat

Similar to reason #2 on why you should bother with networking, if you don’t go to a networking event, your toughest competitor may be sitting in your seat.

It’s an unusual occurrence for me not to see a competitor at a breakfast or luncheon. This is probably one of the most important reasons why you should bother with networking. Your competitor, simply through them being present, can gain a competitive advantage over you.

Take your seat in the next luncheon. Sip your drink. Get talking. And start building your networking and your business. Remember… there is value in networking!

Need guidance in networking? Download your free Networking for Introverts guide and start building your network today. 

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The Power of Keystone Habits

The Power of Habit bookHabits are powerful.  They save time, create efficiency and allow our brains to focus on more complex tasks.  They can emerge without our consciousness, or be deliberately designed.

Some habits have the power to start a chain reaction, changing other habits as they move through the organization.  These are called keystone habits and they are important because they help other habits flourish by creating small wins.  Keystone habits start a process that, over time, transforms everything.

Charles Duhigg introduced this idea in his book, The Power of HabitThe book provides this example of a keystone habit…

“Typically, people who exercise, start eating better and becoming more productive at work. They smoke less and show more patience with colleagues and family. They use their credit cards less frequently and say they feel less stressed. Exercise is a keystone habit that triggers widespread change.”

Examples of Keystone Habits

Many organizations grow profits by focusing on a keystone habit. If a financial leader, be it the CFO, entrepreneur, controller, or CEO can understand and promote his or her organization’s keystone habit, profits will follow.  Here are a few examples of companies that saw dramatic bottom-line improvements by focusing on their keystone habits.

Alcoa

alcoa logo

Company: Alcoa

Keystone Habit: Safety

Result: 5x increase in net income and $27 billion increase in market cap

When Paul O’Neill took over the helm of Alcoa in 1987, he made a statement that sent investors running for the doors to dump their stock.  His statement…  “I want to talk to you about worker safety”.  But what O’Neill realized is that focusing on the company’s new keystone habit of safety would cause a trickle-down effect to the bottom line.  If employees work more safely, there are fewer injuries and production slowdowns resulting in improved productivity.

In addition to becoming one of the safest companies in the world, Alcoa’s focus on its keystone habit of safety enabled it to increase profits and market capitalization.  Someone who invested a million dollars in Alcoa on the day O’Neill was hired would have earned another million dollars in dividends while he headed the company, and the value of their stock would be five times bigger when he left.

Read the full story here.

Marco’s Pizza

Marco's_Pizza

Company: Marco’s Pizza

Keystone Habit: Accountability

Result: Increase Unit Level Profitability by 1.8 Points of EBITDA

Ken Switzer, CFO of Marco’s Pizza, has seen the privately-held chain of pizza restaurants grow from 30 stores to over 600 during his 27-year tenure with the company.  What does he credit with the company’s success?  Their focus on the keystone habits of accountability and profitability.

Marco’s has found that one of the biggest keys to fostering employee accountability is their incentive compensation plan.  Every single employee at the national support center in Toledo has a significant bonus opportunity based on achieving franchisee profitability goals. That is the sole factor in about 40% of the bonus opportunity for employees.  Tying a significant portion of employee compensation to achieving goals has fostered a sense of “we’re all in this together” that results in more employee engagement.  When you’re in that team environment, people just talk more and work well together.

Read the full story here.

Frito-Lay

frito-lay-logo

Company: Frito-Lay

Keystone Habit: Logistics

Result: 6% Compound Annual Growth Rate on Core Operating Profit

How does Frito Lay keep its spot at the top of the snack food chain?  By focusing on its keystone habit of productivity.  According to president Tom Greco, “we believe the productivity opportunity is significant.  Our productivity agenda pursues cost-reduction and capability-building initiatives to deliver results.”

In 2012, the company rolled out a geographic enterprise system (GES) developed to reduce the amount of manual handling throughout the supply chain and drive productivity.  According to Greco, “GES is both a productivity generator and a growth enabler. Productivity allows us to invest in our growth”.

Read the full story here.

Google

google log

Company: Google

Keystone Habit: People

Result: People that can pick up the slack when executive plans fall short

It can be said that Google is picky about the people it hires.  They focus on choosing, developing and empowering “smart creatives”—professionals with the technical skills to solve problems as well as the imagination to dream up new ideas.  They argue that the people are what create value, not the execs with a “plan” so they invest in their people.

In order to succeed in the business of solving problems, Google needs to constantly be creating new value.  They need good people to invent these new products and processes.  Focusing on their keystone habit of people has allowed Google to maintain its edge in a competitive industry.

Read more here.

Domino’s Pizza

dominos pizza logo

Company: Domino’s

Keystone Habit: Taste

Result: Increased profits 16% in Q3 2014

Had a Domino’s pizza lately?  In case you’ve missed their self-deprecating commercials, Domino’s has recently undergone a taste renaissance.  Spurred on by negative consumer comments about their pizza, the chain has revamped their recipes in an attempt to make their food taste better.  Check out this video detailing how focusing on the keystone habit of taste has allowed them to rebuild their reputation and gain market share.

Click here to read more about Dominos and check out their turnaround story.

Conclusion

Keystone habits say that success doesn’t depend on getting every little thing right, but instead focus on identifying a few key priorities and developing them into powerful levers.  Where to start in identifying your company’s keystone habit?  Look at those habits that, when they start to shift, dislodge and remake other patterns.

I’ll leave you with this quote from Charles Duhigg in The Power of Habit:

“Destructive organizational habits can be found within hundreds of industries and at thousands of firms. And almost always, they are the products of thoughtlessness, of leaders who avoid thinking about the culture and so let it develop without guidance. There are no organizations without institutional habits. There are only places where they are deliberately designed, and places where they are created without forethought, so they often grow from rivalries or fear.”

To learn more financial leadership skills, download the free 7 Habits of Highly Effective CFOs.

keystone habits

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Dealing with People Problems

A wise man once said…

“Life is simple, people complicate it.”

The same wisdom holds true for business.  If you take a look at the biggest headaches that you have to deal with on a daily basis, chances are good that the majority of them have to do with people.

Dealing with People Problems

So what’s a company to do?  Here are a few suggestions for how to solve some common people problems in your organization.

Identify Your Culture &  The Traits of Your Top Performers

ritz carlton credo

This Ritz-Carlton Credo identifies a culture of service. “Service” is the common trait among all their people that the company will look for when hiring.

Who are the most successful people in your company? What do they have in common?

Truly successful organizations have a common trait that they look for in prospective employees and foster in current employees. This trait is defined by the culture of the organization.

The Navy Seals value perseverance above all else. For Ritz Carlton, it’s service.

Identifying your company’s culture and nurturing those traits that support the culture is critical to building and maintaining a winning team.

Fewer, Better People

With the prevalence of technological advances across all industries, many routine jobs are being automated. A typical reaction to this trend is to reduce headcount.

A recent Wall Street Journal article highlighted this very fact:

Mr. Siu [the researcher referenced in the article] thinks jobs have been taken away by automation, more than by outsourcing. While some manufacturing jobs have clearly gone overseas, “it’s hard to offshore a secretary.” These tasks more likely became unnecessary due to improving technology, he said.

While automation almost always leads to the need for fewer people, it’s important for businesses to realize that the people they now need are different. They need people to analyze, not just input, the data.

Right People, Right Jobs

Are there some people in your organization that you feel aren’t living up to their potential? Perhaps the problem is one of fit. Even the most talented employee is limited if the work they are doing isn’t the right fit for them. Consider moving these people to a part of the company where their gifts would be better utilized.

You might be surprised that your accounting manager has a passion and a talent for marketing that isn’t being tapped into. Be open to allowing your best people to take on tasks outside of their job description.

Hire for Talent, Train for Skills

Obviously, hiring the right people in the first place eliminates a lot of headaches. Problems arise when a business doesn’t carefully define what the “right” person looks like. Often, they get caught up in a particular skill set they believe a job requires. Then they lose sight of a better indicator of success – talent.RI-MYUNG-HUN

Talent is that innate quality that transcends skill. It’s something that a person either has or doesn’t have.

You can’t teach talent. Look around your organization for those people that everyone goes to when they need something done. They are the ones with talent.

“I can teach anyone to play basketball. I can’t teach tall.”
—John Wooden, legendary basketball coach

Need help minimizing people problems by hiring the right people? Download our “5 Guiding Principles for Recruiting a Star-Quality Team” below!

dealing with people problems

dealing with people problems

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