Are you willing to do what it takes to launch your company to the next level? In my last blog, we placed your company in front of a mirror to determine if you had the leadership mindset to become a rocket launcher. Too often, companies become stagnant in their growth because the person running the company lacks the mindset needed to launch a rocket. I have compiled a list of modern-day growth accelerators that work for any organization or industry. These will work if its leadership is committed to following them.
Most modern-day growth accelerators occur in five distinct areas of business:
Opportunities to increase revenue, profits, and cash can occur throughout a business, but I have found that it is best to have a framework. The first step toward increasing your business success is to accurately identify the growth accelerators that need the most attention. Today, I want to discuss Stewardship and Human Capital Management growth accelerators that address issues likely to be plaguing your company.
Stewardship accelerators address the drags on growth, profits, and cash that occur because of leadership deficiencies and failure to establish a meaningful ideological foundation. These ideologies define why the company exists and shape the environment in which everyone works.
Growth Accelerator #1: Replace Poor Managers
When you make allowances for a poor manager, you decide that a substandard manager has more to offer than everyone else put together—a fool’s bet. Your ineffective manager causes everyone else to perform at lower levels. You lose access to a lot of great ideas. People are less apt to work for your organization, let alone willingly give extra effort.
Growth Accelerator #2: Address Team Dysfunction
You may have leaders who are great functional experts with substantial institutional and industry knowledge, but that does not make them great team members. You must function effectively as a team so that the sum becomes greater than the parts. Failure to address dysfunction in the leadership team has a multiplying effect on the rest of the organization’s ability to accelerate. Have you ever been on a great team, whether in sports, work, or any other environment? It does not take great players to produce great results.
Growth Accelerator #3: Establish a Clear and Compelling Purpose
The day you start your business, you must place “purpose” at the forefront. Purpose is a critical issue that fails to get enough attention. Many business owners who are asked, “What is the purpose of your business?” will answer “to make money” (or something similar). You may be thinking, “Isn’t that the purpose of any for-profit business?” I can confidently say no.
Purpose is a direction, not a destination. It is a place we never quite reach because it is an ideological objective. It is the big, central idea that we want everyone to think about every moment they play their role in our company. It is a centralizing idea that should be so compelling that it inspires and motivates people to give extra effort, develop creative solutions, break down barriers, and better serve clients.
Human Capital Management
Human Capital Management, or HCM, is an ideology that addresses a company’s key people processes. It recognizes that employees are assets managed through a system of activities. Leadership must refine all system elements to extend the life of those assets and achieve a maximum return on its investment in them. This system considers acquiring, growing, keeping, and optimizing your workforce.
Growth Accelerator # 4: Develop a Strong Culture
Show me a high-performing organization that employees love and clients rave about, and I’ll show you a company with high growth and exceptional profitability. That is an example of an organization that has a remarkable culture. Culture begins with core values, but its reach is so much broader. Culture refers to how everyone in the company conducts themselves and the environment that everyone operates in. Culture is created, shaped, and nurtured in particular ways. It starts with clearly defined core values that all leaders consistently demonstrate and expect from every employee. Culture also encompasses how leaders, managers, and coworkers treat each other and their clients. It also represents the working conditions, in general, which includes available tools, resources, and physical workspace.
Growth Accelerator #5: Optimize Your Return on Human Assets
Leaders have three different roles to play when it comes to people:
This Growth Accelerator will help you discover how to optimize return on your people assets. It’s a balancing act. All the stakeholders’ needs and the objectives of maximizing stewardship, human capital management, strategy, planning, and accountability sometimes compete with one another.
That is what makes managing people so tricky and takes excellent management and leadership skills. Many organizations use the wrong measures for determining how to manage human assets. Labor rates, turnover, and other commonly-used measures are not the right ones. It’s essential you learn how to measure and improve your Labor Efficiency Ratio™ to determine how well your company manages its human assets.
Growth Accelerator #6: Increase the Percentage of Performing Talent
Increasing the percentage of performing talent is critical to acceleration. Productivity, morale, and profits deteriorate when your internal processes do not correctly identify “nonperforming” talent. These are people who fail to consistently demonstrate all your core values and achieve the reasonably high-performance standards established for their position. Additionally, you may be classifying people as “performing” for the wrong reasons, while the real performers quit, get fired, or become less engaged in their positions. We often find employees retained and considered “performing” because they have a lot of domain or historical company knowledge.
While such knowledge is valuable to the company, these people are often disruptive and underperforming in other ways, drawbacks that cannot be overlooked. The cost of these decisions always outweighs the benefits of keeping people. Management teams continuously fail to correctly calculate the cost and overestimate the value of keeping such people. I have yet to see one of my clients suffer consequentially when one of these people quits. On the contrary, my clients always remark that they should have acted sooner.
Growth Accelerator #7: Address Vacant Positions
Many challenges result from how much emphasis is placed on limiting the time that positions remain vacant. Other problems occur because of the failure to create necessary new jobs. Another pitfall is filling open positions with inadequate talent because of the substandard compensation level offered for that job.
Organizations are so concerned about what a new hire will cost that they lose significant opportunities to acquire people who can bring in revenue and operational efficiency that far exceeds their earnings package. Meanwhile, existing employees get burned out trying to make up for empty seats. Strategic efforts are poorly executed because people are spread too thin.
Growth Accelerator #8: Increase Hiring Success
How do you measure hiring success? Hiring success means you hired someone that fits your culture and performs at the reasonably high standards set for them, given their tenure and experience. Too often, companies are making the mistake of measuring hiring success just by using turnover as a yardstick. Cultivating the right or wrong environment and onboarding process for those you hire can profoundly affect whether people stay or leave. The turnover measure does not tell you how well you hired. You must measure culture fit first and then go deeper to determine how well your hiring processes work. You must capture useful data and then dig deep to understand that data.
To launch a rocket, you must plot a course and increase speed. You must have high velocity and have enough discipline to increase acceleration or scale your current level of acceleration to take your company into orbit. My book, The Leader Launchpad, was designed to help make that happen. Join me next time when we continue to explore more growth accelerators that will help launch your company to the next level.
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