Lead Article (Self-help topic – STAFF)

Every business that I speak with tells me how hard it is to attract and retain great staff. Even terrible staff are incredibly hard to attract and retain in the current employment environment.

There are a range of strategies you can employ that MAY work for you or you can hire a recruitment firm and hand over your first born child.

I have a different idea. I say that you should give your company away. I know that sounds a little drastic, but hear me out. First, accept the fact that pay is not a primary motivator in retaining skilled staff. In fact, on the list of top seven reasons an employee stays with a company, Fair Pay is ranked at Number six. In front of Fair Pay (in order) are: Challenging Work; Good boss; Recognition; Career Growth and Flexible conditions. Interestingly, 90 percent of bosses interviewed immediately after an employee has resigned say the employee left for more money. In direct contrast, ninety percent of employees when interviewed immediately after they have resigned say they left because their boss was a jerk – and it had nothing to do with money.

Assuming that you aren’t being a jerk to your employees, a great retention strategy is to allow employees to buy some of your company. Sometimes employees don’t have enough money to buy a percentage of your company (if they do then maybe you have been paying them too much) so you might consider a vendor-finance agreement. There is some argument that the concept works better when the employees have some ‘skin in the game’ and that is true but don’t dismiss the benefits completely if you use 100 percent vendor finance.

I had a previous company where I allowed staff to buy some of the shares of that company – and I lent them the money to do that. Dividends from their share were used to pay back the loan.

The first significant change was how I had to modify my behaviour. Instead of treating it like ‘my company’ I had to ensure I started behaving more like an employee. I suddenly had shareholders to answer to! I couldn’t print school projects out for my children without paying a fair price for each page. I couldn’t provide services for one of my associated companies without paying a fair price for those services. It was amazing all of the little benefits that I had been receiving when it was my own company. The result might sound stifling but it was actually cathartic. To gain a true appreciation of what the company was capable of, I needed to stop treating it like a little backyard company and start treating it like a major public company.

In addition to changes in my behaviour, it was also amazing to see the change in behaviour from the employees who were now shareholders. We held monthly shareholder meetings and suddenly I started to see people who were great employees turn into business thinkers. This was now ‘their’ company. You have to be careful that the line from employee to shareholder is not crossed on a day-to-day basis but a good management structure can achieve this. Depending on your long-term aim with the business, this also sets the business up to one day be sold to your employees. The scariest moment is the moment that the combined employee shareholding is greater than the original owner’s share and you then run the risk that saw Steve Jobs fired from Apple and Ken Olsen fired from Digital. You alone no longer have control – but if your ideas are so good it should be easy to convince your fellow shareholders. In fact, that was one of the aspects that I thoroughly enjoyed, Instead of making decisions because I could, I suddenly involved other people in the decision making process. Having to justify major decisions to small shareholders may seem annoying if you are a control freak, but I would constantly tell myself that if my ideas were as good as I thought they were then these shareholders would obviously jump at these ideas.

In my case the end result was a more stable company with a better overall leadership team and better growth than I would have achieved on my own – and when we did sell that company I believe I received more for my less than 100 percent shareholding than if I had continued to remain the sole owner. After all, would you rather be like Bill Gates and own only 8 percent of Microsoft or own 100 percent of a company worth $100?

So if you want greater engagement from your staff and you want a method to retain those invaluable employees, consider giving them some of the company. If you structure it correctly and you have the correct people, you will be amazed at the results.

Tell me if you think I have lost the plot at md@smallbusinessrules.com.

Business Tip of the Month

Rule 46: Let The Client Make The Decisions

How many times do you think you know the way a client is going to answer a certain question? Do you sometimes jump in and make a decision for the client because you think you know the answer? Do you sometimes do this without even realising it? I see this almost every time I go shopping. If I walk into a mobile phone shop dressed shabbily and ask for the latest smartphone, I guarantee you that every single time they will offer me the cheaper or low-end smartphones on the market. I like to buy the latest technology but I constantly find that I am having to talk the salesperson up to sell me something at the higher end. It should be the other way around. The salesperson should be talking me up. In fact, what should happen is that a salesperson shouldn’t make a number of assumptions about what I want and should actually ask me questions to find out what I am actually after. When that occurs, they then should offer me a range of options that will suit my needs. They can offer the products – I can make the decision. As a shopper it is incredibly frustrating when the salesperson tries to make the decisions for me – and what often occurs is that I buy a cheaper product than the one I would have purchased if I had been given the complete range of options. The lesson here is to ensure that you firstly listen to what the client asks you and then answer the question. Secondly, offer some options.

Science Quiz Question

It is a nice warm sunny Sunday afternoon in Australia. As I like to do on warm sunny afternoons, I am floating around in my tiny swimming pool in my little wooden dinghy. Call me a little strange, but in my boat, I like to keep a large rock with eyes and a nose and a mouth painted on it. I call her Jenny and I like to chat to her. Jenny is a solid little Basalt rock. She weighs 20kg (about time she went on a diet). Jenny and I have a little fight and, in disgust, I throw Jenny overboard. She sinks to the bottom – never to speak with me again.      My question is this. What happens to the water level in my little pool? Compare the water level in the pool when Jenny is in my boat and when she sits at the bottom of the pool. Does the water level go up, stay the same or go down?

Science Quiz Answer

We are all familiar with the story of Archimedes running through the streets naked yelling “Eureka”. He was actually trying to determine an easy method to test whether a crown made for King Hiero II had been made with pure gold or whether some silver had been mixed in. As he lowered himself into his bath, he saw the water splash out of the bath and suddenly realised that this effect could be used to determine the volume of the crown and therefore its density. By comparing the density to a known sample of pure gold, he could determine if the King had been duped. Hence he jumped out of the bath and ran through the streets yelling with excitement. The principle is now known as ‘Archimedes Principle’ (mainly because it is a better name than ‘Naked man running through the streets principle’). From a scientific perspective, if the weight of an object is less than the weight of water it displaces, such as in the case of my boat, it is going to float. When Jenny is inside my boat, she pushes the boat down and the water in the pool rises. With a 20kg rock, an equivalent weight of water will be displaced, so 20 litres of water is displaced. When I drop Jenny over the side of the boat, she sinks. Now, only the actual volume of Jenny will be displaced. Since Jenny sinks (and Basalt is very dense) then we know that Jenny weighs more than the volume of water displaced (also from the definition of buoyancy). This means that the boat without Jenny will displace less water than is displaced by Jenny at the bottom of the pool and the water level in the pool will go down.



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