Tapping Into People Power
By Mark W. Sheffert
August 2001
Have you ever heard a company president say, "If it wasn’t for those darn employees
and customers, my job would be pretty easy?" Or the CEO say, "Our people are
our greatest asset," yet doesn’t make any investments in training, communications,
competitive compensation and benefits or pleasant facilities? And, of course, how
many times have you heard a CFO say, "Our largest cost is people?"
Well, based on my almost 30 years of business experience, I’ve learned the
greatest opportunities and greatest problems in an organization walk around on two
feet. Despite what executives like the ones I’ve quoted above believe, it’s not the assets
like property, plant, equipment, furniture, or computers that will make the difference
between a company winning or losing in the marketplace. Rather, it’s a company’s
people who make the difference; people have the power to build, stagnate or destroy
the value of a business.
Winning organizations are good at motivating people and at getting them to be
productively engaged in their jobs; they unleash the power of their people. And, they
know their people can stretch beyond the skill sets of their jobs to help the overall
organization in planning, process and implementation . . . in fact, they love to be asked.
Let me share a case study of a family-owned technology company that made the
transformation into a company that tapped into its people power. The father is a classic
inventor-turned-entrepreneur who founded the company and ran it along with the help
of his sons. The company grew over many years into the market leader in their niche
market. Being in the technology industry, they believed technology was the answer to
improved productivity. They invested heavily over the years into the latest and greatest
information systems and manufacturing technologies. This company had the slickest
Enterprise Resource Planning (ERP) system you’ve ever seen.
Yet, their financial performance was not stable --- achieving earnings one year, not
the next, then barely scraping by the next. Revenues grew initially, but then started to
level off and decline. The company just sputtered along until they had three quarters in a
row of growing unprofitability. Because revenues were down, accounts receivables were
declining. Working capital was eroding rapidly. They became out of compliance with
the bank covenants on their credit agreement. Their flow of cash was quickly running
down to a trickle, so it was becoming harder to pay the bills. Accounts payables were
stretched out to 60-90 days; they were basically depending upon trade credit to finance
their corporate losses.
They knew they had to do something different, but didn’t know what it was.
After a quick assessment, my firm determined that the major problem wasn’t their
products, their market, or their operating systems. It wasn’t the skill sets of their people.
It was as simple, yet as complex, as this: an adversarial relationship that management
had with their employees was compounded by a dysfunctional organizational structure. Because of problems in the company’s leadership and lack of management experience,
the future of the company was in peril.
For example, family members had been elevated to management positions because
of their last name, not necessarily due to their skills or ability. The board of directors
was comprised of family members and several others who were chosen not because of
ability but because of their relationship with the family. As you can imagine, this had
created friction among the other employees.
Strategic decisions were either not made, not communicated, or simply demanded
willy-nilly by the father. There was no formal business plan, no integrated planning
system, no defined and measurable goals. The board of directors, management, and
employees were not in sync with respect to the company’s direction, strategy, allocation
of resources, or deadlines. Communication throughout the company was poor. As a
result, employees did not have a clear understanding of what they were expected to do,
and they had a mounting lack of confidence in the board’s and management’s ability to
provide leadership during a growing crisis.
After some "two-by" logic, the board and management opened their eyes to these
problems and they knew they had no choice but to change their organization’s behavior.
They had to change from a family-driven company into a professionally managed
company that relied on their people, not their technology, to create profit and value.
First, we took some actions to take care of their immediate financial problems
and stabilize the company. Then we shook up the board and executive team to bring in
management experience and decrease dependence on the family. It was very difficult, but
family members were kept only if they had the skills, training and experience needed.
Then, the new management team developed a formal strategic and business plan
that focused on significant growth and profitability. After settling on their strategic
vision, they wrote goals that could be measured, putting deadlines on every action and
deciding who was responsible for what. Next, they made very conscious efforts at
communicating the plan to all employees. They wanted every employee to know their
role in the plan and how their job fit into the big picture.
They also made extraordinary efforts to strengthen work relationships within
their company to improve teamwork, communication, and productivity. It was
unfamiliar territory, but they learned to give feedback to employees a lot more often
than once a year in a tortured performance review session. And, they set up crossdepartmental
and "skip-level" reviews to get feedback from employees.
And guess what happened? The employees regained their trust and confidence in
management, communication lines were opened, and financial performance improved.
These changes were not easy and didn’t happen overnight. But the company learned the
hard way that it isn’t only technology or equipment or operational systems that build a
company’s value --- they are necessary, but that’s not what drives it --- it’s all in the
power of the people.
People make success. It’s the people developing a marketing plan; people creating
the products; people doing the buying and selling. People power is what business is all
about. And it is the winning organization that takes the time and makes the investments
to make sure its people are motivated to perform productively.
Winning organizations invest in environments that emphasize communication,
training, benefits, competitive compensation packages including non-compensatory
rewards, and pleasant facilities. Today, more than ever, employees have a choice.
They will choose to work at a business that offers the most pleasant work environment,
rewarding career paths, and a corporate culture of open communication, trust, and
respect.
Do you read between the lines? It’s not as simple as paying people well for a hard
day’s work. A fair salary is important, but isn’t the most important component of job
satisfaction. People also want to know what’s expected of them, to be trained to do
their jobs if needed, to get regular informal feedback on their progress, and to be given
rewards for doing their jobs well. If a company becomes proficient at all these things,
they can tap into its maximum amount of people power ... and their people shall rejoice!
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