Talent Management

By Mike Myatt, Chief Strategy Officer, N2growth

I receive at least 20 e-mails a week from executives and entrepreneurs asking “How do I recruit top talent?” I’ve adequately addressed my favorite boomerang question in many previous pieces including three of this blogs most read posts: “How to Win the War for Talent” “Team Building” and “Who Should do the Hiring“. So in today’s post I’m going to take a different approach to dealing with the talent question by not focusing on recruiting but in dealing with the balance of the talent management lifecycle.

Consider that while the “war for talent” has been waged since the dawn of capitalism things aren’t getting any better. In fact, with the continued advancement of technology, impending mass retirements of baby-boomers and the impact of globalization on commerce the war for talent will only proliferate over time. In other words, organizations can no longer afford to assume that they will always be able to attract the talent needed to execute business strategy. Rather, it is necessary that companies be proactive and address the reality that few, if any, organizations today have an adequate supply of talent, whether it’s at the executive, management or staff levels. Talent is an increasingly scarce resource…

Given that talent scarcity is impacting all businesses, it is critical to link talent strategies to business drivers which make it easier to decision how to deploy, promote, and develop talent from within to best serve the future needs of the enterprise. It is also critical to understand that business environments are shifting and that a company’s talent management strategies must be adapted to current market conditions in order to remain competitive. As an example, cycle times have shortened where 90-day business plans are more common than 5 year business plans and talent is often virtual and/or mobile as opposed to desk bound. If you don’t manage talent according to new paradigms and take advantage of opportunities to cost effectively leverage your talent you will not only be at a competitive disadvantage, but you will likely lose your existing talent to competitors who understand the landscape better than you… 

Let’s begin by defining the talent management lifecycle as being comprised of the following 5 phases: 1.) Identifying; 2.) Recruiting; 3.) Deploying; 4.) Developing, and; 5.) Retaining. Furthermore, each of the 5 phases mentioned above can be broken down into subcategories. As an example Identifying can be broken down into definition requirements, profiling etc., Development can be broken down into initial training, continuing education, coaching, mentoring etc. and Retaining can be broken down into motivating, compensating, challenging, etc.  Virtually every client I have had at least some form of recruiting strategy and process in place at the time of my initial engagement, but very few had processes or strategies in place for the balance of the talent management lifecycle. 

While I don’t mean to give the topic of recruiting short shrift as I firmly believe you should always have your hook in the water trolling for talent, recruiting is just one piece of the talent management puzzle. I believe far too much emphasis is put on recruiting and not nearly enough time is spent on the identification phase and likewise not enough attention is focused on developing, deploying and retaining the talent that has already been hired. In fact, my experience shows that most employers have better talent than they might think, but it is the fact that they are not developed or deployed properly that gives them a skewed perspective when it comes to assessing their own talent. 

In the text that follows I will break down each phase of the talent management lifecycle so that you can begin to incorporate each of them into your company’s strategy:

  1. Identifying: The identification of talent should be a constantly occurring event. It should take place prior to recruiting in that if you haven’t identified your needs/requirements and aligned them with identified solutions comprised of the skill sets, competencies, experience and talent level you are seeking then why even begin the recruiting process? Furthermore, it is critical that you seek to identify future leaders from within the ranks so that you can start to develop them for higher and better use activities.
  2. Recruiting: For those of you who know me or have read my posts in the past you know that I am a believer in the ABH (Always Be Hiring) philosophy. You never know how long it will take to find top talent and if you wait until there is an immediate need you will likely find yourself conducting a desperate search and hiring the wrong person for the job. Additionally, you should hire the best talent that you can afford. If you hire tier-one talent you’ll receive tier-one results. If you hire based upon how cheaply you can bring someone aboard you will get what you pay for.
  3. Deploying: Looking for a sure fire way to catalyze revenue growth? Focus your best talent on your best opportunities. One of the most common mistakes that I see in companies today is that they have the wrong people doing the wrong things. When conducting employee interviews at client companies one of the most common complaints that employees’ voice is that they are underutilized and not challenged. Just because someone was hired for job “x” doesn’t mean that they can’t or shouldn’t be deployed for job “y”.
  4. Developing: Along the lines of number 3 above, if you are not developing your talent your wrong…A lack of talent development will create lost opportunity cost, but it will eventually lead to attrition in the ranks as unappreciated talent leaves for greener pastures. Development should start on day one and never stop. New employees should be trained and mentored by more senior employees and you should consider hiring an outside coach or mentor for senior executives. If you want to watch your employees achieve great things groom them for increased responsibility and develop them for greater challenges.
  5. Retaining: If an employee was worth hiring and developing then they are certainly worth retaining. Much has been written about the exorbitant costs of employee turnover so I won’t belabor the point other than to acknowledge that the costs are indeed high. I have a 4 part recipe for retaining talent and the ingredients are as follows: Motivate, Challenge, Recognize and Reward. Pay your people at the top-end of market, utilize employment contracts, deferred compensation and other forms of golden handcuffs to make sure your talent doesn’t jump ship. Protect your human capital investments in order to maximize your return and manage your risk.

Bottom line…Allocate more time and attention to existing investments over new investments by operating on the bird in hand theory…If you have 90 employees and your headcount ramp calls for adding 10 new hires are you going to sacrifice the 90% for the 10%? In a properly run business it should not be an either/or situation as a good talent management plan would allow you to pay attention to both new recruits and existing employees. A focus on implementing sound talent management strategies will improve performance and morale while lowering costs and risk.   

Seller Considerations

By Mike Myatt, Chief Strategy Officer, N2growth

Let me begin with the disclaimer that there are many different types of exit strategies and many different reasons for exit. That being said, in the text that follows we will only focus on the entrepreneur who sells the business and stays on in an executive capacity for the new entity. Most entrepreneurs are taught to begin identifying their exit planning strategy as early into the lifecycle of a venture as possible. In fact many entrepreneurs are so predisposed to selling their company for the proverbial pot of gold at the end of the rainbow that they spend more time positioning for sale than operating their business. But my question to you is this: Is selling your business all that it’s really cracked-up to be? In today’s post I’ll discuss the flip-side of the coin by pointing-out what most entrepreneurs usually fail to consider; the downside of selling a business…

In my experience I’ve found that there tends to be four types of entrepreneurs: 1) The Cowboy: those that jump into a business venture as a type of “get rich quick” scheme looking to position their business for sale at the earliest possible opportunity. The Cowboy entrepreneur has no interest in being part of any long-term endeavor; 2) The Builder: entrepreneurs who while still predisposed to exit via sale take a bit more time and effort in their endeavors by using a more strategic and calculated approach in their exit planning. The Builder entrepreneur grows the enterprise according to a plan for the purposes of maximizing valuation within a given time frame and will only sell under very specific and favorable circumstances; 3) The Opportunist: Those entrepreneurs who never really intend to sell the business but get approached by a private equity firm, investment banker or principal buyer and decide to “get while the getting’s good” and; 4) The Operator: Those entrepreneurs who view themselves as one with the business and would never sell under any circumstances.

Let’s face it; selling a business feels good – the press, the public accolades, the sense of personal and professional achievement, and last but certainly not least, the rather large and sudden balance increase in your bank account are all good things. What’s not to like? The reality is that in the courtship leading up to the sale, and in the honeymoon immediately following the sale, there is much to like and not too many unplanned or unanticipated headaches to deal with. But as time marches on and the business of business starts to take over, the facades begin to fade and the ugliness of what really has happened begins to set in. The truth of the matter is that until you’ve gone through this process a few times you don’t really know what you don’t know. You certainly understand the price you’ve been paid to induce you to sell the business, but it is not until long after the deal is done that you begin to understand the very true and real cost of acquisition. You may be interested in reading a prior post entitled “Managing Disposition Risk.”

The best dispositions are the ones in which you cash out and walk away – a clean break is always best for a wide variety of reasons. However this is not the case with most business sales as the key principals will normally stay on in some capacity. The seller sees becoming a key-employee of the new entity as a benefit to the transaction that will add significant value moving forward. The buyer sees keeping the seller on board as a necessary evil of closing the deal and rolling up a new business. The buyer needs you to stay engaged to help sell your key employees and keep people together during the transition until the buy-side has time to make necessary assessments and changes without disrupting the continuity of operations. It really is just part of the way the game is played. Very rarely do you see sell-side principals make it for the long haul as part of the new entity.

The buy-side pitch of autonomous operations and independent decisioning quickly becomes a forgotten promise that is pushed aside for the benefit of the greater whole. If the seller doesn’t acquiesce to the whims of the new owners they become labeled as “not a team player.” It’s not that the buyer doesn’t value the seller’s intellect or ability, but the goal of the buyer is to transition every part of the new business into the overall culture of the acquiring entity as seamlessly and efficiently as possible to take advantage of the leverage and economies of scale priced into the acquisition. This all happens much easier by placing the seller into a position of while having a decent title and paycheck, really has little final say or authority….this is the first step in phasing the sell-side principals out altogether.

Ask anyone familiar with the M&A world and they’ll tell you that making the deal is the easy part, but it is the post acquisition integration of culture and personality that causes most deals to fall short of the pre-transaction projections. Most companies that are seasoned at the acquisitions game are skilled at business process engineering and systems integration, and manage the non-human aspects of transactions fairly efficiently. However few companies are as relationship centric as they would like to be, and it’s easier to systematically consolidate and eliminate positions than to absorb them.

I’m not saying all buyers and investors are evil, but you need to keep in mind that at the end of the day they typically have their best interests at heart and not yours. While there are clearly good reasons to sell, and also transactions that have motivational, value and pricing alignment between the buy-side and the sell-side, the really good deals where both sides win are few and far between. My advice is certainly not to avoid all sales, but rather go into things with your eyes wide open knowing the realities associated with your decisioning. It is always better to do a deal from a completely informed perspective rather than being blinded by the ignorance of unrealistic expectations and assumptions.

 

Executive Decisioning

By Mike Myatt, Chief Strategy Officer, N2growth

Senior executives who rise to the C-suite do so largely based upon their ability to consistently make sound decisions. However while it may take years of solid decision making to reach the boardroom it often times only takes one bad decision to fall from the ivory tower. The reality is that in today’s competitive business world an executive is only as good as his/her last decision. In today’s post I’ll provide some tips for making consistently good decisions…

Nothing will test your metal as an executive or entrepreneur more than your ability to make decisions. I happen to be the type of person that would rather make the decision than have to live with someone else’s decisions. In fact I absolutely love to make decisions and whether it is in my role in the business world, or my role as a husband and father, I want to be the one making the tough calls. That being said, nobody is immune to bad decisioning We have all made bad decisions whether we like to admit it or not.  Show me someone who hasn’t made a bad decision and I’ll show you someone who is either not being honest or someone who avoids decisioning at all costs.

For more than 20 years I have either served in the capacity of a principal owner or senior executive and have generally been highly regarded for my decision making ability. Like everyone else I have also made some regrettable decisions along the way. When I reflect back upon the poor decisions I’ve made it’s not that I wasn’t capable of making the correct decision, but for whatever reason I failed to use sound decisioning methodology. Gut instincts can only take you so far in life and anyone who operates outside of a sound decisioning framework will eventually fall prey to an act of oversight, misinformation, misunderstanding, manipulation, impulsivity or some other negative influencing factor.

The complexity of the current business landscape combined with ever increasing expectations of performance and the speed at which decisions must be made are a potential recipe for disaster for today’s executive unless a defined methodology for decisioning is put into place. If you incorporate the following metrics into your decisioning framework you will minimize the chances of making a bad decision:

  1. Perform a Situation Analysis: What is motivating the need for a decision? Who will the decision impact (both directly and indirectly)? What data, analytics, research or supporting information do you have to validate your decision?
  2. Subject your Decision to Public Scrutiny: There are no private decisions Sooner or later the details surrounding any decision will likely come out. If your decision were printed on the front page of the newspaper how would you feel? What would your family think of your decision? How would your shareholders and employees feel about your decision? Have you sought counsel and/or feedback before making your decision?
  3. Conduct a Cost/Benefit Analysis: Do the potential benefits derived from the decision justify the expected costs? What if the costs exceed projections and the benefits fall short of projections?
  4. Assess the Risk/Reward Ratio: What are all the possible rewards and when contrasted with all the potential risks are the odds in your favor or are they stacked against you?
  5. Assess Whether it is the Right Thing To Do: Standing behind decisions that everyone supports doesn’t particularly require a lot of chutzpa. On the other hand, standing behind what one believes is the right decision in the face of tremendous controversy is the stuff great leaders are made of. My wife has always told me that “you can’t go wrong by going right” and as usual I find her advice to be spot on…Never compromise you value system, your character or your integrity.
  6. Make The Decision: Perhaps most importantly you must have a bias toward action and be willing to make the decision. Moreover as a senior executive you must learn to make the best decision possible even if you possess an incomplete data set. Don’t fall prey to analysis paralysis but rather make the best decision possible with the information at hand using some of the methods mentioned above. Opportunities and not static and the law of diminishing returns applies to most opportunities in that the longer you wait to seize the opportunity the smaller the return typically is. In fact, more likely is the case that the opportunity will completely evaporate if you wait too long to seize it. 

Decisions can, and usually will, make or break an executive. Those that avoid making decisions solely for fear of making a bad decision will rarely rise above mid-management, and those that make decisions just for the sake of making a decision will likely not last long.  If you develop the appropriate blend of a bias to action with an analytical approach to decisioning your stock as an executive will surely rise.

N2growth Webcast Updates

By Mike Myatt, Chief Strategy Officer, N2growth

As many of you know over the last few months we have been testing a webcasting platform at N2growth. These efforts have been in response to your requests for broader access to the information that you find mission critical as CEOs and entrepreneurs. While we have held a few disparate webcasts on a one-off basis in recent months, we are pleased to announce the formal roll-out of the N2growth Webcast Channel. You can now find a calendar of upcoming webcasts on the topics of greatest interest to you (we know this because the cirriculum has been built from your input). You can now register to attend N2growth Webcasts as often as twice a week if you desire.

For those of you unfamiliar with webcasting as a communications channel reviewing the following benefits should serve to address any questions you may have as far as why we’ve decided to travel this path:

  1. Convenience: You can attend from anywhere on the planet with nothing more than access to a phone and an Internet connection. Whether you’re in the office, at home, in a hotel, having a cup of coffee at Starbucks or even in the car as long as you have a phone and web acces you can attend.
  2. Affordability: Depending on the topic of the webcast you can attend for prices that typically range anywhere between $100 and $400 per webcast. Contrast this with the costs associated with attending traditional conferences (travel, lodging, conference fees and miscellaneous expenses) and you’ll quickly see what a bargain webcasts are… 
  3. Interactivity: All registered attendees have the ability to submit their specific questions in advance of the webcast. We want to make sure you receive the information you need and do everything possible to provide you with huge return on investment.
  4. Anonymity: Nobody but you and the presenter will know you are in attendance so you can rest easy in that you will be learning in complete privacy.

Client centricity is not just a catch phrase to me as this concept was born out of your feedback and direction. If you haven’t attended any of our webcasts I would encourage you to register for one of the upcoming events and give it a try…I continue to be interested in receiving your feedback as to speakers you’d like to hear from or topics of interest that you wish to have covered. Don’t be shy…let me know what you think… 

Brand Acquisitions

By Mike Myatt, Chief Strategy Officer, N2growth

Real brands have real value…in fact recent studies confirm what many of us have known for quite some time, which is that brand equity can become one of the largest assets on a companies balance sheet and ultimately lead to increased valuations. While I have written often on the topic of branding in today’s post I’m going to look at brands (as opposed to companies) as potential acquisition targets…

Brands that have been well engineered have also been heavily invested in creating both tangible and intangible worth which makes them solid acquisition targets. It is much easier to acquire a brand than create one from scratch as you are leveraging the investments of time, money and efforts of the previous brand owner. Even if a brand is not particularly well known or even if it happends to be dormant there may still be significant logic to acquiring the brand. Moreover acquiring the right brand can give you immediate access to certain markets and demographic as well as pave the way for geographic expansion.

By decoupling a brand from the operating entity that owns it, your acquisition will likely be void of much of the brain damage typically associated with the post acquisition integration efforts of rolling-up a going concern (employees, infrastructure, etc.). By stripping the brand out as a stand alone asset you acquire the brand equity which will often include significant good will, mindshare, marketshare and any number of other benefits in a much less complicated transaction that can close in a short period of time. Lastly, many companies undervalue their brands (especially if they are not currently active) and will often times divest themselves of a brand at a discount over true market value. This is in stark contrast to a company’s perception of their own enterprise value which they almost always value at a steep premium.

While the text above discusses brand acquisition from the buy-side perspective the logic should not be lost upon potential sell-side players. Those companies that have developed brands (active, dormant or somewhere in between) looking to leverage their investment should look into a valuation of their brand assets (see “Assessing Brand Value“) and consider the possible divestiture of brands that don’t fit into the company’s operating strategy going forward and where it makes economic sense to do so…