Wealthification Part 6 – People
Next Module: Part 7 – Systems
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Make yourself redundant in your business. [Click To Tweet].
Be slow to hire and fast to fire. [Click To Tweet].
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A good routine sets you for a pattern of productivity. [Click To Tweet].
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I’m James Schramko, and this is the Wealthification module for People.
People is one of the highest costs in a business. Generally, it is one of the least predictable as well. As you grow, you will probably need to outsource some work, you might need full time staff. And it is one of the biggest capacity constraints for service businesses.
If you plan on having a business that works well without you, then there will definitely be a people component but aside from having people in your business, there are still the other people factors – there’s you, there’s your competition and then your suppliers as well.
So we’re going to dig into this high-energy topic, and we’re going to talk about the difference between full time teams and variable cost per supply. Let’s get into it.
Having A Team
At some point you’ll build a team, and I encourage this because that’s where you get leverage in your business. Full time will generally be better than part time people because you have their full attention and you can establish a real culture.
At the earliest convenient point, it’s good to start gearing your business to the point where you can have full time staff and they don’t actually have to be in the same country as you. You can get very good staff in other countries if you have work that can be done on a computer and then there are sub elements as to whether you need to have someone who can speak to your customers or whether you can handle it via some of the systems we have talked about for support.
Outsourcing Versus Task Sourcing
There’s a big difference between outsourcing and task sourcing. Task sourcing is where you get little tasks and you have people complete the task one by one from sites like fiverr. The problem with task sourcing is that you have a lot of energy used up in describing the brief, hiring for the brief and then reviewing the work and paying for it. So it is often more effective to have full time people and a lot of the role that your people might be doing could be project management. That way, you can really factor in the scalability of your business.
A lot of people grow their business by using dedicated specialists suppliers instead of task sourcing. That’s where you find a service that’s really good at what they do and you contract them on a per unit basis or on a variable cost so as your business grows, the variable cost of supply grows with it. In that way you won’t have to be in so much trouble. You don’t have the fixed cost of a staff member to be on the books all the time. Work out the best combination for you. The ideal is that it’s not you doing all the work. Your goal should be to make yourself redundant in your own business. If you want any degree of automation and if you want to sell the business, you have to prove that it works without you.
The Staffing Demands Of Expansion
Consider that as you grow in team size, you will need managers. So for every three or four people that you hire, you would need to hire a manager to manage those people and then you deal with the manager and not so much the people. So if you want to scale up to a large team, then you want to have no more than six direct reports and you want to make sure that no one in your team have more than six direct reports. Another important thing is to make sure that within you team you cross-train within your team, at least two people should be able to do the same role whenever possible. In that way, when someone leaves, then you have some protection. I call this the ‘Noah Principle’, so two of everything so as you grow, you want to ensure that you are able to sustain your business model by having that protection in place.
The other thing that you need to consider is as you grow in team size, you will have other requirements such as human resource management. The other thing is your business will also require more support so you’ll need to work out the ratio of employees who go to support and employees who go to some form of project management versus specialist skills.
Make Them Want To Work For You
When you consider hiring people, remember that the goal should be, to be the employer of choice. You want to have someone choose to work for you versus all the other opportunities out there because even after they take the job, you want them to still be happy working for you. You shouldn’t be a means to an end; you really should be end destination. You should be somewhere where people want to belong. So it’s important that you learn how to hire well and how to train well and understand that with human resource, dealing with people, it is a constantly moving target and it certainly not easy. Humans are incredible beings and they require a fair bit of effort towards getting it right.
The main functions of human resource management that you’ll have to consider whether it is you now or you employ someone for this function later on, is that it’s the hiring, the training and the firing.
Tips To Save You Time And Energy
It is important to set up a hiring checklist. When you want to bring in a role, you should know what tasks that person will be doing and it’s probably a better idea to hire someone a little bit higher up than what you need. So that that person can cover the job you need and a little bit extra for growth.
I like to hire more senior people and then have them fill the team under them because that way, the people coming into the business under them are people that they had a hand in selecting and they’re stakeholders in the success of that person.
I setup a division of my business to handle the hiring. That is a separate division to the management who actually take on the candidates once they’ve arrived at the company. That way, they have pure focus for getting people for the task and putting them through a process in a logical and non-emotional way. When the teams receive their employees, then they have an induction process. So what we look for are really good employees. There’s a few must-have’s and some desirable traits. We list them out in advance. For someone to work in business, they must have a computer, an internet connection and they must speak English.
If they have those must-have’s they can move to stage 2 and that’s where we have desirables. This doesn’t mean they have to have it. It just means that if they have it, they have advantage over other candidates. If someone knows how to do HTML or a couple of years experience in HTML and if they know how to build wordpress, that would be a good candidate for a web developer. So you put down the desirables, but here’s my tip:
If you’re prepared to train people, if you get people with the right attitude, then you can skill them up and put that energy into training them and you’ll get a better employee who’s less likely to leave you and who will love working for you because it’s not money that’s the primary driver for employment. For most employees, it is appreciation, it is sense of belonging, contributing and being part of something bigger than just them and it’s also the security and the comfort. So money is important but not the most important thing.
As a general rule, be slow to hire and fast to fire. That means you will need to have multiple interviews. Interview at least 2 or 3 times with different people. There’s the initial criteria must be met before they go on interview. Once they interview, you’re doing probing into the background and verifying and checking the resources listed on the application.
Make sure you do this, a good way to get applications is to set up a form online that filters into a spreadsheet that makes it easy for you to manage. You might use something like Google docs for that or surveymonkey.
The other thing is that when you see that there is a problem and someone is not right for the business, it’s better to let them go early and be fast to fire. Don’t have people sitting around because they can be poisonous and can become like a cancer.
A great management technique is the three T’s and this is how to deal with problem areas and this is what they stand for:
Train somebody. If you do a good job of training people into their job, you avoid problems. Most companies under-do the training. What you do is to set up a training library at the very minimum, perhaps a training Dropbox that you can share across all employees computers and you put Jing tutorial videos, made with the software Jing. You make a little video of each task, you put a checklists, you put resources and you could put files that have a corresponding name to the task. You could setup Basecamp or a wiki for your employees but a trained employee is more effective than a non-trained employee.
One of the best ways to have someone learn is to have a buddy system. When people join the company, pair them up with someone who’s already doing the job well and have them cross-trained because it helps both employees get a better grasp on their work. For someone to be able to explain it to someone else, they have to know it well, so they’ll probably brush up and for the new person, they’re getting trained by someone experienced.
Second “T” is Transfer. If someone is not working out in one area, it doesn’t necessarily mean that they’re bad for the company. It just might mean that they’re not suited for the role that they’re in. I have a number of examples where we’ve transferred someone from one department to another where we have a better alignment with their skill set, talents and interest level and they’ve excelled in the new role. Always be in the lookout for opportunities within your business and encourage transfer where they make sense for everybody.
The final option is to Terminate. It’s never pleasant but sometimes, you just have the wrong people and it’s not about you or your company. When somebody is continually putting in a poor performance, it’s about them. Usually it’s that they, through their actions have demonstrated that they are not suitable for the business. It’s not the person personally, it’s their behaviors. It’s what they do. It’s not about them even. It’s about what they do.
Just keep in mind that if you struggle with this termination thing, it’s not the person, it’s just the thins that they’re doing that is not consistent or suitable with the activities that you need to have done within your business. You should free them up and let them get on with finding whatever it is that they’re suited to but it’s just not within your business. It’s a good idea to have a leaving checklist and make sure that you deactivate access from leaving employees. When we have employees, we set them up with their own email address within our business, with our own team Dropbox for access to files and we set them up with a master Basecamp and Googledocs spreadsheet which doesn’t enable sharing outside the company. If someone does leave, we can just deactivate their access and point any email addresses back to our own manager.
If you have a team, that automatically makes you the boss. Steering away from the good old 1980′s command and conquer management style, we probably want to be talking more about leadership and there’s a few techniques that can help you with this
One is the loose–tight method. You let people be creative, you let them make mistakes. You let them explore and innovate and develop your business. Then you look at what’s happening and you talk about it and discuss it and then you let them go again. The reason this works quite well is that it teaches your team that they can think and they can experiment and they can have a discussion and we look at the sort of things that they’ve been up to but it is natural because just like the tide going in and out, the sun going up and down, everything in life vibrates, we breathe in and out so you need cycles. You can’t always be rigidly managing or micro managing stuff and you can’t always be loose and let them go because unfortunately, people often work to the level that is inspected, not expected. So what you want to do is find that balance, let it be loose, let it be tight and you’ll find that this really works well for you.
It’s important to be a role model
Where possible, attend the meetings and have your opinion and don’t put yourself on a high pedestal or the Ivory tower, get down with the troops and dig in and do the things that they would expect that you could do and demonstrate to them that you’re just like them and that you’re human and even when you do occasionally make mistakes, it’s ok to be human and to say “Listen, I think I might have been a bit harsh on this the other day and I apologize if I upset anybody.”
They like you to be yourself a little bit and to be normal, you don’t have to be a superstar all the time but you do have to lead with the front foot and you have to demonstrate that you are the leader and ultimately, the profit or loss of the business comes down to you and you’re the custodian of this business and it’s your ship so if it does go up on the rocks, ultimately you’re the one that takes responsibility. So if a tough decision has to be made, the box stops with the leader but the leader can really take advice from other people in the business and not feel as though the leader has to have all the great ideas because the best innovations and best ideas are going to come from the teams so be humble enough to receive them and implement them and always credit them where they were contributed so that your team will feel encouraged by putting forward great ideas.
Your job really as a leader is to catch major deviations from the norm. You want to find things that are extra bad, the fraud, the lazy employee, the one that doesn’t turn up, great waste of human resource , money or damage or negligence but you also want to find the extra good. The people who are shining, the people who are putting twice the effort of everyone else, the ones who have that ability or talent that you haven’t properly aligned yet to task within your business, that’s your job as well. Never let somebody leave because someone leaves a boss not a business. If they leave, they are really leaving you in almost every case it’s because you weren’t able to find the right mix. So if it’s someone you want, make sure you look after them and lead.
Standard Operating Procedures
Another great thing to put in a business is a standard operating procedure. This is just the checklist of the things that you do for each role within the business. It could be something simple as a daily meeting. We turn up, we say what we’re doing for the day, we listen to everyone else, we go then we do the stuff. At the end of the day, we put in a daily activity report which might look like this.
In our team, we ask every person in the entire business to put in their report saying what did they do today. In that way, as the leader of the business, we can look at the entire hours spent for the day, it could be three to four hundred hours and we can say, right this is all the things that were done and is this consistent with what we’re trying to achieve as a business. Are we rowing in the right direction? Are there questions raised by the team that they are not sure how to answer? Are there obvious deviations from the standard operating procedure? Is it a good report?
Another one is the start-stop-change report and that is occasionally asking: What should we start doing that we’re not doing now? What should we stop doing that we’re doing now but shouldn’t? and what are we doing now that we should change a little bit? It’s a nice way to explore frustrations, innovations or gaps in the business.
Tips For Delegating
You’re going to ask people to do things for you and this is poorly understood in business. This is where you can really get a better result if you explain why you‘re doing something as well as what to do. So if you tell people why we’re doing a certain thing they now have context for it. Quite often they’ll come up with a better way of doing it or add a new innovation and this is really good.
The owners of communication in the delegation is on the person giving the instruction. It’s his obligation to test understanding and to make sure that the message got through properly. When you give an instruction, it’s good to give an expectation on the time frame required, to give an indication or a promise of support if needed or alert them of where they could get help if they have any questions or if they were not able to complete. Then tell them that they need to contact you and confirm with them what they think the objective is and when they feel that it is required by and if everyone agrees that is more or less a promise and then it’s your job to follow up if the promise was met. As the delegator, consistently ask them to let you know when the work has been done but it’s still something you might want to make a note of and check on because occasionally, something doesn’t get done and ultimately, it’s your responsibility to make sure.
What Values Represent Your Business?
One of the good innovations for a more modern business is to have values that you identify represent the business. This is how you hire and train and this is how you manage performance and reviews or even a dismissal. You need to identify as a group. It’s not you telling the company what the values are. It’s the people in the company identifying what they feel represents the business. Here are some examples: They might feel that to be in our company, you must be highly-skilled. In other words, if you don’t have the skills when we hired you, you will make a commitment to learn the skills that we teach and to be really good. In our case, we’re ninja good.
You also want to have a commitment for excellent communication because this is really important. Later on, when you do have problems and you need to investigate, you may use a technique like the Toyota 5 Why system. Where you ask ‘why’ five times. Why did this happen? Why did that happen? and why did that happen and eventually you get to the bottom of any problem or challenge. Now if you’re an excellent communicating team, then you will get to the challenges quicker and you have a commitment that things will be discussed rather than held back and kept secret. This really can eliminate a lot of bureaucracy that goes in a normal business.
You might also agree that part of working for the company means that you discreet and that you don’t share information outside the company. That’s retaining your intellectual property and keeping your market advantage.
So here’s a few things for you to consider. It’s up to you to sit down and work out what your values are but once you have then, use them as a basis to hire. You can probe for the candidate’s history to see if they fit these criteria. For example if integrity is one of the values, you could ask the candidate, “has there ever a time in the past where you were told a secret by perhaps one of your employee workmates that they don’t want you to share?” They might say yes, and you can ask did people ask you about it? Then they might say yes, and then what happened? And so on. So you can find out if there behavior suits the skills that you need.
The Team’s Top Asset
Now the most important person in the team is you. You are the most vital asset for the business. You are the creator, the founder, the driver of this business. Ultimately, it rests with you.
You have to make sure that your head is in the right place to manage the business. So your mindset is important because the way that you think determines your action and your actions determine what you get. I like to think of it as Think-Act-Get. One of the greatest biggest problems most people have is fear. Fear of spending too much, fear of liability, fear of making a public failure, fear of letting their family members down. So this is a constant thing that it’s worth improving your mind against.
Remember that if you decided in the beginning that you want to build this profitable business and you are prepared to pay the price, and you set your beliefs that you’re going to do it and you’re going to be like water, when it comes up against a log or a boulder, or a rock, it just goes around it, over it and under it. Even if the sun burns the water, it turns into steam and it rains back down into the ocean, it’s indestructible. If you fortify your mind to that degree, then you are ready. You are ready to make a reflection on the outside world of the way you are thinking inside. If you’ve got that mental strength, your business will be fine and you have nothing to worry about.
Have A Productive Routine
One of the best ways to enhance personal performance is to establish a routine and this is quite simple. It could be sleeping in till 10, eating breakfast, checking with your team on a meeting, doing something positive for the business like creating content, driving traffic or coming up with an innovation, and then it might be some more routine stuff, such as checking daily reports and having a look at financial accounting statistics, so that would be a routine. You might have some exercise built in to that, you might have some fun, read a book, watch a movie, play playstation, go outside, walk the dogs, whatever the routine is, I’ve found that having a routine allows you to get set into a good pattern of productivity. People who are too free of routine tend to be all over the place and unstructured and that could be good for creative juices but probably bad for your team members, they need to rely on your routine as well.
Question All Your Assumptions
One of the most valuable techniques when it comes to people is to question everything and that is because we all have assumptions. We need to be curious why do we do it this way? How else could we do it? Who’s our perfect customer? What problems does our product solve? Do we even know our numbers? Is our marketing effective? These are questions we should be asking but we also have to ask it of the people. Do we have the right people for the amount of business that we’re doing now? If we had more people, what sort of business would we do? If we change people around in the business to do different roles, what would happen then? Who’s managing this person today? Why is this guy on a day off? When is this lady due back from leave? All these questions are good to be asking yourself so that you can hone in on systematic errors and decide on personal preferences on the way you want to run your business. So just question everything. An example is in the old business that I used to work in, you have to put in your leave notice at least 6 weeks in advance. In my own business, I only ask for a couple of days notice and that is because we have two of every person in the business and it’s long enough for us to communicate the very next daily meeting that such and such will be away and this is who’s responsible on that day and if there are any problems, ask me. So in that way, we’ve been able to question the old assumption that we need to put 6 weeks notice in and make our place more of an employment opportunity for our team. They’re happier working for us because they have a better life.
Caring For Yourself
Your own health is important. As long as you make you sure you get enough sleep and drink water and deal with frustrations as they come then you’ll be ok. You are no good to your employees sitting on the hospital bed. If you were not to show up for a while, then you want to make sure the business runs without you. But the best thing you can do to protect your business and all of your employees is to look after yourself. Eat properly and do what makes sense.
Feed Your Brain
As the custodian of your business, you have to be the one who does the majority of the learning. You can really work hard on getting the right environment to get your daily learning. Cut down and filter all the sources of information that you probably have access to and just find the ones that make the most sense for you.
In my community, places like SilverCircle.com where we have the most controlled learning environment because we have a weekly call to get new ideas, share ideas and mastermind and we have the forum community where we can ask questions if we have a problem that arises and also we get things like book summaries and extra information modules. So have the right learning environment so that you can continue to develop and innovate your business because if you are not innovating, you’re going backwards by default because other people are innovating.
How Do You Communicate?
Communication is huge and you have to set up communication channels firstly with yourself. How do you talk to yourself? Do you have that positive mind? Do you have the little voice in the head? Is it a good voice? If it’s a bad one, you can just delete it. If it’s a good one, that’s perfect. Is it encouraging?
Then it’s you with your staff, how do you communicate with them? Do you generally care about them and do they know that? Are you accessible for them when they have a challenge?
Then, there’s suppliers. If you have great communications with suppliers, quite often they can refine their offers to match your business and you get a better outcome and you might get preferential pricing, timing or allocation of resources. Communicate well with your competition so set up your spy channels, your alerts, and your watch list. Keep an eye on what’s happening so you can respond quickly. Remember you owe these and to the employees who are working for you.
Also your customers, set up your communication channels properly, your emails, messaging and payment confirmations. Make sure that all the people who deal with your business get a consistent look and feel and they probably understand what your values are even if you never told them because it’s reflected in the work that you do.
I find that a support desk is the most vital customer communication tool that you could have because it covers pre sales, during sales and post sales.
The Importance Of Filters
From a personal point of view, you really need to set up filters and this is where I’ve done a lot of work. The secret is you want the least amount if information possible. When I was creating this information, I wanted to have the shortest possible essence with the most impact-full information so that it could be consumed quickly, that the points made sense and I’ve supported multiple modality. Having voice, an image, having the words. So one of your main goals should be to reduce the amount of things that you have in front of you and that you spend your time on so that you have more energy to focus on the positive things and the good things. My tip for email management is to use Gmail and to set filters and rules and only subscribe to things that are absolutely vital for your business. Anything beyond that, you can have it go into filter if you have to have it at all. I designed software called SpeedDash (SpeedDash is available to members of SuperFastBusiness) to make this job much easier. It’s a control panel where you can get some basic inputs for you business, you can set task, manage your calendar and you have a quick link into all of the websites that you would need to visit to run your business such as your shopping cart, your email autoresponder, your bank account, your paypal account and anything that’s vital for you to visit. The team project management software.
In your office, remove distractions. Just put everything you haven’t used for the last six months in a box and stick that box in the garage. It’s best to do single tasks at a time rather than trying to do many, many things. Put your focus on it, the best thing I found out to do that is to use a white board. Whatever project I work on, I just put it in the white board, make it happen, turn it into the product and finish it and that is the secret to getting the best possible outcome. If you want to change a bad habit, the best way is to replace it with a good habit. It’s hard to stop habits but what you can do is you can just create brand new habits. If you are buried right now under the pile of trouble, the best thing to do is a power cut. Start with everything and then eliminate all the things you don’t need. It’s like finding your Statue of David inside a block of marble. Remove old papers filed, equipment, furnitures, software systems, procedures, anything distractions, filter really hard and only keep the things that are valuable now or in the short term future
Do Your Research
Another people thing is research. You really need to understand the people around you and especially your competitors. You need to know who they deal with, their customers, how do they compare to your customers? What’s your customer doing? What’s their buying behavior? How often do they buy? Their buying frequency? What do they like with what you offer? What don’t they like? What do they wish you had but you never asked? These are things that you need to research.
Look at their business model, what’s their growth engine? How do they run their business? What’s their likely next maneuver? What’s their overall strategy? Could you compete with them or could you perhaps complement them if you are able to take a different angle in the market place? Or eliminate a conflicting product. Perhaps you can partner up with them and share the database or share leads.
Of course the last ‘people thing’ are the people you hang around with. Your friends and family. Just keep in mind that you do tend to become just like them. If you want to be happy, wealthy, successful, find happy, wealthy, successful people and interact with them. They are going to be the ones who will be your metro-norm and keep you on a consistent plan. Find the right people. Cut off people who are poisonous to your relationships because they’ll stress, anger, fear, doubt, concern, query everything and tell you, you can’t do it, they’re not the right people around you. Surround yourself with the like-minded peers and you will be successful.
Wealthification is just one of the many courses inside SuperFastBusiness.com. Join me inside this Internet Business coaching community so that I can help you profit faster: Click Here
Next Module: Part 7 – Systems