CEO Success Report - June 2001
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CEO Success Report
- June 2001
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Increasing the Effectiveness and Enhancing the Lives of CEOs
and business owners.
Contents of this issue...
.. Welcome - A few words from the publisher, Gary Lockwood
.. Thought-Starter - "Count On It"
.. Guest article - "Change Your Turnover Expenses Into
Profits"
.. CEO Resources
.. Quotes to use in your staff meeting this month
.. Humor to lighten up the executive suite
.. Contact the publisher
.. Subscribe and unsubscribe instructions
See past issues of the CEO Success Report at:
http://www.CEOSuccess.com/archives
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WELCOME to this issue of the CEO Success Report!
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Hello again. I'm Gary Lockwood, President of CEO Success.
Welcome back once again to the CEO Success Report. I know you
have no shortage of material to read and I thank you for choosing
to read our newsletter.
Find resources for your success at www.CEOSuccess.com
May I ask a small favor? Please forward this issue to other CEOs
and company presidents who may be interested in receiving
these messages. Thank you.
We work hard to provide practical ideas, thought-provoking concepts
and useful information for you. Please give me some feedback
about this issue or about the website. Send your comments me at
mailto:Gary@CEOSuccess.com
Most business owners and CEOs know what's important to
their enterprise, but can't (or don't) measure those things.
You've heard the old maxim: "You can't manage what you don't
measure."
What do you pay a lot of attention to? What are you constantly
measuring, asking your employees about, talking about and
looking at?
When your team knows what's truly important to you, they'll likely
pay more attention to those things, too.
My Thought-Starter for today discusses the significance of paying
close attention to those aspects of your enterprise that are crucial
to your success.
Our guest article this month is by Dan Logue, an expert in hiring
and retaining top employees.
According to Dan, companies put a great deal of effort into the hiring
processes but fail to invest time and money into retention. It does
your company no good to hire the best people and then turn around
and lose them.
Dan's article discusses some of the key strategies for hiring and
keeping those high-performance employees. He shows you how
to turn those turnover expenses into profits. Read more about
Dan at the end of his article.
I hope you enjoy receiving these articles and ideas to
help you sharpen your thinking about being an effective CEO.
My wish is that you use the ideas in the CEO Success Report to
get the results you really want. If you want some help in putting
them into practice, or if you have questions, email or call.
As you know, our specialty is Increasing the Effectiveness
and Enhancing the Lives of CEOs and business owners.
Enjoy this issue with my compliments.
Sincerely,
Gary Lockwood
CEO Success
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This month's THOUGHT-STARTER
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"Count On It"
by Gary Lockwood
"What we see depends mainly on what we look for."
-- John Lubbock
One of my clients (let's call him Mike) was telling me how important
it is to him that he sell long-term maintenance contracts, not just
ad hoc projects.
When I asked him how many of these long-term maintenance
contracts he has already, he couldn't tell me. He didn't know! He
said he's been too busy to track the number of such agreements.
The fact is that most owners and CEOs know what's important to
their enterprise, but can't (or don't) measure those things.
You've heard the old maxim: "You can't manage what you don't
measure." You have also likely read the story of the "Hawthorne
Effect".
In the late 1950s, the GE plant in Hawthorne, California brought in
some consultants to measure the effect of brighter lighting on the
productivity of their factory workers. The consultants first
intensified the brightness of the lighting.
Productivity increased.
After raising the brightness two more times, they saw two
more increases in productivity. On a hunch, they lowered the
lighting and measured one more time. Productivity went up!
They figured out that the productivity gains were not related to the
brightness of the lights, but to the act of measuring. They were
paying a lot of attention to the effectiveness of their workers. And
guess what? The workers responded by working more effectively.
What do you pay a lot of attention to? What are you constantly
measuring, asking your employees about, talking about and
looking at?
When your team knows what's truly important to you, they'll likely
pay more attention to those things, too.
Focusing on two or three key business metrics focuses you on
those areas. If your currently dominant thoughts are about
creating a new brochure, you'll start seeing other brochures.
You'll hear conversations about brochures. You'll pick up ideas
relating to brochures and even notice colors that would be
attractive for the new brochure.
In other words, your brain will pass through anything even
remotely related to the important issue - the brochure.
If you focus on improving a specific key indicator of your business
success, your brain will pass through sights, sounds, people and
ideas even remotely related to that point of focus. In other words,
if you measure it visibly, often and attentively, it will likely
improve.
Here's my suggestion: Identify two to five key measurements and
key indicators that are important and essential for your business.
Set up an active system to measure and track these indicators.
Talk to your employees about it at every opportunity. Put charts and
graphs of these indicators on the wall of the lunch room. Make your
interest in these metrics very active and visible.
Chances are, you'll get what you're looking for - improvements in
these areas.
Count on it.
About the Author...
Gary Lockwood is Increasing the Effectiveness and Enhancing the
Lives of CEOs, business owners and professionals.
Get the Free BizSuccess newsletter -
http://www.bizsuccess.com/newsletter.htm
or send any blank email to mailto:subscribe@BizSuccess.com
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Guest Article
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Probability into Reality
How to change your turnover expenses into corporate
profits.
by Daniel Logue
Studies have shown that 75 % of hiring requests are for replacing
personnel that have left the company and not for new positions.
Companies put a great deal of effort into the hiring processes but
fail to invest time and money into retention. Company executives
must hold their management staff accountable for not only selecting
the best people but also retaining them. It does the company no
good to hire the best people and then turn around and lose them
because the proper actions were not taken early on to retain them.
Until management is held accountable for both aspects of process
there is little chance of turning those turnover expenses into
profits.
Everyone agrees that turnover is a costly expense for any company.
Unfortunately, many companies have lived with the problem so long
that they have come to believe that it is a normal cost of doing
business.
I can't count the number of times I have talked to company CEOs and
presidents about high turnover problems and heard them say, "That's
just the way our business is." If a company wants to turn these costs
into profits then they must put this belief behind them. Success in
reducing turnover involves: knowing how large the problem is, deter-
mining how much it is actually costing the company, developing a
turnover reduction strategy, and implementing that strategy. Let's
look at these elements in more detail.
A majority of companies can quote figures on how many people
they lose in a year, but few calculate what the actual cost of their
turnover is. Unfortunately, companies that do calculate their turnover
costs seldom take all factors into account. The key to investing in
retention involves knowing how much to spend to get an adequate
return on your investment. Company profits are not enhanced when
a company invests more money in reducing turnover than the turnover
is costing them.
The obvious first step in turning those losses into profits is calc-
ulating the actual cost of turnover. When calculating turnover rate
there are several factors that must be taken into account such as
separation costs, vacancy costs, replacement costs, and training
costs.
Separation costs include:
Exit interviews costs that are incurred.
Administrative costs related to termination.
Severance pay.
Any unemployment compensation increases.
Vacancy costs include the net expenses or savings incurred resulting
from the increased overtime or temporary employees needed to carry
out the functions of the vacant position.
Replacement costs include the cost of:
Attracting applicants.
Interviewing.
Assessment and skills testing.
Travel for candidates.
Relocation expenses.
Pre-employment administrative expenses.
Medical exams and drug screens.
Background checks.
New employee orientation.
Training costs include both formal and informal training. All new
employees require some level of training to function in the new
company. This training may be as simple as learning the company's
procedures, to a more time intensive task of learning new proprietary
software programs. It is well recognized that there is an initial
productivity performance differential between the person who
leaves and their replacement. This cost should be estimated
and accounted for in the turnover cost calculations.
It's important to note that most companies only take into account
tangible costs when calculating turnover. Intangible costs are just
as real and admittedly more difficult to quantify. Often, intangible
costs have a much greater effect on the business than the easily
quantifiable costs. Examples of intangible costs include: Stress and
tension that an uncompensated increased workload causes on the
workers that assume those duties due to the vacancy, decreased
productivity, and a decline in employee morale. Be aware that
calculating the cost of turnover from quantifiable factors alone
provides only a portion of the total cost.
Once you know the cost of your turnover you can develop a turnover
reduction strategy that generates a return on your investment. A
retention strategy is developed in the same manner as a business
strategy and is equally important. This strategy must be directed
by upper management in concert with HR and must go beyond
a strategy of "hire the right people." Sales and profits are
always
the number one objective of a company, but their number one
priority should be retention. Like all other initiatives, the
retention strategy must have the full support from top management
to assure it success.
When designing the retention strategy be aware that different levels
within the company have different needs and drivers. A study com-
missioned by Coca Cola showed that hourly employees' top three
wants were good direction, sufficient and appropriate supplies and
equipment, and good immediate supervision. Management
employees, on the other hand, want a clear sense of organizational
direction, good training, and the opportunity for advancement.
These differences must be reflected in the retention strategy for
it to be effective throughout all levels of the organization.
A good retention strategy will result in a retention culture being
built within the company. People will stay with the company
because of such factors as terrific managers, accommodating
work schedules, a friendly atmosphere, growth opportunities and
challenges, and many others. New hires are looking for job
satisfaction, recognition, and the feeling that they're part of the
company's effort, therefore the retention strategies must reflect
those values.
There are many proven methods to help companies do a better job
of identifying top performers and retaining good employees. Hiring
the right people for the job is one of the key elements in a retention
strategy. If the right people are not hired, retention becomes a moot
point. Hiring is not merely determining that the person has the
skills to do the job, but matching the job needs to the person's
needs, interests, and personality characteristics (job matching).
It is well documented that the most successful hiring process
consists of a structured interviewing process, a good assessment
testing process, and good background checks. This is why it is
important that all individuals involved with the interviewing process
be trained in behavioral interviewing techniques. The company
should invest in a well validated, business oriented assessment
test to enhance their ability to identify the right person for the
job.
Several common factors are found in successful retention strategies:
1. Hire for job fit.
2. Informing employees as to what the company's goals and
values are and living those values in every thing the company does.
3. Actively managing the employees' first week to structure the new
employee's experiences so that they seize the enthusiasm for the
company that the other employees display.
4. Employee understanding that there is career growth, learning,
and development by staying with the company.
5. An individualized reward and recognition process.
6. Giving the employee the feeling that their work is important to
the company.
7. Leadership that is consistent and fair to the employees.
8. A process that asks the employee what do they need to keep
them motivated, interested and connected to the company?
Improving retention is not an easy process but it pays big dividends.
The time, money, and effort that a company puts into developing and
implementing a retention strategy will not only reduce the turnover
rate, but it will result in a more productive work environment. When
this occurs the turnover costs will be converted into company profits
and the present company profits will grow through increased
productivity.
About the author...
Dan Logue is president of Logue & Associates. Logue & Associates
puts money back into the pockets of companies and corporations
by showing them how to hire better, manage their employees better,
and increase employee retention and satisfaction.
Email: dlogue@earthlink.net Phone: (909)920-0052
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RESOURCES for CEOs
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Thomson & Thomson Connotation Services
Trademark and copyright research firm Thomson & Thomson
offers two unique brand research services. Connotation Check
and Connotation Evaluation will help businesses researching
trademarks, corporate and product names for international launches
to identify possible negative connotations and associations with
their name in foreign markets -- before costly mistakes are made.
What does your name mean in another language? What do
members of that country "feel" about the word as a name?
Thomson & Thomson will help you find out.
Check it out at http://www.thomson-thomson.com
< this resource brought to you by Larry Chase's Web Digest.
Visit http://wdfm.com
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QUOTES to use in your staff meeting this month
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Beauty is only skin deep, ugly goes to the bone.
A Smith & Wesson beats four aces.
Friends come and go, but enemies accumulate.
Our purpose in life is not to get ahead of other people--
but to get ahead of ourselves.
An upset is an opportunity to see the truth.
If you always do what you've always done, you'll always get
what you've always gotten.
Ignorance on fire is better than knowledge on ice.
Every day is a new life to a wise man.
You're not a failure because you don't make it;
you're a success because you tried.
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HUMOR to lighten up the executive suite
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KIDS ADVICE TO KIDS
"Never trust a dog to watch your food."
Patrick, age 10
"When your dad is mad and asks you, 'Do I look stupid?'
don't answer."
Hannah, 9
"Never tell your mom her diet's not working. "
Michael, 14
"Stay away from prunes.
Randy, 9
"Don't pull dad's finger when he tells you to. "
Emily, 10
"When your mom is mad at your dad, don't let her brush your hair".
Taylia, 10
"Never allow your three-year old brother in the same room as
your school assignment. "
Traci, 14
"Don't sneeze in front of mum when you're eating crackers"
Mitchell,12
"Puppies still have bad breath even after eating a Tic-Tac."
Andrew, 9
"Never hold a dust buster and a cat at the same time."
Kyoyo, 9
"You can't hide a piece of broccoli in a glass of milk."
Armir, 9
"Don't wear polka-dot underwear under white shorts."
Kellie, 11
"If you want a kitten, start out by asking for a horse."
Naomi, 15
"Felt markers are not good to use as lipstick."
Lauren, 9
"Don't pick on your sister when she's holding a baseball bat.
Joel,10
"When you get a bad grade in school, show it to your mom when
she's on the phone. "
Alyesha, 13
"Never try to baptize a cat. "
Eileen, 8
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CONTACT CEO Success
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Gary Lockwood is the publisher of the CEO Success Report.
Email: mailto:Gary@CEOSuccess.com
Office: (800) 272-1575 (USA) * (909) 984-3344
Fax: (815) 361-3041
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Your Comments, please?
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
I appreciate feedback, corrections, and comments about the
CEO Success Report. Please send your thoughts to:
Gary@CEOSuccess.com <mailto:Gary@CEOSuccess.com>
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