There are many challenges in business that are hard. Many of the challenges facing the owners of small and medium business enterprises (SMEs) are also shared in common by the CEOs of small, under-resourced organisations. Here are some of those challenges:
There is always too much to do. Deadlines to be met, crises to be dealt with.
If it’s a new business there will be staff to recruit, systems to establish, new suppliers and customers to be found.
If you’ve bought a second-hand business or taken a CEO job in an existing organisation, it will be a bit like buying a second-hand car. As you head on down the highway, you’ll probably discover there are a few things under the hood that could do with a tune-up.
If you’re the business owner or the CEO, you won’t have a boss from whom to seek guidance about the problems that are inevitably arising. It’s lonely at the top.
On the other hand, you will be the person from whom the staff will want to seek guidance and engage with on a number of levels. If you want a happy workplace you’ll need to be both visible and engaging.
This list of challenges is exhausting, but not exhaustive. So, it’s little wonder that a recent study found that CEOs work more than 60 hours per week on average and that they work both on weekend days and when they’re officially on holiday. The work of a CEO or SME owner is relentless.
In the face of grueling schedules and challenging workloads, the biggest challenge of all is to avoid getting trapped by the daily “urgent” tasks and deadlines of the business to the exclusion of the single most important activity of CEOs and business owners – THINKING.
Because good productive thinking takes something that CEOs and SME owners lack most – TIME.
Irrespective of how successful a business is, there is always a lot to think about:
Business planning issues – strategies, goals, objectives (including tracking performance)
Monitoring the changing operating environment
Dealing with various business shocks
Improving organisational culture
How to be more effective as a CEO or business owner
Anything that’s keeping you awake at night.
Some people say that good productive thinking takes not only TIME but also SPACE. That’s why some management teams go offsite for periodic meetings or planning retreats. No matter how busy a CEO or business owner is dealing with the day-to-day operations of the business, it’s important to regularly get out of the business and put in the thought required to work effectively ON the business.
The time spent doing the hard thinking always pays dividends – more time devoted to productive thought about the business will make every other aspect of the business easier and less time-consuming.
Would you rather spend your time dealing with day-to-day crises, or avoid most of those crises by thinking about the business?
If you could spend more time thinking and less on the daily business grind, what are the issues that you would like to solve first?
Our business owner boards provide the environment to regularly step outside your business and do some hard thinking. Click here to find a board near you.
If you have a one-person business, then you do it by yourself. Maybe you trade securities on the exchanges that facilitate that trade, or you have a drop-shipping business and sell stuff on Amazon or Shopify. There are many examples of great one-person businesses.
But most businesses are not one-person businesses. They range in size from small businesses that involve two or three people right up to large corporations that employ hundreds or even thousands of people. And one of the most important assets that these businesses all have is their team.
Why The Team Matters
The team is the single most important factor in determining success. A dysfunctional team can destroy any enterprise, no matter what other factors that it has in its favour whereas a great team that’s focused on its goals and objectives, and works well together, will prevail even in very difficult circumstances.
So it’s well worth putting time and effort into building the best possible team that you can.
When it comes to teamwork, sports analogies are just too apt not to embrace – so think about the ALL BLACKS.
Every team has a culture and it’s better for the business owner or CEO to be proactive in fostering a positive team culture, rather than hoping that the right culture will develop organically.
Most successful businesses have a written business plan, and it’s important that’s shared with the team so that everyone can focus on achieving the business’s goals and objectives. But it’s also useful to document the characteristics of the team culture that you want to achieve and rules for how the team should interact. This will help in several ways:
The documentation task will assist in clarifying your thinking about culture.
It will provide a reference point that the whole team can use.
It will help inform staff selection.
It should be used in staff induction.
The culture needs to:
Provide a safe environment where team members feel free to ask questions, make (and own up to) mistakes, challenge ideas and each other
Foster trust and mutual respect
Encourage open communication and the sharing of skills and knowledge
Encourage staff development through training and the acquisition of new skills.
A positive workplace culture will boost morale and employee satisfaction, and foster camaraderie and loyalty. This will increase productivity, improve customer experiences (happy employees will interact far more positively with customers as well as with their coworkers), lower staff turnover, and, assist in recruitment.
Staff Recruitment and Selection
To build a great team, it’s important to put time and effort into rigorous selection. Think about the ALL BLACKS again.
Sound recruitment practices require some investment of both time and money. But failing to recruit well can be even more costly in terms of damage to your team and your business. It is generally better to put in the time, effort, and money to recruit and select carefully.
Here are a few principles that have worked well for me:
Ensure that anyone that you hire is a good fit for both your team and your workplace culture. While you may require certain skills and experience a good fit for your team (and a great attitude) may be even more important. Many gaps in skills can be adequately addressed by training and on-the-job mentoring and skills transfer. It’s much harder (and often impossible) to fix a bad attitude.
Resist the temptation to hire people like you. We all tend to have this bias, but it really does take all sorts to make a world and a good business. Diversity will bring more different perspectives and contribute to increased productivity, greater innovation, and better decision making.
Make sure that your induction process for onboarding new employees includes a session about your business’s values and culture. This is best delivered by the owner or CEO as this will help to emphasise its importance.
Embrace the culture and model the behaviour you desire
Make everyone feel safe.
Be sensitive to the feelings of others. Provide validation and support where necessary.
Don’t ever discipline any employees for making a mistake. Assure them that it is okay to make a mistake and help them to fix it.
Admit to your own mistakes.
Communicate openly and with respect.
Challenge people, and also encourage them to challenge you if they think you might be about to make a mistake.
Build the team through team events
Team meetings and other events are essential to building team spirit and a sense of belonging. So have regular team meetings with real tasks ensuring team input – not just “information sessions”.
Make sure that all members of the team get an opportunity to have their say.
Always thank your people for their efforts, and praise their achievement of jobs well done.
Encourage cooperation and help people to trust each other.
Team social events are great but group training can also be a good occasion for team building. Other events can include birthday morning teas, Friday after-work drinks, karaoke nights, etc.
Listen to your team, and don’t micromanage
As the leader in your business, you need to give constructive criticism where it is due. But this should always be done respectfully and in private and in the spirit of helping them to grow.
Listen to your team. If you have been giving them the right encouragement to challenge you, they will help you to avoid mistakes.
Don’t micromanage. If you’ve hired good people and provided any required training, there is no need. It will also destroy trust, lower team morale, and reduce people’s confidence.
Members of The Alternative Board are in the fortunate position of being able to access the collective experience and knowledge of their fellow members. A confidential and trusted environment in which your team issues can be discussed is just one of the benefits of membership. Contact us to find out more.
One of the main issues contributing to a lack of business confidence right now is difficulty in recruiting appropriately-skilled employees. The Alternative Board NZ’s Spring Pulse Check showed that 37% of the businesses surveyed were suffering due to the inability to recruit the people and skills they required.
COVID-19 restrictions have put additional strain on the labour market and exposed the problem, but it would be too simplistic to suggest that the pandemic is the sole cause. Other factors may include
Long-term underinvestment in training for New Zealanders to acquire key skills.
Competition for labour from Australia, where wages tend to be higher and living costs are often more favourable.
Significant expansion in the public sector, which leaves fewer people available for employment in businesses.
Irrespective of the causes, businesses need to think about how they will compete to recruit and retain the employees they need in the current labour market conditions.
The best way to do that is to ensure the business provides a happy workplace with a positive workplace culture so your good staff will not want to leave and others will be attracted to apply.
Business owners and CEOs should strive to create and maintain a happy workplace for their employees – and remember they spend much of their own time there. An unhappy environment only adds to their personal stress and workload.
Happy workplaces have lower staff turnover, so recruiting, onboarding and training new employees becomes more manageable.
A workplace culture where employees feel safe, comfortable and valued could make the difference between success and failure in recruiting and retaining the talent that your business needs to survive. Creating and maintaining such a workplace should be foremost among your staffing strategies.
Of course, there are other ways that you can try to compete in a tight labour market. You could try offering more money – if you are offering way above the market pay rates you are almost certain to attract a few applications from mercenaries. However:
Can you afford to increase your payroll expenditure? Remember, this is likely to be a long-term increase in your business expenses.
There is no guarantee that the mercenaries that you attract will have the attitude that you are looking for. They may only be interested in the money, and not be so interested in the long-term success of your business and may leave if they get a better offer.
You may rely on some of your best people to train the new recruits in at least some aspects of the job – so make sure there is no apparent pay gap between your loyal long-servers and the fresh faces they are training.
You could try offering perks (such as free health insurance, paid time off, kiwi saver co-payments, discounts to your business’s products or services etc). Some of these have only a small marginal cost to your business and, used wisely, can help in building employee loyalty. However, some perks can add substantially to your business costs and you need to make sure that any perks are accessible to all staff rather than a recruitment bargaining tool, adding stress and ultimately being counterproductive. A happy workplace is probably the most cost-effective strategy for recruiting and retaining good staff. In a happy workplace your employees will help in attracting the talent that you need to your business and attract more customers.
Our Summer Pulse Check is now live. The Alternative Board seasonal Business Pulse Check is gaining significant traction within the market and our voice is starting to resonate with key politicians including the Minister for Small Business, Stuart Nash. You can have your say on the constrained labour market and other issues by clicking here.
The COVID-19 Omicron variant is now out in our community and the spread in cases saw a shift to Phase Two. With further surges being predicted over the next few weeks smart operators will use the current time to prepare their businesses for the likely challenges.
The good news is that most people who have contracted the Omicron variant have experienced relatively mild health symptoms. The bad news is that it is very contagious, and at Phase Two the government will be requiring persons who test positive and their contacts to isolate for a period of 10 days (for cases) or 7 days (for contacts).
Keeping Employees in Separate Bubbles
Given the isolation requirements, it will be a good idea to split up your workforce into separate “bubbles” (ie. teams, shifts, or whatever your workplace parlance requires) that do not have any direct contact with each other. By doing this, you will be able to avoid having your whole staff in isolation should one employee have a positive COVID test.
If you can split your staff into two separate bubbles then a positive test in only one of the bubbles will still leave you with approximately half of your staff available for work. If you can split your staff into more than two bubbles, that will be even better. The more bubbles you can practically split your staff into, the less affected your business will be if your staff start testing COVID-positive.
During phases Two and Three of the Omicron response, businesses may have vaccinated, asymptomatic “close contacts” onsite if the worker is not customer-facing and can maintain a “bubble of one” while at work (including travelling to and from work). The detailed “Bubble of One” requirements and other requirements for returning to work during omicron are available by clicking here.
At the risk of stating the obvious, implementation of these measures needs to be clearly communicated and well-managed.
Anticipating more supply chain disruptions
If there is widespread absenteeism in the transport and distribution sector due to an increase in the rate of COVID infection (and the associated isolation requirements), then it is to be expected that supply-chain disruptions will also increase.
So it will be smart to increase your inventories of critical supplies and bring forward orders for your critical items.
It would also be smart to identify alternative sources of supply (for both non-critical items and critical items if possible), and transport alternatives that you could use if your usual transport arrangements fail.
Keeping in touch with customers
In addition to communicating with your employees, you need to make sure that you keep in touch with your customers. If you don’t maintain the contact, you are providing an opportunity to your competitors to step in to exploit the communication gap.
Could be that some of your customers will voluntarily self-isolate during an Omicron surge out of an abundance of caution. So you need to remind them that you still value their business, and explain how they can order without visiting your premises. Easy if you already have an e-commerce website, but otherwise you need to have some other system whether that be by email (send them an up-to-date order form) or by telephone ordering.
And if you don’t have any system at all for your customers to do business without visiting your premises, it is certainly time for you to set one up!
Is your business Omicron-ready? What additional measures have you had to take? If you would like to discuss these or any other issues give Russell or me a call.
The past two years have been very challenging for everyone, particularly for businesses. But also for our customers, our suppliers, and our employees. And for their families, and our families. Some have lost people dear to them. Fortunately, in New Zealand, the illness and death caused by COVID have not been on the scale that has been suffered in many other parts of the world (for which we should be grateful).
Nevertheless, it has been a tough time. Many people have lost their businesses and many employees have lost their jobs. As always, the effects have not been evenly distributed – some businesses, some sectors, some occupations have suffered more than others.Be not troubled – for all these things must come to pass, but the end is not yet.
The perpetual optimists among us may have been hoping that 2022 would get off to a much better start, but the current outlook is for more stormy weather.
Stats NZ has released the inflation indices for the December quarter. Although the quarterly CPI increase is down slightly from the September quarter, the annual increase for the year to 31 December 2021 is 5.9%, which is the highest annual increase for 31 years.
Rising inflation is not unique to New Zealand – many other countries are also experiencing higher inflation due to many factors including supply chain disruptions, increasing oil prices (the price of crude oil is now more than US$85 a barrel or 60% higher than the price at the start of 2021 while petrol prices in New Zealand are up 30% year-on-year), labour shortages, soaring transport costs, and steep increases in the cost of many commodities and materials used in the construction industry.
The cost of construction of new dwellings in New Zealand has risen 16% since December 2021.
The Omicron variant of COVID is now in the New Zealand community, the whole country has been put on the “Red” traffic light, and “locations of interest” (and “super-spreader events”) are popping up everywhere. The government modelling has extended up to a possibility of 50,000 cases per day, although they have also modelled significantly lower case numbers. Nobody knows for sure how quickly it will spread but internationally it has quickly raced through populations.
The good news is that, for most people, the Omicron variant causes much milder illness than the earlier variants. Nevertheless, if case numbers run as high as anticipated then there will still be a lot of deaths.
If the Omicron variant really takes off and the people diagnosed with COVID (and all their contacts) have to isolate for 14 days (or even for 10 days), that will be a lot of people not turning up to work. This will quite likely exacerbate the existing labour shortage and create even more supply-chain issues.
On top of all that, the geopolitical situation in the Black Sea area seems to be deteriorating. Hopefully, the issues can be resolved diplomatically because a shooting war would probably put additional pressure on both inflation and world supply chains.
Despite a rough start to 2022, these things will pass. In the meantime, we need to focus on developing plans to survive whatever circumstances the year may throw at us and be prepared to react very swiftly. Shared wisdom will help.
After the rain comes the fine weather
Have you considered how each of the clouds on the horizon may affect your particular business? Have you planned how you will deal with the most critical risks?
At The Alternative Board we believe in the value of shared wisdom, and we’re starting to see the positive actions our members are taking to combat the storms ahead. If you’re interested in finding out how being on an advisory board can help you walk through the storm, get in touch. It’d be great to have a chat.