It’s that time of year when business owners are thinking about ‘how do I reward my team’ or ‘they are expecting a bonus … what do I do?’

I am a believer in sharing the financial rewards with your team. AND I believe it is important that there is some structure and education in place or else it can, and usually does lead to entitlement or a misunderstanding what the ‘bonus’ is for.

Here are the key points to ‘Bonusing’
• Profit Share vs Bonus. Profit sharing should be based on how the company does financially. Bonusing can be more subjective and less effective. Lots of profit, lots of sharing. No profit, no sharing. We are all in this together.
• Be sure people understand what has to happen in order for the company to have lots of profits. Education is key. And make it transparent so they have the power to impact the result.
• Keep your formula simple. I like x% over a certain amount of profit (remember to keep enough profit in the company to finance growth and reward shareholders) goes into a pool. That pool is then divided up equally or divided up based on salary levels.

It may be too late this year to put a structured system in place and do the education necessary. If that is the case for you then certainly bonus but make sure you position that moving forward you will be developing a system so everyone can have an effect on how much they get at the end of next year. Managing expectations is very important.

The points I’ve outlined above really are just the high level things to consider. For a details understanding of what I believe to be the best, simplest and most effect system read Brad Hams “Ownership Thinking”

I just met with the owner of a small trucking company. He said one of his main challenges is finding good drivers to service all the work they have. Naturally I asked “why are they so busy?” “What do they do for marketing?” His response … nothing. We just stay very focus on our niche and we are VERY good at it. The referrals just keep coming in daily.

They run from Toronto to New York. That’s it. All their team work 5 days a week between 40 – 50hrs (including drivers) and they are nicely profitable. Working those hours is almost unheard of in the trucking business.

Conversely I’ve worked with businesses that try to be all things to all people and end up working long hours and struggle to be profitable.
The lesson …. Get clear on what you are good at and narrow your focus. In their book Uncommon Service, Anne Morriss and Frances Frei give numerous examples of companies that are intentionally bad at certain things (think Southwest and food) so they can be exceptional at what matters to their ideal customers.

When Clive wanted more time to be able to work on growing his business what he was really looking for was better leverage. That is ‘get more growth with less of his time invested’. He was currently under leveraged from a time perspective. I asked him this one question …

“What activities do you do now that take up more than 10% of your time that could be done by someone else?”

It took him less than 5 seconds to say “scheduling”. Next question …

“What would have to happen to get scheduling off your plate?”

In the 5 minutes following that question Clive had laid out a 5 step plan that was going to free up approximately 15hrs per week. In reality it took about 6 weeks to get 80% of the bugs ironed out of the delegation process and get others up to speed with training. The payoff - aside from the extra initial 15hrs - is a new mode of thinking that has allowed Clive to free up even more time by asking himself similar pattern breaking questions in other areas of the business.

And so it goes; the well-known, and largely underutilized, principle called the 80/20 rule or Pareto’s Principle is one most of us probably should revisit. In this context the rule states:

80% of your results come from 20% of your activities.

The question is “how much of our time is spent on those 80% activities”. From what I’ve seen with most business owners, it is usually not enough. Despite my awareness of this I still catch myself doing things someone else can be doing at the expense of time invested in higher value activities.

To implement 80/20 thinking relative to your own time ask yourself this question …

“If I could only spend 20hrs per week working and my business had to achieve the goals I have in place, how would I do it?”

This question forces you into a new mode of thinking. Don’t expect the heavens to open on the first attempt at answering this question. If you stick with this question for 90-days and each day write down the answers that come to your mind, you’ll be amazed at the options available to you.

Achieving bigger goals requires bigger thinking …

Let’s start personal … how many times have we made a new year’s resolution only to have the enthusiasm die shortly after? Face it … we are human. Will power is rarely sufficient to ensure lasting change. And so it goes in business.

Bottom line … without significant pressure we tend to lose momentum when it comes to changing from our normal patterns of behavior.

Ok but how important is momentum … really?

Think about this … if you were being chased down by a rabid elephant would you rather your gun fired peas or cannonballs? Well when it comes to creating change in your business you need to use the same philosophy. You need to be the cannonball.

So how do you maintain or increase momentum?

Momentum = Mass x Velocity. If we want to increase momentum we need to understand what mass and velocity are in a business context.

Here’s one way to look at it:

Mass = the weight or size of your idea or business. If you are a startup you won’t have much weight vs an established company with a larger customer base. When we say “so and so has lots of clout” … what are we describing? I’d say ‘clout’ is the same as mass in this context. Here are some ways you can increase mass:

· Get more people involved

· Increase credibility

· Have more detailed plans - a clearer picture on what you are trying to accomplish

· More marketing channels

· More financing driving the initiative

· Increased awareness in your organization. Visual prompts. Make it front and center.

· Outside accountability

Velocity = amount of action you take within a given timeframe. Some way to increase this are

· Clearer action plans

· More regular meetings (make them short stand up daily meetings)

· Greater accountability

· Shorten timeframes.

· Assign a champion who will drive it.

Of course it is also possible to have massive momentum going in many different directions. This has the same effect as minor momentum going in one direction. To get massive results requires massive momentum going in one direction. Ensure you next 90-day plan captures this concept.

A quick litmus test - At your next meeting ask people to write down on a piece of paper anonymously a score from 1-10 on how much momentum they believe the current plan has.

Is it possible to have a hostage situation in business. Probably. It might be a big really important customer that makes you feel that way or the government or your own business.

The hostage situation I’m talking about is when you as the owner feel hostage to a member of your team. This is the situation where you have an employee that brings a lot of value to the business (usually through skill set or tenure) but has a hidden agenda, or does not fit in with the rest of the team. Or perhaps whose behavior makes your skin crawl. Yet you don’t feel you can do anything about them because they would leave a gaping hole in your business. There is always the fear around loss of revenue or profitability if you ‘rock the boat’.

How do you fix it?

Step one is to realize that the only person that can make you feel like a hostage is you. This situation is all about perspective. As soon as you feel like anyone has power of you they do. You always have options in every situation and this one is no different. The truth is, when this situation is rectified you will see your business grow in both efficiency and profitability

Have you ever tried to change someone’s attitude? After trying this several times myself I’ve decided eating sand is more fun. Changing someone’s attitude is one of the toughest things to do because it is outside of your control. Simply said, if they don’t want it to change then guess what … it won’t change. Trying to do so is also a huge drain on your energy … energy that could be more valuable used elsewhere.

OK, so you’ve got this employee whose attitude sucks and it’s affecting the rest of your team, so what do you do? There are 2 options:

1. Give them a good reason for it to change or

2. Help them to realize your business and them are not a good fit

While those 2 options might seem logical, they can be quite challenging to execute on. There are emotions and fears involved that prevent most owners from taking the necessary steps. I’d say this situation can be one of the bigger leadership challenges for small business owners.

Here’s the way I coach my clients through it:

1. Firstly you have to have a clear idea of the desired behavior. I coach my clients to document the ‘Rules of the Game’ (ROTG). What are the core values that you as a team choose to uphold and are willing to be held accountable to. If the expectations are not clear then it is very hard for someone to know if they are on track or not. It is a good idea to get your key players involved in this process to create buy in.

2. There must be agreement for accountability on the ROTG. So the ‘trouble person’ needs to agree this is the standard. If they don’t want to agree to that then it is time to take some more drastic action. Before making any rush moves here make sure you are aware on the labour laws in your country and always act within them. Long and the short is this person needs to go.

3. When the individual’s behavior is outside the ROTG, it must be addressed immediately. The conversation must be assertive and delivered from a point of respect. Your mindset needs to be “I’m helping this person to be a good fit for our company and their role. If they can come into line then they will excel in their position”

4. Keep this kind of pressure on. The driving force of the conversations is alignment with the culture of the business. The conversations may start to take the tone of “I’m not willing to compromise on the ROTG. You need to make a choice if this place is for you”.

5. The outcome of the process will be either a behavior shift or they will leave. The key is to keep the pressure on. And this process should not be a drawn out one. The degree of non compliant behavior will dictate the degree of pressure asserted.

Human behavior will only change when there is pressure. If the person receiving the pressure does not want to change they will find an environment that does not have pressure.

This process is not the most enjoyable part of leadership but can be the most rewarding. A huge part of leadership is to expect more from your people and continually be ‘raising the bar’, keeping positive pressure on them to improve. The process described above is simply an intense version of that positive pressure.

When you have a team of people who all share in the same core values and work to uphold them, you’ll start to see that small problems disappear and are replaced by pro-activity. Profitability will improve, sick days go down, customer satisfaction goes up, turnover is reduced and numerous other measures will improve.

At the end of the day your business is your people. If you don’t have the people you want then you don’t have the business you want. And your customers are not getting the experience they deserve which drives down the value of your business.

So take control and have some fun!

To get what you want in business, the process is relatively simple. Certainly not easy, but it is simple. The formula goes like this.

BE x DO = HAVE.

Let me explain:

The HAVE is your results. You could view this as the results you have today or the results you’re looking to achieve in the future. Also known as your goals.

The DO is the actions you take. Both the choice and quantity those actions.

The BE is you. Or another way of looking at it is ‘your effectiveness’.

OK so how do you use this? Before we look at that, let’s look a little deeper on the BE part because there is more to it than just saying ‘this is you’.

What are the factors that determine your effectiveness? There are 3 and they are:

1. Your Skill Set

2. Your Mind Set

3. Your Emotional State.

Your skill set and mind set really equal your level of potential. This is relative to the role you are playing and the goals you are looking to create. For my clients who are business owners, the skills revolve around finance, people, communication, sales, marketing, operations etc.

Your mindset could be summarized as your values, beliefs and how you see yourself. It is how you think. This is crucial part of the equation. Skill set and mind set form the foundation of the BE and usually change progressively over time.

The 3^rd component of the BE is your emotional state. This is the here and now. You could have a magnificent level of potential in terms of your skill set and mindset but if you’re in a foul mood because of what someone said to you, you’re not going to produce your best results. Conversely if you just had a massive win in your business and are on cloud nine, you are going to have a different level of energy and subsequently will get different results from your actions.

The long and the short of this success principle is there are only 4 areas we can affect to guide our results.

1. Skill set

2. Mindset

3. Emotional State

4. Choice of actions and level of activity

To apply this practically, take a look at the goals you have and then take inventory of yourself. What skills might you need to achieve this goal? What is your action plan? What beliefs might you have to challenge? This can be a tough thing to do on your own so once you’ve had a go at it, share it with someone you trust who knows what it takes to achieve the goal you are after. They will be able to point out things to consider that you can’t see. It’s tough to see where you have not been before.

Have fun with it!

Making it easy for your prospects to understand what is in it for them to buy from you versus your competitor is a key fundamental for increasing conversion rate.

In this 3 minute clip I’ll walk you through 4 steps to follow to get a Unique Selling Proposition in place.

To increase your conversion rate one of the most important strategies is to have a standardized sales process in place. In this video blog I guide you through a 9 step process to get your sales process in place. Enjoy …

The Power of a Common Goal

If you lead a team, one of the most powerful ways to unite people is to have everyone working towards a common goal.

If people just turn up to work each day and are expected to do their best, it is not too inspiring aside from knowing that “I did a good job today”. When people are faced with a challenge whether it be one of adversity or not, you are tapping into a sense of belonging. At the core people want to feel they are a part of something significant and that they are seen by others as an important part of that something.

When a team has a common goal that is meaningful, it creates that significance. The key is the goal must be inspiring for the leader so when it is communicated, that inspiration and enthusiasm is carried. When a goal is communicated in such a way, the feelings of the leader are transferred to the team and the effect will be people acting with a sense of purpose.

I conducted a team day recently that was a follow up to one we had done 12 months ago. At the first team day, the owners had some rough goals they were looking for and at the second they had crystal clear goals they were excited about. The difference was astounding. By the end of the day you could see the team uniting at a new level and no one wanted to leave the event. Of course they eventually did but considering this was being held on a Saturday, the result was awesome to see.

So on a scale of 1-10, how would you rate the power of your goals for your team? And on the same scale, how would you rate how well you have communicated them?

You can spend your time reading business books, attending seminars and asking colleagues “what is the best way to market my business” and you can get a thousand different answers. For the energetic business owner that can often result in loss of focus and momentum; a recipe for disaster.

If you are looking to have a great year in 2011 and want to keep it simple then answer this one question.

As a company, what would we have to do to make our customers say to others “you’d have to be crazy not to do business with [insert your company name here]”?

The simple truth is that assuming there is a market for your product or service, if you go over and beyond for your customers, exceed their expectation and get them talking then you are going to have a great year.

Sure there are many other things you can do and I’m certainly not saying don’t do anything else, but be sure to answer the above question before you look into other creative or advanced marketing strategies.

Business is not that complicated. Have a product or service that people want or need and be bloody good and delivering it to your customers. Be better than anyone else.

Have a great year.