Situation: A company started small with everyone wearing many hats including the person in charge of HR. They wish to create a more formal HR structure with professional advice, but don’t yet want to hire a full-time HR professional. How do you create HR using outside resources?
Advice from the CEOs:
One company outsources their full HR function. Services include:
Putting records in order and maintaining them.
Developing different hiring packages for different levels of employees.
Keeping the company and employees updated on compliance regulations.
Coordinating on-boarding and training.
There are several national HR and personnel outsourcing companies that can help. Examples include Paychex and ADT. There are also a large number of local providers. Network with your business peers or check out your local Chamber of Commerce to learn who these providers are.
What about training?
Outsourced HR professionals can organize training for formal certifications and some aspects of job skills training.
Training in company culture should be done by company leadership. Outsourced HR can organize schedules for this. The key point is that company leadership is the face of the company and the foundation of company culture. This can’t be effectively outsourced.
In some cases, training can be done via video. Outsourced HR can help to plan and coordinate creation of the videos, and can then schedule video training for new employees.
Have your in-house person join an HR roundtable to embellish their own training.
Situation: A company serves a market with a lot of new small entrants. Clients purchase from these other companies as well as the CEO’s company. They are continuing to call and network with their client base to retain clients and build new customers. What else should they be doing? How do you deal with cut-throat competition?
Advice from the CEOs:
Make a list of those clients who are no longer purchasing from you or referring new clients. Go talk to them. Ask why they are no longer purchasing from you or referring new clients. This may open new options. You may find something new or unexpected that you can offer.
Work with an outside service to follow up with on clients lost and won. The key question for them to ask clients is why. Learn from the responses what is most important about the clients’ purchase and referral decisions.
Consider a new service. A health/happiness outcome would be a nice value-add: a quarterly report back to referral sources on how happy the clients that they referred are. The last question on the survey should be – Would you work with our firm again? Why or why not?
Consider using an outside source to gather the data for these surveys. To get more valuable responses, don’t just ask about your company, but also several of your top competitors; this will produce a richer set of responses.
There are two ways to compete: either you are low cost or have established a unique value proposition. Whatever this is, sustainability of your critical point of differentiation is essential.
Health care legislation is now in flux. Whatever the outcome, it will have an impact on your market. Become an expert resource on the implications of various outcomes.
Look at social media resources – feed valuable information to your audience via blog.
Situation: A small company’s business is increasing and they need to build a sales organization. To date all sales have been conducted by the founder CEO and a single employee salesperson. Should they build inside or outside sales first? Are there trigger points at which one or both should be increased? How do you develop a sales organization?
Advice from the CEOs:
Right now you have first mover advantage in your market space. You have a unique offering and no existing competition. The immediate objective is to maximize early market share. Borrow if necessary to ramp sales. There is no trigger point.
Hire an outside salesperson now. You want an individual who is knowledgeable about your market and who has a large set of contacts. Make at least 50% of this individual’s compensation variable (commissions) to start and escalate the percentage of variable compensation as sales grow. Hire at current market rates.
Supplement your existing marketing with an investment in social media marketing and SEO (search engine optimization). Don’t try to do this yourself on the cheap – hire a pro. Invest in Pay-Per-Click to push your visibility.
To sell this plan to your existing salesperson and the rest of the team, it’s time for a Come to Jesus talk.
Make a strong business case for your program.
The trade-off is either invest now to rapidly build sales or become insignificant.
Once you’ve made your pitch and received consent, let the plan work before you ask for more.
Situation: A small but very profitable business was founded and has been run for two generations as a family-owned and operated business. To boost performance, the CEO hired a general manager with a good background who is not a family member. The general manager has told the CEO that he feels that there are too many family members in the business. The CEO likes hiring people she trusts, particularly friends and family that she has known for a long time. Is it wrong to hire family members?
Advice from the CEOs:
Don’t try to change what you’ve already done – plan for the future.
Acknowledge the GM’s idea. Tell him that you appreciate his suggestions. Suggest that he test hiring more non-family members to cover one of your low risk market segments. Measure the performance of this team versus the other teams within the business.
The challenge with family members is accountability and objectivity. The question for the family owners is whether they have the freedom to act in the interests of the company. Can they put family ties aside when someone is not serving the interests of the company?
The essential question for the family that owns the business is – what do you want to maximize? If it’s loyalty and longevity – keeping the family together, employed and in harmony – they can be good. If it’s profits and performance – family and friends can be difficult if emotional ties cloud business objectivity.
The upside to family is loyalty and trust. That said, family and extended family friends are different. The latter don’t have the same ties or sense of loyalty.
Can you keep employees for too long? Yes. Make sure that you evaluate all employees every year. Establish job and performance standards and make sure that all employees – family and non-family – are held to the same performance expectations.
Situation: A company’s reputation is based on quality of work. The CEO notes that occasionally they have mishaps due to suboptimal documentation. They are considering a concerted quality effort. Based on your experience, would you do this whether or not you were bound by ISO requirements? If so, would you hire an outside consultant to guide your efforts? How do you optimize quality improvement?
Advice from the CEOs:
Some companies have successfully used ISO to force documentation. ISO provides a structure to enforce keeping the company and employees diligent and honest.
Other companies have used standard operating procedures (SOPs) for field as well as internal functions to speed completion of documentation and accelerate invoicing. These companies may or may not have ISO requirements.
One company tried to go cheap – implementing process improvement without a qualified consultant. While the effort was eventually successful, it took way too much time and money. From this experience, they recommend hiring someone who is experienced and who already has a template to guide the process.
To test the experience of an outside consultant, start with a small project to get the company accustomed to the process and to evaluate the consultant’s efficacy.
If the choice is to work on this yourself with your employees, start by documenting what happens correctly. Once you have done this, work on improvements to address problem areas.
This is not a simple exercise – plan for it and use the right inside or outside person to guide the process.
Situation: A small technology company has a handful of major customers. They are very good at what they do and want to expand and diversify their customer base. The challenge is that they don’t have the funds for large-scale marketing. As an additional twist, for now they prefer to stay under the radar of their largest competitors. How do you build market awareness on a small budget?
Advice from the CEOs:
Start with the basics. Define your market niche and build from there. Create a beachhead in this niche and generate strong testimonials from your current customers. Segue to tradeshows and broader marketing opportunities as you build marketing strength.
You already have several marquis clients. Look for opportunities in other divisions within these client companies. The work that you have done for existing divisions makes you credible.
Network with your current clients to develop other opportunities. They won’t want to help their competitors; however, if you can improve what they receive from their other vendors they may provide introductions for you.
As a small company, focus on a single market where you have strength and credibility. You don’t want to spread yourselves too thin.
Find a good customer and solve their problem well. Create an evangelist who will tell others about you.
Look for speaker opportunities at high visibility events within your market niche.
Consider webinars, these are inexpensive and if you promote them to decisions makers in your target niche you can quickly build credibility.
Situation: A company wants to expand its markets and customer base. Currently their business is dominated by a single customer. What best practices have you developed for identifying new customers and markets?
The key to getting new customers is to devote dedicated time to this task.
If your company is populated by engineer or software specialists, consider hiring a sales professional – a commission based hunter sales person who has experience landing big accounts in markets similar to yours. You may pay this person a good percentage of sales for brining in this business, but gaining the additional business can be worth it.
Much depends upon your relationship with your large customer. When a single client has rights over or ownership of the technology of the company but is not pursuing broader markets that the company is interested in, is it feasible to negotiate rights to pursue this business?
The larger client will pursue their own interests, not those of the smaller vendor. Perhaps a win-win deal can be worked out, but it may be difficult – particularly if the larger client is concerned that use of the technology in other markets could affect its interests in their primary markets.
Be very careful in this situation. The easiest tactic for the larger company to defend itself from a perceived threat is to sue and simply bury the smaller vendor through legal expenses. While the smaller company may be legally within its rights, deep pockets can beat shallow pockets through attrition.
In the case that the larger client simply continues to buy all capacity of the smaller company, an alternative is to raise rates, or perhaps to just say no.
Consider recreating the opportunity – create your own adjunct proprietary product with your own software or design talent and expand your horizons with this product.
Be aware, the large client can still sue if there is any appearance that your proprietary product impinges on their product rights. As in the case above, the larger company has the resources to bury the smaller company in legal expenses regardless of who is legally correct.
Situation: A small company has a candidate who seems a great fit for their culture and comes with excellent references. However, this candidate has little experience in their industry. They are struggling to assess which is more important – the quality and character of the person or their experience and skill set? What is your opinion – do you hire for character or skills?
Advice from the CEOs:
Overall, personality, character and values consistent with the firm’s values outweigh skills. However, if the individual needs significant training to attain the skills required for their new role, you must assess the ability of your firm to provide that training. Either that or bring them in at a lower level and let them grow into their eventual role.
If the candidate will fill a business development role, put them across the table from you and others, one-on-one, in a sales role play. Can they sell you on hiring them for the position? If the candidate will have to develop their own leads, make selling you on their ability to do this part of the role-play exercise.
Open up the search to other possible candidates, and assess the current candidate vs. others who may want the position. See if this individual rises to the top in a competition for the position.
Large company experience may not be relevant to the needs of a small firm. Better to find an individual with experience in a firm more similar to your size than with only big company experience.
Key Words: Hire, Candidate, Character, Culture, Skills, Experience, Training, Business Development, Compete, Large, Small