Human Capital is the Final Frontier

Everything is the Same

In August 2003, several employees of Los Angeles based internet marketing firm (eUniverse), decided to start a social networking site called MySpace that would allow them to interact with their friends. Six months later, Mark Zuckerberg and a handful of college buddies started a similar social networking site called Facebook.

In January 2007, Steve Jobs introduced the world to the iPhone, which allowed software designers from all around the globe to design applications that users could access via a handheld device. Less than two years later, in November 2009, the Open Source Alliance (consortium of 84 hardware, software and telecommunications companies led by Google) released Android, a mobile platform that allowed users from all around the globe to design applications that users could access via a handheld device.

A walk down the aisles of the nation’s large retail drug store chains (Walgreens®, CVS®) will reveal a lower priced self- branded version of most of the high margin products. Want whiter teeth? Try Walgreens® Whitening Dental Wraps, instead of Crest White Strips®. Having problems with your allergies? I would recommend Cetirizine HCL, as an alternative to the more expensive Zyrtec.

Not too long ago (15 + years), you could roll out a unique product or service and enjoy the “only one of its kind” spot in the marketplace for years. This position would allow you to reap significant financial benefits which you would utilize to come up with next exclusive product to dominate the market.

For most of us, those days are over. The information and communication explosion (think Google) has changed the rules forever. As Daniel Pink pointed out in his book A Whole New Mind, “Until recently, much of the world’s data and information was piled on the dusty shelves of libraries. And the rest of it was housed in proprietary databases that only deep pocketed institutions could afford and well-trained experts could access. But today, facts are ubiquitous, nearly free, and available at the speed of light.”

The continuing onslaught of technological advancement means that no matter how different and unique your offering may be, someone will copy and improve upon it in a matter of months – not years or decades. And believe it or not, as a consumer you want this to happen. You want to commoditize every product and service as much as possible, so that the only factor that matters is price. Be honest, do you really want to pay $22 for 48 Zyrtec® capsules when you can get the same product for half the price?

The rules have changed. If you’re interested in building a world class organization that consistently grows both the top and bottom line, you’ll need to try a different approach.

It’s Your People

If a specific product or service no longer holds the key to success, then what does?

The answer is simple and right in front of your face. In fact, it probably just walked past your office. The key to consistent growth and profits is people. I believe that human capital is the final frontier. In other words, in today’s rapidly changing marketplace, the last opportunity to build a truly competitive advantage is by getting the most out of your people.

When most people discuss human capital, they are simply referring to the skills and abilities of an individual employee. I’d like to tweak this definition a little. I define human capital as the amount of productivity and innovation an organization is able to get out of its team. Most of the executives I work with believe that they are getting just about as much as possible out of their employees. If you share this view, I’ve got some bad news and some good news.

First, the bad news – you’re wrong. There have been numerous studies that indicate we are getting far less than we think out of even our best employees. Even Microsoft®, one of America’s strongest brands, recognizes a productivity problem. A 2005 internal survey (38,000 + respondents), concluded that their employees feel productive only less than 60% of the time. www.cjmcclanahan.com As you consider this information, also remember that this is Microsoft®, a company whose entire mission is to make people more productive. In addition, this survey was conducted before anyone was really using Facebook, Twitter didn’t exist, and your phone couldn’t receive email, videos or connect to the internet. If Microsoft had a productivity problem before Facebook, do you think it’s possible you have an issue today?

Whether you believe it or not, you have a productivity problem. If you have any doubt, send a text or email to a staff member whom you know is in an important meeting that demands their attention and see how long it takes them to get back to you. I’d be surprised if it takes more than 15 seconds.

Now, the good news for you, Microsoft and every other company in the world - there’s tons of room for improvement! Even the slightest bit of progress in productivity and innovation can lead to significant growth in both your top and bottom line. Imagine what would happen to your company if your team stayed focused and avoided distractions? What if instead of problems, they were committed to finding solutions to even the most intimidating challenges?

Why Can’t We See the Solution?

Obviously, I’m not the first person to suggest that it’s time to get more out of your team. Spend 5 minutes on Amazon.com and you’ll find a library full of books teaching the fundamentals for improving employee performance.

If it’s so apparent, why do most companies do so little to improve the performance of their workers? Why don’t they dedicate more time and resources for training, coaching and continuing education? Why are these concepts only considered when it comes time to fulfill a designation or professional requirement?

While I will concede that it is probably a little different for each organization, I believe that there are a handful of reasons why companies are less than fully committed to the improvement of their employees. First, it’s hard to measure the results and in a world driven by data, the subjective improvements tend to matter far less than those which fit nicely in a spreadsheet. In other words, how can you tell if a 4 hour sales workshop led to a new client?

Second, even if you can figure out a way to measure the results, improvement doesn’t happen overnight. In a world dominated by email, text messaging and social media, we have become addicted to instant gratification and our patience is disappearing with every Facebook post and Twitter message. Thus, any initiative that doesn’t deliver an immediate result gets put on the back burner.

Finally, we are often reluctant to put any significant resources into an individual who could leave at any time. Every leader can tell the story of the time they agreed to send an employee to a 3 day conference only to have them quit a month after they returned. This leads to the “I don’t want to train my competition” excuse.

People First

A first year business school student can see what’s wrong with this picture. All of these reasons for neglecting to invest more in our people are very short sighted. Instead of building a passionate team dedicated to creating a world class organization, we have decided to treat our employees like robots. In this sense, we will only service the machine when it begins to significantly slow down and if it gets too old, we replace it with the newest model.

In case you are tempted to conclude that I simply don’t understand your company because you really, really care about your staff, ask yourself the following 3 questions:

1. What is our per employee budget for training, coaching and continuous improvement? 2. Are we helping our employees to identify and reach their career goals? 3. Have we lost any really talented people in the past 12 months?

If you are satisfied with your answers, congratulations! You are one of the minority that has displayed a commitment to putting people first. And, if this is truly the case, I would bet that you are enjoying the rewards that go with this strategy including above average growth in both the top and bottom line. Human Capital is the Final Frontier

If, like most leaders, your answers leave you feeling a little ashamed, you’re in luck. In the next few pages, I am going to provide you with some simple guiding principles that I have learned coaching hundreds of professionals in a variety of industries.

Purpose Lays the Foundation

A generation ago, our professional careers were a lot simpler. You went to school, got a job and stayed there until you retired. At work, you sat at a desk or on a line and performed your trade. You weren’t interrupted every 38 seconds with an email, Facebook update, text or marketing message. In other words, you focused on doing your work, that you felt grateful to have and that provided for your family.

Today, the professional landscape has completely changed. Our employees are inundated with a constant barrage of interruptions. They walk in the office (unless they work from home) checking their cell phone, sit at their desk and immediately turn on their email before they fire up the internet to figure out what’s going on in the world. For many, their job responsibilities are forced to compete with all of this information before the first bit of work is completed.

In addition, today’s workers suffer from the “grass is always greener” syndrome. Many are under the impression that everyone else has a better career and constantly hope they can find a new and more rewarding job in the near future. They feel this way because the media (internet, radio, TV, etc.) bombards them with the message that “you are missing something in your life”.

We’re never going back to 1950 – this is the new reality. But, don’t despair, amongst all the tweets, emails and texts, there is a huge silver lining. Today’s workforce may be distracted, but if you can tap into their passion they will absolutely amaze you with what they can accomplish. They will pull all-nighters, find innovative solutions to the most difficult challenges and drive sales through the roof.

Before you can tap into this passion, you need to build a foundation that supports all of your actions, decisions and initiatives. This foundation that supports your company is called your purpose and every single company on the planet has one. Unfortunately, most companies share the same purpose – make as much money as possible, as fast as possible – that’s it. These companies may have a framed “Mission Statement” hanging in the lobby that refers to exceeding customer expectations and changing the world, but their behavior always tells the real story.

It’s always about growing market share, increasing revenue and driving more profit to the bottom line. I firmly believe that these 3 items are the most important outputs of a business and you must have a goal to improve in each area. But, just because you want to make more money, doesn’t mean that it should be your purpose. The reason is that most people, whether they know it or not, desperately want to make a difference in the world. As Victor Frankl pointed out more than 50 years ago:

What man actually needs is not a tensionless state, but rather the striving and struggling for some goal worthy of him. What he needs is not the discharge of tension at any cost, but the call of a potential meaning waiting to be fulfilled by him.

In other words, it’s got to be about more than just the bottom line.

While the concept is simple, like most things in life, the execution is hard. In his bestselling book, It’s Not What You Sell, It’s What You Stand For, Roy Spence Jr provides some guidance to get you started. He starts by pointing out that a company’s purpose is the “definitive statement about the difference you are trying to make in the world” with the perfect example being Wal-Mart’s purpose – “Save people money so they can live better.”

Next, Spence recommends that you need to find your hedgehog, borrowing the concept from Jim Collins and Good to Great. This process is simple and will help you identify the foundation upon which you want to build your company. To identify your hedgehog you need to ask yourself three simple questions:

1. What are you deeply passionate about? www.cjmcclanahan.com 2. What can you be the best in the world at? 3. What drives your economic engine?

A quick review of these questions will lead most to conclude, “This seems too easy”. But, after giving these questions some deeper reflection you will soon realize that it’s challenging craft answers that best reflect your organization. That is perfectly normal. It’s a process and any meaningful result will require hard work. However, I promise it’s worth the effort.

Vision Sets the Course

On May 25, 1961, before a joint session of Congress, President Kennedy made the following proclamation:

“I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth. No single space project in this period will be more impressive to mankind or more important for the long-range exploration of space; and none will be so difficult or expensive to accomplish.”

This bold statement, created a powerful vision that inspired not only the space program, but an entire country. Over the next 8 years we did whatever it took to accomplish a goal that at one point in the not so distant past seemed impossible. Because the vision was so clear, powerful and world changing, failure was simply not an option.

When was the last time your company had a target so powerful that your employees did whatever it took to accomplish the goal? For most, the answer is probably “never”. Most leaders lay out a financial goal, review it quarterly and may even distribute a financial reward if the goal is met. But, rarely do they lay out a powerful vision that inspires the team to push beyond their limits.

If you’re interested in getting maximum productivity and innovation out of your most valuable asset (your team), you need to create a compelling vision. This vision has to be more than a revenue target or number of units sold. It has to be something that triggers an emotional response and leads to inspired behavior.

We can’t all work for NASA, the United Way or a political campaign and can’t put a man on the moon, end poverty or elect a charismatic candidate. As a result, building a compelling vision is quite a challenge for just about every company in the world.

But, it can be done. And getting your team excited about a goal is a critical component to building a competitive advantage in today’s marketplace. If you’re ready for the challenge here’s a few thoughts to get you started.

First, remember that you need to build this vision upon the foundation of a meaningful purpose. A vision without purpose may get your employees fired up for a day or even a week, but they’ll eventually lose steam and wonder “why again am I working so hard?”.

Second, ask your team to brainstorm the following question – “What do you want the marketplace (customers, prospects and competitors) to say about our company?” Their answers will provide you with some insight as to what is really important to your people. For example, a law firm’s employees might indicate that they want to have a national presence or desire to be recognized as having the most community leaders.

Finally, any vision that you lay out for the future of your organization must be measurable and have a time limit. President Kennedy didn’t say that we wanted to have a better space program sometime in the coming years. He said that he wanted a man on the moon within a decade. Similarly, you need to set a goal that is specific so the team can measure their progress.

Automatic Leadership

Having a clear purpose and compelling vision is a great start. Yet, it’s just the beginning. Simply putting these two concepts in place won’t drive any bottom line growth. All you have is a cool plaque hanging in the lobby until you Human Capital is the Final Frontier begin to execute the tactics. In other words, somebody’s got to do the work. And unless you’re a sole proprietor, that “somebody” is your staff.

It’s time to lead.

Keep in mind that leading an individual is completely different than managing employees. Anybody can send out an email with a list of tactics and follow up at the end of the week to make certain they were complete. Anyone can yell at an employee who makes a mistake and anybody can field the non-stop questions that pop up throughout the day. Anyone can manage - few people know how to lead.

Leadership is lot like golf. If you can master a handful of simple of habits, you’ll do great. These habits are straightforward and can be mastered by just about anyone (I don’t buy into the notion that you have to be born a leader.) Like most of what I teach, leadership consists of three clear-cut concepts.

First, a great leader starts by understanding the “why”. Understanding the “why” simply means that you need to take time to figure out what your employees hope to get out of their careers. In other words, you need to know what a perfect career looks like for each of your direct reports. How much would they like to make? What would their title be? What skills would they be developing?

Before you start, it’s important to note that I have asked thousands of employees these questions and almost no one has any idea what they want their career to look like in the future. You’ll need to help them stretch their horizons a little bit and get them dreaming. Next, be prepared for some of your staff to have a vision for their careers that doesn’t include you and your company. That’s perfectly normal and OK. They were going to leave anyway – everybody does. Why not get the most out of them while they’re here?

Second, once you know where your employees want to go, it’s important that you set some clear expectations to help them get there. Most leaders think that an annual review and sporadic staff meetings qualify as setting clear expectations. Not true. Employees are like teenagers; they do a lot of head bobbing (up and down) to our instructions but rarely give us their full attention. As a result, you need to set and reset expectations all the time. I recommend you start weekly at a minimum.

Finally, like the autopilot on an airplane, you’d better be prepared to offer some course correction. So, when your staff doesn’t meet expectations, you have to hold them accountable. Because holding people accountable is often uncomfortable, many leaders permit the failure to meet expectations convincing themselves that “they probably won’t make this mistake again”. Don’t let that be you. Avoiding these conversations doesn’t fix the problem, it just makes it worse.

Since 2003, I have had thousands of conversations with CEO’s and business owners about challenging employees. My advice to them has never strayed from these simple principles. Keep it simple.

Time is the Great Equalizer

During my first year coaching executives, I spent the majority of my day teaching specific tactics for growing sales and profits. A handful of these clients took my advice and had success, but most of them struggle to make the changes necessary to succeed. They all had the same reason for their lack of progress – no time.

Frustrated, I began analyzing my clients and their businesses in an effort to determine why some executives had more time than others and I came to the following conclusion – they didn’t. Every executive starts the day with 24 hours and they all lead companies with employee, marketing, finance and sales challenges. The difference between an executive who has time and one who doesn’t all comes down to one word – commitment.

Successful executives (and people for that matter) understand the difference between an interest and a commitment. An interest is something they’d like to do if time permits. A commitment is an item that absolutely must be done regardless of the circumstances. For those executives who struggled to find the time to grow their businesses, every www.cjmcclanahan.com single interruption that popped into their day instantly became a commitment and their single focus shifted from running the business towards fighting fires –aka – handling interruptions.

The successful leader understands that it is absolutely impossible to get everything done and every day ends with incomplete items on the “to-do” list. What’s critical is that the most important commitments are complete when you leave the office at the day’s end. It doesn’t matter who puts in the most hours, what matters is if the essential tasks were completed. There’s a big difference between activity and achievement.

Knowing the difference between an interest and a commitment is easy. Ignoring the interests and focusing on the commitments throughout the day is tough work. We are all obsessed with instant gratification and find it nearly impossible to ignore the temptation of a new text or email. Nevertheless, I have found that the executives who make the most progress in this area out achieve everyone else.

As Dr. Stephen Covey pointed out in First Things First, you need to develop the habit of spending your time on the important and not just the urgent. Here are a few fundamentals to help you begin the process. First, plan the week in advance. And, yes, it is as easy as it sounds. Take 10 minutes on Monday morning and put together a list of the commitments that must get completed by Friday at 5pm. These are the items you’ll finish regardless of unpredictable fires that pop up throughout the week.

Next, consider setting aside time during your day to work on specific items. Blocking your schedule helps you stay focused on what’s really important. The best place to practice this exercise is with your email. Despite what you may have heard, having two monitors sitting on your desk with email open at all times is killing, not helping, your productivity. When you are working on a task that requires your concentration you should turn your email off. Don’t worry, my IT sources promise that your computer still works without the email on.

Even the most successful, time management experts struggle to keep the “main thing the main thing”. As a result, my final piece of advice in this area is to take time at the end of each day and reflect. Look back at your activity and ask what you’d do differently if you could go back to 8am and start over. These reflections will help you make better decisions in the future. As with everything, you goal should be to make improvements each day.

Remember, the best idea/tactic/strategy is useless if you can’t find the time to execute.

Choice

Unless this is your first day as a leader, it’s unlikely that you’ve reached this point in the paper and exclaimed, “This guy is a genius! I never knew I was supposed to have a vision in my business!” In fact, every time I speak to a crowd and mention the importance of these fundamental lessons, most of the room nods in agreement. You’ve read the books, listened to the CD’s and attended the workshops. You already know these essential truths.

My purpose isn’t just to review information that you already know. Rather, my goal for this paper is to inspire you to change your behavior because as Dr. Stephen Covey points out in one of my favorite quotes – “To know and not to do is really not to know.” This quote rings true for every person whose been on a diet, joined a gym, owned a Franklin Planner or been to a counselor. Learning what to do is the easy part – it’s the “doing” that’s hard.

In my opinion all change comes down to one word – choice. The results you achieve in your life are the direct result of two simple factors – outside circumstances and the way you respond to those circumstances. This fundamental truth hit me like a sledgehammer while reading The Eighth Habit where Dr. Covey points out:

Between stimulus and response, there is a space. In that space lies our freedom and power to choose our response. In those choices lie our growth and our happiness.

We all face challenges and opportunities in our lives. A valued employee quits. Your best client leaves for the competition. Your top prospect says yes. Your top prospect says no. There’s no way to escape the circumstances in our daily lives. However, we are all responsible for how we choose to respond in each of these situations and these choices define our lives. Human Capital is the Final Frontier

Taking 100% responsibility for everything that happens in your life is much easier said than done. I believe that we are all hard wired to blame others when something doesn’t go our way. And, I have spent the past 3 years listening to clients and prospects tell me that their poor performance is due to the economy and completely outside of their control.

That is baloney.

Your bottom line, salary, relationships, health, and personal net worth are largely the result of choices you have made in your life. It might make you feel better to blame your customers, your prospects and employees, but this blame will never get you anywhere. The world is full of average performers who make excuses for their circumstances.

Don’t be one of these people. Don’t allow yourself to succumb to the temptation to blame. That strategy never ever works.

Be different. Be the type of leader who accepts responsibility for both the good and bad results you get from your team. Be the type of leader who starts every day by looking in the mirror and asking “What can I do today to move my company forward?”

Conclusion

If you want to build a world class organization in today’s global interconnected marketplace you had better be prepared to try a different approach. To quote Bob Dylan – “The times they are a changin”. No longer can you simply build a great product or deliver an exceptional service. In 2012, great products and services will only get you a seat at the table.

The key to building a company that consistently delivers bottom line results is right in front of your face. It’s time to focus on your people because their production, creativity and persistence are the game changing components to differentiate you in today’s crowded marketplace.

Don’t over think it. You don’t need a PhD, MBA or even a college degree to get the most out of your team. Just get back to the fundamentals. First, examine your foundation and get clear about the purpose that drives your company. Next, help your team focus by laying out a powerful vision for the future and connecting their daily behavior with this vision.

Before you begin rolling out any new tactics remember that you need to help your team effectively prioritize. There’s a big difference between activity and achievement and your success is directly related to your employees keeping the “main thing the main thing”. Finally, create a culture of responsibility that inspires people to find solutions instead of problems.

As with most things in life, intellectually speaking the solution is simple. All you need to do is choose your future.

Choose wisely.

www.cjmcclanahan.com