Ric Campo Talks About People, Profitability, and Corporate Culture

I just left a very interesting forum, sponsored by executive recruiting firm, Austin Allen at the River Oaks Country Club in Houston.

Ric Campo, a founding partner of Camden Living, gave a powerful and informative presentation. His comments were filled with the very precepts Camden followed to become a Fortune 100 Best Companies to Work For award winner in 2008, and, one of the finest multi-family real estate development and operation companies in America.

I took copious notes. Ric was singing my song.

Ric's management principles are not the common practice in today's world. Read and see why they should be.

Just to highlight a few of his salient points:

• Camden has well defined, well communicated missions and values. These do not change with market conditions.
• Camden believes that their front line employees are the most significant contributors to the company's success.
• The Company's value isn't derived from a focus on their material assets. Ric said, "It's not about assets, it's about people. Our people are our assets."
• Camden strives to hire the best and the brightest. Then, the company strives to give them responsibility and authority to deliver Camden's mission.
• Camden recognizes success based on the creation of an increasing number of high-quality, long-lasting jobs. This is representative of their belief that people are their greatest asset.
• Camden is very concerned and intentional in maintaining and developing their outstanding corporate culture.
• In the Fortune Employee surveys, Camden had 92% of their workforce saying that Camden was truly a great place to work. The average among the Fortune top 100 was 89%.
• Camden is a stickler for "best practices" in handling people. (This is why more companies really need to engage the services of a PEO.)

That might work for some companies, but not when things are tight, or tough.

Some might argue that this is all well and good for some high margin, fluff company. Don't kid yourself. Camden's business, in today's market, is anything but that. They must thrive in a tough, highly competitive, asset intense business. Camden's profitability challenges are as big as they come.

Employee Practices Turn-Around an Acquisition

I particularly enjoyed the story Ric told about one of his mergers. Camden had acquired a fairly large company with an east coast presence. The acquisition had everything it needed on paper to be functioning well, yet, at the point of the acquisition, was not doing so. They even verbally ascribed to the same management and cultural philosophies that worked so well with Camden.

However, on closer look, their talk didn't match their walk. The reason for poor performance could be tied to this divergence, a response to some very difficult, but temporary market conditions. It turns out that the company had frozen salaries, cut bonuses, and increased the employee contributions to their medical plan. Meanwhile, they hadn't cut the executive compensation.

Ric said that these actions upset the affected folks, which, in turn, affected their ability to perform. Needless to say, Camden corrected the situation, in accordance with their mission, and the situation righted itself quickly.

Happy People: Successful Enterprise

Camden demonstrates the true, but rarely followed axiom: The happier the people, the more engaged they will be, the more profitable the enterprise.

This validates the well researched message of Richard Hadden and Bill Catlette who wrote Contented Cows Give Better Milk, and the sequel, Contented Cows Moove Faster. Companies with well placed, well rewarded, well aligned, happy employees, are able to do more, make more money and have fewer problems.

It's kind of funny that most managers still can't see it.

They will, though. They'll need to to survive.

You Can't Stop the World, And You Can't Just Get Off, Either

Everything is changing. Not a new phenomenon, but an accelerating one.

The rate of change is so great, that more than 50% of US business execs are finally confessing that they are struggling with its pace. And, let's face it, even the rate of change is increasing. I call it Hyper-Dynamics.

It effects everything in our lives, and our companies, much of which management tries to ignore.

Consider some changes we business owners tend to try to ignore.

• Employee Ability and Aspiration: What an employee once wanted to do for you, he no longer wants to do. He may have matured in his current role, and desires a new challenge. She may now have young children at home, and no longer wants to travel. Children may have "left the nest" and she now wants to travel. The individuals which hold the IP in our enterprises are changing just as quickly as is everything else, but we have no systematic way to deal with these factors, and are inept at adjusting our roles and processes to take advantage of the opportunities these changes afford. Instead, we underutilize the people we have, and we just let then go when are mechanical models no longer require their service in the box we have externally defined.

• Customer needs: What a customer wants from you today is different from what he wanted yesterday, and what he'll want in the future. They are seemingly more fickle than ever. 80% of customers who leave would say that they were satisfied, or very satisfied with your service. But they left you, hoping to find a better value from another provider. Our offerings have been devised and "perfected" from our own perspectives. Our internal systems are mechanically created to provide what we think we should provide. Adapting to customer's felt needs takes a back seat to our beliefs about the way things are. "That's not our policy." "We can't do that." We justify our position: "We've never had to do that before. We don't need to start now."

• Markets: The entire market has the potential of the international corporation. What was once a regionally valued offering may now be available from a remote producer in China. Outsourcing and off-shoring can render our offerings obsolete. When faced with these challenges, we make the false assumption that we just need to work harder at what has always worked before. We push our sales people to make more calls. We push our service people to work harder. We push our management to work longer.

• Costs: Energy, healthcare, taxation, insurance, natural resources, and people costs are rising at unprecedented rates. The forces that are pushing them are not even within our control. But we believe that we must make their containment a significant part of our strategic management initiatives. We spend a dollar to save a dime. We focus on financial statements, correcting them, as if they were the business itself.

• Product value: Whatever I can produce today will be more efficiently produced in the future. Shelf life of ideas is shorter than ever. Windows of profitable opportunity are smaller than ever. But we still function as if we can develop something, sell it profitably, and rest, as though we have arrived at something that will last. We resent the copy-cat, or the competitor that says he does exactly what we do, but at a better price. We gripe about the imitator from the 3rd world who unjustly sells to our customers.

There are many, many more, but these few provide enough to exhaust many the mechanically minded manager.

Our refusal to accept hyper-dynamics will, simply, lead us into disaster. Short term solutions will merely exacerbate our problems. Self delusion just guarantee the inevitable.

My solution? REALLY embrace change. I know it sounds trite, but the mere statement of the words does not prove the reality behind them. I mean embrace, welcome, anticipate, expect, and adapt.

With this, you'll need to grasp the concept of absolutum obsoletum. Whatever we think works today is becoming absolutely obsolete . . . and sooner than I might think.

The solution comes with the change from a mechanical, change resistant organization into an organic, change adapting one. Change from the organization that orchestrates change to one that is able to flow with the change. These are entirely different approaches.

• Instead of telling your customers what you do, and expecting them to buy, learn to discover what they want and need that you can offer.

• Instead of determining what your company should be doing in antiseptic board rooms, let the front line employees tell you what their encounters with the real world are telling them.

• Instead of defining jobs for your employees, telling them what you want them to do, discover what they would do for you and your customers, if they could.

• Instead of losing sleep and fighting against rising costs, use your people's creative and innovative energies to identify your own company innefficiencies and redundancies.

• Instead of thinking you have the totality of responsibility or all the answers, free your people to create entirely new, high value offerings for your current customers, and for customers not yet reached.

Besides, you and I already know that the greatest opportunities for excitement, value and profitability exist, not in the middle of the pack, but around the edges, where risk is sometimes the greatest. The rate of change means that yesterday's performance is not the end. Everyday comes with new, high value opportunity. It's up to you to find them, but you need to be looking, hoping and expecting.

And, best of all, you don't need to go it alone. Get your people in the act. Teach them that you value their looking, hoping and expecting. Then, don't ignore what they'll show you.

You might as well make a lot of money, too.

It's Still True Today: HR People are from Venus, and Business People are from Mars

Keith Hammonds posted an article on Fast Company titled, "Why I Hate HR." It describes conditions which are typical of the attitudes and experience of companies when considering the involvement of their HR processes as profitability drivers. It is an old article, but well worth re-reading as the problems he communicates aren't really any better handled since he wrote it nearly 3 years ago.

One of the best means of immediately impacting the performance of employees (and with it, the increasing the profitability for the employer) is the performance review. As I have illustrated in a post comparing the sports world with the corporate world, effective performance review processes are tremendously beneficial to employees and companies alike. Yet they continue to be mishandled and misunderstood, therefore, ineffective.

Hammonds asks the question that is typical of management's attitude about them:

"Why are annual performance appraisals so time-consuming -- and so routinely useless?"

The answer is simple. Management doesn't really know what they are, or, consequently, how to use them.

Management doesn't understand what the sporting world does.

• Management isn't clear in communicating objectives.

• Employees don't know how their work impacts the company.

• As a result, nobody knows how to tell exactly how performance aligns with either.

• It naturally follows that there would be no resource to improve performance, because no one knows exactly what to improve.

I know how to fix it. So do many others. But management doesn't seem to care.

Why not?

It's the age old, nagging problem. The HR teams don't know how to connect with the business teams. The business teams don't know how to connect with the HR teams. And, this connection is critical to the success of both. HR is irrelevant without the ability to connect to business.

For 20 years, I have researched this problem. In that research I have discovered that most of the thinking about these issues comes primarily from the ivory towers of think tanks and universities. Their revelations may be true, and their conclusions accurate, but the information is too generalized and difficult to apply. To be of much use to most companies, someone needs to connect these discoveries to the streets, where the rubber meets the road.

I will do that with my new book, The Squaredime Letters, to be released this summer. Squaredime will provide real guidance for business and HR groups alike. It is a must read for both HR professionals and management alike.

The good news is that when the HR/Business connection is finally made, productivity and profitability will be substantially improved for everyone involved.

You know what that means? More earnings for all.

A Strengths Based Approach Makes the Job Search Easy, and A Lot More Fun

I’ve been counseling college students to forget what they think they know about “getting a job” to pursue a “strengths based” effort to become involved with an employer where they can maximize their entry value in whatever enterprise that may be fortunate enough to hire them.

It’s a simple and effective process.

Let's say you want a job.

Begin with a change in perspective. You are really not simply looking for a job, as if you were taking something from someone, but, instead, you are looking for an opportunity to serve someone, as if you are actually giving something valuable.

To do this confidently, you must absolutely know how you naturally work best. This knowledge is what Marcus Buckingham calls a talent, which is the foundation for a strength. Once you can identify your real and natural strengths, you can approach employment in a new way. What you'll learn isn’t what job you should do, as is customary for career counseling services, but how you should uniquely approach anything you might choose to do.

It’s a five step process:

• Discover your strengths. Read Now Discover Your Strengths, and take the online assessment.

• Understand these strengths as areas of near perfect performance. Learn what results they can almost automatically offer, simply because of who they know they are.

• Research companies to discover ones with visions and missions that are aligned with the kinds of things they can be passionate about.

• Take a different approach. When talking with a prospective employer, don’t ask things like, “What positions are you currently looking to fill?” and then try to make the resume look like a fit. Instead, using their knowledge of their strengths, engage a business on the basis of the expected outcomes that their employment will produce for the company. This helps the prospective employer frame the hiring decision. It changes from, “Do I have a position for your?” to “Do I want the outcome you offer?” Managers and business owners are hungry for outcomes, and the average applicant rarely offers any.

• If the first company declines, ask what other companies in the space are in need of the outcome you deliver.
  

Experience tells me that this approach leaves a better impression than the typical employment interview. Rather than the employee-centered approach, this one shows a business owner that the primary interest of the applicant is producing a beneficial outcome for the business. The applicant is there to help him. If the offer of a great outcome is declined, consider that it may lack clarity. Revise it.

No business person worth his salt forgets the approach. And, if the outcomes are well presented, few can resist the strong temptation to take advantage of the opportunity you present. After all, should they pass on a great outcome, their competitor might get it. This is a risk too great for many managers to take.

Besides, you don't really just want a job, or do you?

Off-Shoring and Outsourcing: Problems for Mechanical Model Enterprises

I responded to a wonderful article by David Williamson Shaffer on Epistemic Games. The article was titled, The End of the American Century, and is a good description of America's misunderstanding of the changes that have, and are, taking place in the world economy.

My comments, reprinted here, clarify the difference in perspective between "mechanical" and "organic" business models, and how this difference highlights our cultural dislike for outsourcing and off-shoring.

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David, this is a well written piece. Thanks for your thoughtfulness, and insight.

Yes, the reality is certain, and it is different from that which most Americans assume to be true. There is a larger economic world out there, and most of it is not American.

I was reading Thomas Freedman’s The World is Flat a while back, and, somewhere in the middle, I became frightfully aware of this fact, and of the reality that most of my associates in business believed otherwise. The world’s business models have already changed, and many of us are ignorant of that reality. It became eminently clear that, as Americans, we are erroneously convinced that our long established, mechanical business models, remain the right and true way, and that we should continue to force our businesses to fit those models. This is our form of insanity.

If we are to survive, we must get with the program.

I appreciate your inclusion of the account of the Dallas attorney, Mark Richardson, who said that, out of ethical obligation, he must do what’s best for his clients, and “that includes saving them money.”

His assessment reflects what I believe to be a misapplication of the economic reality he describes. His ethical responsibility is not to “save his clients money,” rather it is to allocate their resources to produce the greatest value for their investment paid to him. His description of off-shoring to a lawyer in India at $60 per hr instead of using his in-house attorneys at a rate of $395 per hr, or his $225 rate for a junior associate, suggests that his rates are, somehow, too high.

I think this perception is common, and a misunderstanding of the real value proposition to be considered. There is a world of difference, and understanding that difference will illustrate the problem many Americans have with concepts such as outsourcing, or off-shoring.

We have a natural distaste for both. It appears that available talent off-shore will take jobs away from Americans. We can’t possibly remain profitable if we are forced to reduce our fees to compete with these off-shore providers, so we think. And, so we fear. However, we miss the basic economics of the opportunity.

America’s infrastructure is considerably well-developed and expensive to maintain. We are also well-entrenched in it. We can’t, and shouldn’t expect to eliminate it, which would be necessary if we are to attempt to compete in this world economy taking the fear-based approach inherent in our “save money” models. Instead, we need to embrace it, to recognize its value, and then use it to our real advantage in the development and delivery of the products and services it can produce. That infrastructure affords us opportunity unavailable and undeliverable by our “competition” in places, which like India, are as of yet under-developed.

The basic tenant of our capitalist economy is the free exchange of resources to gain other, more valuable resources for the betterment of our lives and our companies. At the core of every financial transaction is the idea that all participants gain value in the transaction. A consumer receives greater value from the transaction than what he spends. The seller receives greater value than what he spends to provide the product or service. Done right, both sides profit.

Take the case of the attorney. The law firm's client chooses to buy legal services that provide a greater value than their associated expense. It is the ethical responsibility of the attorney to do just that. Here is where the decision to off-shore aspects of the transaction comes in. The basic research task described in Shaffer's article is an example of a non-strategic offering. Grunt work in simple terms. Such work may provide some value to the client, but the value of that work should not be understood in the framework of the cost to produce it, but in the value of the impact of the work done. The two are really not related. If attorneys in India can provide the entirety of the value to be received for 25% of the cost of attorneys in America, so be it. The value realized is not diminished at all. If attorneys in India are happy and fulfilled only requiring $60 per hr, an efficiency is created, making it possible for the American attorney to deliver the same value to his client at a reduced cost, first to his firm, and secondly, if he should choose to reduce his fee to deliver that value, to his client.

So, off-shoring actually enables the attorney to increase his value to his client, but that value does not lie in his ability to “save his client money.” Such a limited view diminishes his value to his clients, and violates his ethical responsibilities toward his own firm. Both parties have the ethical responsibility to maximize each other’s value, and earnings. Saving money may occur, but cannot be the foundation for value description. Since there is an opportunity to off-shore, the greatest value can now be realized from better utilization of the American attorneys. They can now apply their creativity to strategic activities with the opportunity to add vastly greater value to their clients, tasks well worth the $300+ per hr that they need to maintain the operation and necessity of the firm.

The distinction between the two perspectives lies in the way we tend to view a pricing model. We tend to choose something from our mechanical, manufacturing business models. We consider cost, add some “fair markup,” and assume the rate to be some sort of value. In reality, there is no cost + fair markup anywhere in the value equation. The value exists only in the mind of the customer, and it is not a cost plus proposition. The cost has no significance to him, only that, all things considered, the purchase costs less than the economic value received. Should the law firm be ethically able to charge $300+ per hr for services it provides? Absolutely. However, and this is the critical distinction, it can only support the fee if the value provided is worth multiples of the fee to the customer.

Only when American companies end their love affair with cost plus pricing and adopt value based fees, will we be able to fully embrace every opportunity to send our less-strategic work overseas, and then become what our well-developed infrastructure requires, that is high value/ high margin enterprises.

Become "Well-content" with Weakness - Maximize Your Strengths

The Bible has some valuable business content, particularly content about maximizing individual and team performance. One particularly useful insight comes the New Testament, from the Book called II Corinthians, Chapter 12 verse 10. Permit me a little leeway in how I interpret Paul's words and apply them to business.

Paul says, in essence, "I am well content with weakness, for when I am weak, I am strong."

Dumb idea? Sounds a little ridiculous, where business is concerned.

O, contraire.

Paul's admission is, in actuality, one of the most important yet neglected truths in our world. Paul has discovered something that most people refuse to acknowledge: People are, for the most part, weak. That is, most people are not qualified by strength, talent or unique ability to do a whole lot of things. I dare say, most things. Paul realized that, if he were accurate in self assessment, he had but a few areas of great strength, of unique talent and powerful ability. In everything else, he was somehow deficient. This is also true for you, and for your employees.

In our world of "universal education," where intelligence is measured purely by academics, we become convinced that "well roundedness" is value, and that the way to achieve the greatest of human potential involves becoming as proficient as possible at all things. And, in light of human pride, the acceptance of weakness without significant effort to eliminate it, is foolish.

The truth rests in an entirely different model.

Marcus Buckingham's work, Now Discover Your Strengths, reveals something about a small group of people who achieve incredible levels of success. Synthesizing millions of interviews with all kinds of individuals, Buckingham determined that the most significant and common feature of each of these "super successful" people was their ability to accept, and embrace their individual strengths and weaknesses, and to live and work without the need, ir interest, to do much to improve their areas of weakness, making every effort to function only in the limitations of their strengths.

I would say that these "super successful" people were "well contented in their weaknesses," knowing that when they are weak, (that is fully informed of where they were weak, and avoiding the pull to work to eliminate the weakness) they are strong.

Ignoring this creates reverse leverage in our efforts to be as productive as we can. Buckingham points out that an effort to improve an area of weakness requires more energy than the resultant gain. A whole lot of effort produces a small improvement. So, working on weakness is a bad investment. I call it "negative leverage."

On the other hand, with regard to a strength, it takes but a small amount of energy to achieve great improvements. This is "positive leverage."

Two Contrasting Perspectives on Growth

One school of thought holds that people can be taught to do most anything, and that the area of greatest potential growth is in an area of weakness.

Another school says that there are but a very few tings that any individual is talented has a strength to do well, and that the area of greatest potential growth is in the area of greatest strength.

Buckingham's research supports the latter position.

What does this mean to the potential productivity of our company and the people who we employ? How could this insight help us to deal with the growing number of distractions and activities which are beginning to paralyze many of our operations?

Simple. It offers a solution. It offers the potential of leverage for every employee in every area of our company. It offers the chance for people to "do less and accomplish more."

Taking a Different Approach

Instead of managing activity and time with the same, mechanical processes you have used for decades, consider another approach. Instead of the linear and sequential organization of tasks, which just grow in number by the day, consider an approach which is not so activity focused, as much as outcome focused. Consider that the activities with the greatest leverage potential shouldn't even be on the same list with those that, done by those without the strength to leverage them, are but negative leverage. (They take more energy to get done than the value they bring.)

Consider these possibilities:

• Discover the strengths of your people. Everyone needs to know what they, and their co-workers do naturally, with the greatest ease and with the greatest result. Then, you need to help them, whatever they do, to work in accordance with those strengths.
• Get to know which activities have the greatest impact to bring you the most significant return on the effort invested. Any low impact activity needs to be eliminated, of outsourced to a company where the activity can be leveraged for your organization.
• Re-align your work so that you and your employees know how their contributions actually impact your profitability, and that of your customers. Then, by properly aligning your compensation and reward strategies, your employees will, naturally, do the things that bring the greatest reward for everyone.
• Become flexible enough that you don't institutionalize practices and activities in a non-institutional, hyper-dynamic marketplace in which you work. Everything, especially your customer, is in constant change. Adaptability to the world outside is very difficult with institutionalized internal practices.

You don't have to wait until you're overrun and your people are over-worked with low value, low-impact activities before you make any changes. Learn to embrace your strengths, and your weaknesses, letting others do the same.

If your employees could work half as hard, with double the results, you'd reduce the stress of your workplace, reduce your turnover, reduce your management involvement, increase your innovation, and gain the profits that would result.

Today might be a great time to start.

Performance Expectations - Clear in Sports, Blurred in Business

Performance expectations are clear and mutually understood in the sporting world, but blurred for employees in most businesses.

In the sporting world, each and every player knows his position, his roles, and responsibilities. And, maybe more importantly, each knows how his contributions impact the outcomes of the team.


Every wide receiver knows that he is a wide receiver. The very position is aligned with his athletic strengths. He knows where to line up for a particular play, and where he is to run his route. He knows blocking assignments and decoys. He knows whether he is primary on a given play in a given situation. When a pass comes his way, he knows what he is to do. Once he catches it, he applies different skills to evade would be tacklers on his way toward a goal known by all the other players on the field. A good player is able to improvise in accordance where necessary, in accordance with the common goal.

In the business world, only a few employees actually know their position, their roles, or their responsibilities. More importantly, only a very few actually each know how their contributions impact the outcomes of the company.

In the business world, employees often know little more about their job than their job title, and some generally related activities. That may be it. And, sadly, that job may not utilize the best strengths and attributes of the employee at all. Unbelievable as it sounds, this data is supported by employee surveys again and again.

Employee surveys indicate that only 40% know the primary goals and missions of the company. Only 20% know how their job contributes to those goals. Only 20% even care. Only 20% know how their regular activities impact profitability. They come to work to do their job. When it comes to improvising, or innovating, since they don't really know what matters most, they choose not to. And, in a crunch, employees don't know how to choose the most productive activity in unique situations.

Businesses Lack Strong Employee Alignment - Expectation Need Clarity

Imagine not knowing the real end game. Imagine not knowing which end zone, or which basket is yours. Imagine not knowing what is a win, or what is a loss. It would spell failure in sports. In business, however, it only spells mediocrity, lack of engagement and contribution, resulting in less-than-optimal performance. Management must continually step in, micro-manage, sometimes applying pressure, most of which is misunderstood by the employees involved.

Poor alignment is like having a team where many of the players, somehow, without knowing it, undermine your ability to achieve. They are effectively working to benefit the opposition.

Businesses Struggle to Get the Best From Their Players

Ever wonder why some employees seem to lose interest over time? It's the same reason that they aren't continually increasing their contributions over time. People love to work for great outcomes. Gen X and Gen Y employees aren' t terribly interested in trading their time for a paycheck. They want to be working with other engaged people to accomplish great things. They want to win. If an enterprise has no greater goal than "maximizing shareholder value" or "making money," you can be sure your best people will just bide their time until something better comes along.

Do You Have a Vision, a Purpose and a Mission?

This is the most undervalued, and misunderstood essential when it comes to recruiting the best, and aligning them achieve great goals for your enterprise. It provides the answer to an often unasked question: Why should the very best people want to be a part of our company?

I am amazed how few executives I work with have clearly determined why their company exists in the first place. I mean, why, really. Why this industry? Why now? Why here? What about our customers? What impact does our company have on them? Are we here to make any difference? If so, what difference is that?

If your company should go out of business, will it be missed? If you don't know how you'll be missed, or who will really miss you, I recommend getting alone with some of your key stakeholders, or your employees and getting the answer. If you don't know, I guarantee your people don't know. Even if you do, it's probably a good bet that most of your people don't. If they don't, they don't know why they work for you, making them easy prey for your competitor. (You do realize that over 60% of employees are just biding their time working with you, waiting for a better opportunity to come along before they jump ship.)

What Should you do? Get clear about some things:

- Know what it means to win.

- Know your purpose. Develop a clear vision and mission for your enterprise.

- Communicate. Inspire your people. Engage them in the common call.

You'll begin to attract more winners, people who will know why they want to work with you. They'll know what it means to win, and how their involvement affects the outcome. Then, they'll make greater and greater contributions, ones that move you closer to the goal. Hindrances will decrease. Your customer and competition will take notice of you. You'll make a mark.

You'll start to stack up more wins. And that means, in the end, you'll make a lot more money.

Business Lessons From Sports: Performance Management is Key to Winning

Businesses and athletic programs are similar in that successful programs win.

Winning, however you define it, is the result of proper execution - players doing what they're supposed to do, when they're supposed to do it. Proper execution is dependent on player performance – in the game.

So, teams and companies that best manage player or employee performance win. They have the right people, in the right jobs, executing the right way.

In sports, results are reported in the standings. In business, results are reported as profits.

It just makes sense.

I must make a worthy observation. Business performance management practices in business are deficient and under-developed compared to those common to sports . . . and it is costing us millions in potential profits.

Business should take a lesson. It will revolutionize results.

I want to address just four glaring differences between the two models. Seeing these will help us, as executives, make some simple but important adjustments in our own practices which will really improve our results. The deficiencies in our business practices should then become clear

• Goals and performance expectations need clear definition. These are exact and mutually understood in the sporting world, but blurred for employees in most businesses. In sports, everyone knows what winning means, and every player knows how their job contributes to that goal. That is not characteristic of the teams involved in our businesses.

• Monitoring, encouragement and correction must be immediate, relevant, and continuous. Player performance is monitored and corrected regularly, even immediately, in sports, but is handled only intermittently, monthly, quarterly or even annually for employees in business. Athletes receive immediate feedback and coaching. Good habits are reinforced, and bad habits are broken as soon as possible. Employees may not even know how they are doing.

• Resources for improvement must be readily available. Player performance correction and coaching for improvement is immediately available for the athlete, but may not even exist for employees. In the sporting world, coaches, trainers and specialists abound. Specific enhancements are developed. In business, correction comes without specific help to develop performance.

• Regular training and skill development must be central to operations. Ongoing, regular training is commonplace and essential for any and all highly skilled athletes, while businesses falsely assume that well recruited employees don’t need ongoing training. They should already know what to do, and how to do it. Practice is expected for athletes. Employees rarely practice.

Recognizing and correcting these differences and correcting your processes will mean an increase in your employee's performance, and with it, your company's profitability.

Modeling company performance management practices after those of a sports franchise will improve you revenues, reduce your costs, and create competitive advantages. It will take pressure off your management, as your staff adapts and innovates in ways that will create value for your company and your customers.

Don't know where to start? You're not alone. Consider calling a professional, like a PEO. A good PEO should have a full coaching staff, a veritable well-equipped gym, in fact, everything you need so you won't have to hire a bunch of people to make sure you cover your bases. I work a lot with one particular PEO, Administaff. I know, firsthand, they can help you pull this off very easily.

In the words of FedEx’s Fred Smith: You’ll make more money, and have fewer problems.

I think that’s worth a lot.

You'll Need a Whole new Mind to Survive: The Backbone of the Innovative Company - People

In case you ever wonder how you can help your company be more profitable, or innovative . . .

In case you fear that you may not have a long term competitive advantage in your industry . . .

In case you wonder if you'll ever really fit in to today's workforce . . .

Here is a groundbreaking book which well describes the powerful, changing forces at work in our world, changes that, when fully accepted and embraced, will increase business profitability exponentially. The Book is titled, A Whole New Mind: Why Right-Brainers Will Rule the Future by Daniel Pink.

Pink writes in his introduction:

"The last few decades have belonged to a certain kind of person with a certain kind of mind – computer programmers who could crank code, lawyers who could craft contracts, MBAs who could crunch numbers. But the keys to the kingdom are changing hands. The future belongs to a very different kind of person with a very different kind of mind – creators and empathizers, pattern recognizers and meaning makers. These people – artists, inventors, designers, storytellers, caregivers, consoler, big-picture thinkers – will now reap society’s richest rewards and share its greatest joys.

This book describes a seismic – though as yet undetected – shift now underway in much of the advanced world. We are moving from an economy and a society built on the logical, linear, computer-like capabilities of the Information Age to an economy and a society built on the inventive, empathetic, big-picture capabilities of what’s rising in its place – the Conceptual Age.”

Value, Innovation, Creativity, Employability and Profitability

Anyone looking for the clearest picture into value creation in the coming century should read this. Understanding this great shift will bridge the generation gaps with Gen X, Gen Y and Boomer employees, making your company organically innovative, giving you sustained competitive advantage in your marketplace.

If you are a potentially disillusioned member of GenX or GenY and you wonder how you fit in, you will love what Pink says. You also should be familiar with Ryan Dorsey, and his bestseller, My Reality Check Bounced.

Did I mention that this is a key to sustained higher profitability?

My practical study into the People-Profit relationship parallels much of what Pink and Dorsey describe sociologically. There is a huge deficit of profitability missed by most every company, simply because current mechanical management practices prevent them from realizing the tremendous creativity and innovation contained in their own, current workforce. [Read again: Current practices actually prevent companies from making as much as they can.]

Don't wait until you get much further behind before you begin to convert from the mechanical to the organic business. You might lose your best resources while you wait.

As always, early adopters will reap the greatest benefit.

Did I mention profit?

When Numbers Don't Tell the Truth - But You Pretend They Do

I wonder at the logic of some executive decisions.

• Q: Why would otherwise intelligent executives spend a dollar to save a dime?

• A: Because they don't realize that they are.

They've been doing it ever since they learned to manage by financials.

If you consider what happens when business people start to think like financial people, it will make sense why. Financial people manage by manipulating line items on financial statements.

Here's the logic. Decrease an entry = reduce a cost.

All is proper. All is true. All is right. Manage by the numbers, and numbers don't lie - that is, unless you won't honestly look at all the numbers.

It's the age old, mythical discussion of "hard" costs vs. "soft" costs. And, this thinking is costing you money.

• Lie: Hard costs are real costs. Soft costs aren't.

• Truth: If money goes out, it is real.

There are no such thing as "soft" costs, only costs that cannot be connected to invoices, with corresponding line items on financial statements. As I said, if money goes out, there is a real, "hard" cost, even if you have trouble accounting for it.

The Health Insurance "Shop and Change" Model

Here's the real case of a 35 person company I worked with recently. It's the same strategy followed by countless companies, every day, all across the fruited plain.

The owner/operator is a prosperous fellow in his mid 40s. He manages by financials. He didn't like the 12% increase in his health insurance premium he was given upon renewal. It would increase a line item on his P & L. It would reduce his profits.

So, in accordance with his "mechanical" model, he had already fixed things. He had already followed the very same tried and true method he always used to handle any cost increases he faced. He shopped. He needed and got a better number for his financials.

Good strategy? Appropriate accounting? Not really.

My friend needed a lesson in real math, a lesson in real expenses, a lesson in accurately assessing the cost of anything. You see, his methodology makes financial sense unless the change causes the company to "spend more money" making the change than the change nets.

In his case, as in many others, it did. He just hadn't really looked.

Where Else do Costs Exist?

Here is the typical dynamic at work for most companies in their effort to manage the cost for employee health benefits. You'll recognize it. It is part of a cycle that goes something like this:

• Set expectations based on rumors, news reports, comments by insurance people calling, wanting to “give you a quote”.
• Become anxious about an approaching renewal date.
• Get your renewal. It is usually "too high."
• Listen to explanations, justifications, and excuses from your agent.
• Go out for other quotes.
• Shop plans, and plans, and more plans.
• Set up spreadsheets.
• Compare apples to apples. (Which cannot be done.)
• Make the difficult decision to change.
• Hold employee transition meetings.
• Answer many questions. What? Why? Oh my?
• Adjust, breath a sigh of relief if nobody quits, and pretend that you’ve done something good, something right, something necessary.
• Begin the entire process all over again in 9 months.

You know the drill. So did my friend. He'd done it countless times before.

The problem was that he wasn't accounting for all his real costs. He never accounted for:

• Cost of the distraction, the loss of his executive focus.
• Cost of meetings with brokers and subordinates. (He held 6 over the course of 2 months. that is at least $1500 for a leader making $150k/year.)
• Cost of non strategic use of his mental bandwidth. (Profitable projects needed his brain.)
• Cost of subordinates time building projection models. (At 6 hours, at least $300, not counting other things that weren't done.)
• Cost of the 120 minutes each member of the staff spent in direct transition meetings. (That single expense was $5500 for 35 employees averaging $45k/year.)
• Cost for the breakdown and rebuilding of employee confidence that accompanies any change to benefits. (Employees talk among themselves and spend countless hours doing their own comparisons while at work. Let's be conservative and give each employee only 1/2 hour of wasted time. Cost: $1500.)

So, this corporate leader cost his company a minimum of $8800 to make the transition.

What Did it Get Him?

For all of his efforts, he was able to moderate the 12% increase ($15k) to 6% ($7.5k). He reduced a line item on his financial statements. He could report this "success" to the board.

However, the real bottom line reflected something completely different.

When you spend $8800 to save $7500, no matter how you do the math, you lose $1300. And that's only counting the actual labor dollars he could actually identify. Guaranteed, the losses are far greater if he were to account or any loss of attention, or loyalty, or goodwill, or whatever else he had the guts to consider.

Upon closer discovery, with the courage to be honest, my friend discovered that his real costs surpassed the financial savings he anticipated, and reported, in the change. – This means he, and his company, lost money making the change. He spent a dollar to save a dime.

Numbers really don't lie. They just don't have a chance to be accurate when the real variables aren't included in the equation.

Get smart. Count the real cost of your "cost saving" measures. Otherwise, you won't really be saving any money at all.

You might even save your way right into bankruptcy.