Better Business: People Power

Brett Davidson, chief executive of FP Advance, says getting people planning and ongoing management right will create an effective business.

Assuming you have a strategic vision for your business and an operational plan set for the next 12 months there is another crucial step; the ‘people plan’.

An effective people plan should clearly answer three questions:

• What should your people be doing?
• How should they be doing it?
• How does this fit with the business’s overall vision?

To make your team effective you need them to be excellent at an individual level but also to gel as a unit. Sales skills need to be balanced with more introspective detail and follow through, otherwise the business cannot deliver to the standards clients expect. Rainmaking skills need to be balanced with operational and managerial skills, numerical skills balanced with written skills and so on.

Some natural tension between the various skills and personalities is to be expected. Absence of any tension might even indicate one group has established a dominant culture within the company, which could be detrimental to optimal performance.

Assembling the right team is therefore critical but it is also important to have people doing the jobs they love and are good at within the business. If people have the requisite skills and are happy in their role the seeds of peak performance are already sown.

So how do you create a business that contains the right people performing the right tasks?

Take a look at your business plan and work backwards from the end state.

• Where do you intend to be in three to five years?
• To create a business that looks like that, what sort of clients will you require?
• What services will these clients require/expect from your business?

After identifying which services need to be provided by in-house experts and which can be outsourced, you can then start to build the team you will need to deliver it all.

Once you know what it is you are trying to deliver to clients you can begin to analyse the roles required to make it happen. This can be done anonymously, with no names attached to the roles until the job descriptions are written.

Clear job descriptions also have a direct impact on profitability, improving profit per principal by 45%.

Obviously most businesses already have some sort of a team in place but it is still important to pretend you are starting with a blank sheet of paper. Once you have created a list of skills/people/roles that will be required you can then evaluate how to bring this about through extra training, or even changes to your existing staff.

Getting the right person in a role pays you back many times over, while the wrong person in a role can detract from business performance by taking your eye off the ball.

The right team

With roles clear and the right team on board the challenge is how to get them to really buy in and perform to their maximum capacity. While sharing the business plan and vision with your team might go some of the way to achieving this there is a better way to get genuine commitment to the programme.

Explore four key areas with your staff and get them to tell you what matters to them in each area.

• Key motivators
• Key values
• Key learning and development needs
• Key strengths and talents

By exploring these four areas with each staff member you have an opportunity to really understand what makes them tick and what motivates them. From that information you can help them craft their objectives at work.

Ensuring staff have clear personal objectives also has a direct impact on profitability, improving profit per principal by 33%.

Having agreed on some goals and objectives for each individual it is imperative these are reviewed and appraised on a regular basis (at least once per year).

The review function helps ensure accountability. Setting goals and not reviewing them is a waste of time. However, it is also important to make some sort of appraisal of each staff member’s performance against objectives to assist with refining the goal setting process each year.

Looking at businesses that do review their staff at least annually, versus those that do not, shows a massive 200% increase in profit per principal.

The final piece of the people management jigsaw is to review each staff member’s salary or package of benefits on a regular basis (at least annually).

Doing so ensures that as staff improve skills and knowledge, hopefully making a greater contribution to the performance of the business, they can be rewarded appropriately. For some this will mean more money in their basic salary each month while for others it might mean changed working hours or extra unpaid holidays each year.

Once again the difference between firms that do review salary and remuneration versus those that do not shows up a 400% increase in profit per principal.

Putting all of this together obviously has the biggest impact on profit. Profitability for firms that manage their people effectively by doing all of the fundamentals outlined above is significantly higher than for firms that do one or two aspects well.

Ignoring these tasks has longer-term consequences for your business yet none of them is quite as important or urgent as generating income today so they can easily get overlooked. Getting your people planning and ongoing management right is a key part of taking your business to the next level.

* Please note: the profitability calculations use a notional £60,000 salary for each principal working in the business.