The Top (Self-Serving) Reason You Need to Keep Your Employees Happy

 

 

Why should I thank my employees for coming to work? Why do we need employee appreciation events like lunches, dinners and parties? I gave them a job, which they are lucky to have these days. Isn’t that enough?

You may have heard these sentiments expressed by CEOs and business owners. Or perhaps you’ve had similar thoughts yourself. Isn’t every two-hour lunch event decreasing your employees’ productivity and costing your business money?

The answer to that is yes. But if these events help keep your employees happy and prevents them from leaving, you are saving money. A lot of money when you consider the high cost of turnover for filling any one of those jobs.

You can find out just how much that cost is with this Turnover Calculator  from The Predictive Index, a workforce assessment company.

This six-step calculator takes into account items such as the cost of covering the position during the time it is vacant, the hiring manager’s time, advertising for the position, resume screening, company time spent interviewing and background checks.

Other costs include the time to onboard the new hire and time for that person to obtain full productivity.  (To obtain the full report on this site, you will have to give your name, company and email at the end. There are other online calculators available as well.)

A study done last year by the Society for Human Resource Management, the 2016 Human Capital Benchmarking Report, concluded the average cost-per-hire is $4,129. And that doesn’t include the additional cost associated with onboarding the new hire.

Whatever the final figure is, it’s indisputable that losing an employee is expensive. So, next time you find yourself concerned about the cost of yet another employee outing or party, remind yourself that if that event helps keep people happy and engaged, it’s a bargain for your business.

The good news is the biggest thing you can do to help retain employees is also the simplest. Show appreciation. Say thank-you. These simple gestures can contribute to your bottom line as well. In an  article in the Wall Street Journal about showing appreciation at the office, it was reported that more than half of human-resource managers say showing appreciation for workers cuts turnover, and 49 percent believe it increases profit.

To read more about how appreciation helps and recognition needs to extend beyond the paycheck, please see my blog Any Time of Year is Good to Express Appreciation.

Here’s some further reading on ways to retain your employees.

How Loyal Employees Contribute to Your Bottom Line
This is a two-part series on the importance of developing and maintaining loyal employees. Part one explores why every company should focus on having loyal employees and how doing so contributes to its revenue. Part two offers tips of how to develop loyal employees.

Work-Life Balance Key to Recruiting, Retention
This two-part series is on the growing importance of offering a work-life balance to employees in your company. Having a work-life balance was ahead of money, recognition and autonomy for more than half the people surveyed in a study done by Accenture in determining whether or not they have a successful career. Part two, Work-Life Balance, the #1 Thing to Offer, discusses the one critical component your workplace must have to keep employees.

Funny, But True Stories: The Thoughtful Thieves

 

“No way that really happened!”

You know that saying, “You can’t make this stuff up.” I’ve lived that during my career in the turnaround industry. I’ve seen the look of disbelief cross people’s faces when I’ve recounted one of my unbelievable-but-true stories. Like the one I call The Cases of the Thoughtful Thieves.

I’ve dealt with my share of messy fraud and embezzlement, cases in which I had to dig deep and do a lot of research to track down the missing funds and identify the perpetrator. That’s why I was so appreciative of the Thoughtful Thieves. They made my job so much easier.

I was sitting at a CFO’s desk one time while he was on vacation. I recommend to all my clients they encourage their CFO to take two consecutive weeks off and sit at his or her desk, open their mail and just see what happens. You can learn a lot that way.

So I decided to check out this CFO’s mail. Imagine my surprise when I found bank account statements from an account in the Cayman Islands where he’d been stashing the money he had been stealing from the company. Had I been his advisor, I would have strongly recommended having those statements sent to his home or a PO box. Anywhere other than to the company he was stealing from. But maybe there aren’t a lot of fraud consultants available with these handy tips for success.

I was poking around on the computer of another CFO and found a folder on the desktop. It was password protected, but with the blessing of the CEO, I used my handy-dandy password decoder and opened it up. And I found an Excel spreadsheet neatly detailing all of the money he had stolen from the company. Everything had a date on it and tracked the path of the funds he had embezzled. He even had an entry for paying the contractor for his home, done with company funds he’d helped himself to. It’s like he had given me a gift, one that I happily shared with senior management at the company.

For more stories, check out my book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes.”

Never Skew the Facts to Sell the Deal

My work as the turnaround authority has given me a front-row seat to the behavior of CEOs that led them to crises. This experience provided plenty of fodder for my book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes.”

One of the mistakes CEOs make, which I covered in a white paper I wrote, is that they skew the facts to boards, creditors and constituents to “sell the deal.” Now, I often have to deal with unpleasant situations and work with companies in dire straits. But no matter how bad the situation, honesty really is the best policy. Changing the facts, or omitting crucial information to get your way is never the way to go.

Here are two stories to illustrate my point. Both these situations involved CEOs bending the facts so they could qualify for financing their companies couldn’t support.

The CEO of a hard drive manufacturer in California desperately wanted a line of credit from his bank for $60 million, so he stuffed the channel in order to make his company appear more credit worthy.

Stuffing the channel is when a manufacturer oversells product to put sales on the books, despite knowing that much of the merchandise will come back unsold. This inflates the books by overstating the top line, thereby improving the bottom line.

This strategy worked. He got the loan, but when the company repurchased the inventory on the channel within 60 days, it became out of compliance on the line of credit and the bank put the company in default.

That’s when I was brought in to salvage what I could and to hopefully restructure the company. The company survived, thanks to some hedge fund loans, but the CEO lost his job because he skewed the facts and misrepresented the true financial situation of the company.

Not bending the facts is so important that it deserves this second story. Before the technology was so ubiquitous, laser tag equipment had a very high value. A Texas-based company was seeking a large loan and claimed it had more inventory on its books than it did by adding the inventory in its Ireland-based location to the U.S. books. The auditors never verified the inventory and granted the company a far larger loan than it could handle.

When the company filed for Chapter 11, I went to the “plant” in Ireland and was not happy to discover it was just an empty lot. That inventory was just a figment of the president and CFO’s imagination and the company was now $75 million short in inventory.

I immediately went to the judge to convert the case to a Chapter 7 rather than try to bring the company through bankruptcy and be embarrassed by the fraud. The creditors ultimately sued the accounting firm and recovered millions of dollars from faulty accounting, once again highlighting the blunder of skewing facts.

Don’t manipulate data to give an unrealistic picture of your company, especially when it comes to qualifying for financing. There are reasons for the rules that prevent companies from getting loans they can’t handle, and yes, those rules do apply to you.

How a Little Toilet Paper Saved a Multi-Million Dollar Company

“My mother loved me to pieces,” wrote humorist Roy Blount Jr. “And I’m still trying to pick up the pieces.” Blount explores his relationship with his mother in his book <i>Be Sweet</i>, which anyone raised in the South will recognize as the advice we often received.

I often use that advice along with the other constant admonitions my mother gave me as a young boy to use the words “please” and “thank you” in my career in the turnaround industry. My own interpretation of being sweet is that I treat everyone with respect. That’s the way my momma raised me.

When I visit a failing company for an assessment or when I take over as Interim CEO, the situation can seem depressing. These companies are not on Fortune’s 100 Best Companies to Work For, to say the least. Their employees work for the anti-Googles of the world: there is no free gourmet food, no celebrity visit, no bocce ball court or bowling lanes.

The employees know the company is in a bad situation. They’ve heard rumors about bankruptcy, layoffs, salary cuts. Most likely they have had very little communication from the higher ups to dispel what may or may not be only rumors.

Then I show up. A total unknown. About as welcome as a skunk at a garden party. I need to turn that negative emotional tide quickly so I can do the job I’ve been hired to do. I need these people on my team, and I want to give them hope about their futures. I can’t give them free gourmet meals – but I can buy them toilet paper.

I’ve mentioned this story before as a lesson for CEOs to watch their raging egos, but it applies for this situation as well. A very smart Ivy League Ph.D lost his $50 million company. He practically threw the keys at the bank considering all he kept from them, and I was called in to try to save his company.

Minutes after I arrived the executive assistant asked for $20 so she could buy coffee and toilet paper. Seems the CEO’s wife, the Dragon Lady of El Paso, as she was not so fondly referred to by the employees, had severely rationed coffee and toilet paper and they were out. Not a square to spare.

The company was losing millions, but saving a few dollars by limiting the staff to two rolls of toilet paper a day is kind of like unscrewing the light bulb in the fridge of your McMansion to save on electricity when you’re months behind on your mortgage payments. It won’t make a darn bit of difference except in the Demoralization Department.

I reached into my wallet and took out $100. “Go to that Sam’s Club I saw on the way in here, buy as much coffee and toilet paper as you can. Bring it back, put it in the break room, and tell everyone, ‘Compliments of Lee.’”

From then on, the staff loved me. Nobody lost his or her job, and we sold the company, in full, six months later.

Other times getting buy-in from employees is as easy as saying “please” or “thank-you.”

When I assume the role of Interim CEO, I need the assistance of the staff there. They may need to stay a little late to prepare a report for me, which they have to do in addition to their regular jobs. A simple, “Thanks, I really appreciate it,” to let them know that I know we’re all pulling a little more than our weight to keep the ship afloat, goes a long way. It’s always a shame that so many of them get this strange look in their eyes like I’ve said something odd. To them, I have. They aren’t used to hearing appreciation for doing their jobs.

Treating people with respect goes a long way towards helping build loyalty with a staff, especially when turning around companies. I spend a lot of time picking up the pieces, but not as a result of too much love.

Have you thanked someone lately? Who?

The $5,000 Dollar Magician and the Real Element of Disbelief

Maybe we should be more jaded by now when we see wasteful government spending. Perhaps it was believed that we would shrug off  the scandal over the General Services Administration spending $823,000 on a Las Vegas conference. But I’m not going to. I’m still appalled. I don’t know if it was the clown, the mind reader or the $5,000 motivational magician who sent me over the edge, but at least one of those entertainers didn’t belong at a government conference in the midst of one of the worst recessions our county has ever faced.

While we may be shocked and wonder how these things could possibly happen, the reality is that they happen every day.

I’ve written previously about the necessity of reviewing the expense reports of senior people, which is one of the first things I do when reviewing a company that is losing money. I’ve uncovered a lot of fraud that way, from CFO’s writing themselves checks for thousands of dollars to them depositing large rebate checks into an account only they know about.

But it’s not only theft that should concern you. Overspending on company events or inappropriate business expenses can be costly as well. Putting the morality of infidelity aside, is it appropriate for a married CEO to charge trips with his girlfriend on the company credit card?

I thought of how costly fraudulent and inappropriate business expenses can be not only to a company’s bottom line but also to its reputation when a scandal erupted recently in Atlanta.

This scandal involved a $106.22 wine cooler from Pottery Barn.

Brian Leary headed The Beltline, a non-profit, partially government-funded organization that is developing a multi-use trail on a former railway corridor around Atlanta.

His staff purchased this wine cooler – among other questionable expenses – for his fiancee. I dare say it cost a previously well-respected CEO more than $106.22. It cost him his job.

When a city audit turned up that expense plus payments of parking tickets and dry cleaning bills for Brian, $500 kegs of beer and a $2,100 tab for food for employees at a baseball game, well, people started asking questions. Shortly thereafter Brian was out, unemployed and disgraced.

I find theft and inappropriate expenses by C-level execs much more egregious than many. After all, these people have been trusted with the management, reputation and future of their companies. With their high salaries they should be the people least likely to need the money. Does an exec with a six-figure salary really need his company to pay his $7 dry cleaning bill?

I don’t know what causes senior-level executives to turn dishonest and steal from their companies or exceed the limits on appropriate business expenses (wait, is it as simple as money?) – I just know that they do.

Have you checked expenses at your company lately? Are your employees clear on what can be considered an appropriate business expense?

How You Know You’ve Made a Bad Plan

There’s nothing I love more than a good maxim from an ancient writer. Today’s comes from the writings of Publilius Syrus:

“It’s a bad plan that can’t be changed.”

Well said, Publilius. Let’s address the issue of changing a plan from two sides.

In the first place, every business and every business plan should have contingency plans. It is of the essence. You shouldn’t even consider a contingency plan to be as much a contingency as part of the plan. “If X happens, we will then proceed down road Y.” This is incredibly important and oft ignored by many business people.

On the flip side and despite the need for a contingency plan, it is important not to waffle between plans, especially during a crisis. When a business is going through a crisis, it’s important for the CEO or leader to pick a particular plan or direction and stick with it. Nothing breeds a lack of confidence in staff like plan hopping. That doesn’t mean you shouldn’t have a contingency plan, but it does mean that you need to go down road Y only when X happens and not just willy nilly.

As Publilius said, if you can’t change your plan, it’s a bad one. In that case, it’s not a plan. It’s a tunnel out of which you can’t see the other side. Even if you don’t emerge from a tunnel the way you expect, you need to know that you’ve created some way to get out. That’s what a contingency plan is.

How do you create your plans? Do you always build in a contingency plan? Why or why not?

Why Should People Follow Your Lead?

You are a leader. Most likely, leadership is not a position for you, but an attitude and a way of life. People at work, home and in your social circles turn to you for advice. Your wife (or husband) lets you be the spokesperson in confrontational situations. People listen to you. But what was it that got you where you are? Did you work your way up the career ladder? Were you given a great opportunity and took advantage of it? Were you always this way and running your own business crystallized this approach in your life?

No matter what some may tell you, it is unimportant how you became a leader. The essential point is how you use your power to motivate and inspire, to scold and fire, to teach and support others.

You may have been to some leadership seminar and learned the “key principles of leadership.” They told you that by following their 7-step program (or 4-step plan, or whatever it was) that you will be a revered leader.

I want to try something different, though. Rather than offer steps, I want to offer questions. I want you to ask yourself the following three questions, and then I want you to answer them honestly and understand how the answers can make you a more effective and motivational leader.

Question 1: Would you rather be loved or feared?

You may already be familiar with the Machiavellian dilemma of The Prince: is it better to be loved or feared as a leader? This question explores both your preference and abilities. Do you rule with an iron fist or joke around with your colleagues over drinks? Many people work with friends or want to maintain a very cordial working relationship with employees. It is in our DNA to seek approval. But are you capable of confrontation when necessary? Consider this: your good friend (and you are his superior) is underperforming at work and you notice. What do you do? What do you think you should do? Explore the normative and positive aspects of your answer and decide what actions and words would make you the best leader at your company.

Question 2: Do you seek advice or work in isolation?

When you are facing a challenge, you may close your office door and work until you solve the problem. Alternatively, you may write a set of e-mails and schedule some meetings to explore the problems with others. Do you seek the advice of others and hope for their buy-in or do you rely entirely on yourself? In my experience, leaders who openly share their challenges and ask for advice resolve their problems faster and more creatively than their counterparts who do it by themselves. However, there are a few leaders I know who are best at relying solely on themselves. They consider the situation objectively and without any input they devise brilliant solutions. Know how you work best and perhaps consider an alternative method to problem-solving. Ask for advice! It rarely hurts, especially if your team feels that it has your ear and you get buy-in.

Question 3: Do you inspire people to trust your leadership?

There are some leaders who keep their teams focused by frequent and harsh criticism, yelling and threats. Very few of these leaders (though there are some) build a good team with a solid focus that produces good results in the long run. Recently I visited an Atlanta-based online retail company (not a failing one) and arrived early. I go there once every few months and each time people greet me like I am their favorite uncle. It feels strangely good to be there. What do they do differently? – I asked myself. As I made my way to the waiting area I could hear the CEO chatting with the customer service team.

Technically, he did not have to be there (there is a customer service manager after all), yet he was sharing how great the team was doing and the few challenges they needed to work out. He did not go into too much detail, just excitedly elaborated on a few broad themes. He mentioned key priorities for the company over the next few months. He asked anyone who had a problem that they felt needed his attention to come directly to him. I felt like he could send out a memo the next week saying that they were moving the company to Oceania and everyone would follow excitedly. That is how much they trust their leader. Sure, this type of open environment does not work at all companies, but it works for this one. The CEO found a way to inspire and motivate people as the right kind of catalyst for the right kind of team.

As you answer these questions for yourself, I again encourage you to reflect on the consequences of those answers and how they benefit – or not – your business.

What kind of leader are you?