What is intersting is that he found me via linkedin.  He reached out, contacted me and we had a chat.  While i am not interested in changing jobs at the moment, i know people that would be suitable and i will the eBay guy in touch with them.

This is a great example of a company that is forward planning.  eBay is using social networking to its advantage and it is appears to be delivering storng results.  More companies should take this approach.  Your target market is out there and they are using linkedin.  It is just a case of being systematic and organised in building contacts and developing networks.  It is also a great example of nurturing relationships.  While someone may not say yes today, the door is now open and you never know what the future holds.

It also puts the company (eBay in this case) in a great light.  They appear progressive, organised and innovative.

Who would want to be an executive recruiter?

Recently i chatted with one person that was made redundant.  Her description of the process was “I was notified I was being made redundant, and immediately frog-marched out of the building. I wasn’t even given the opportunity to collect my wedding photos off my desk. It was all rather disrespectful.”

The above is an example of a company that is not approaching the letting go of people in the right manner.  How should companies handle this most difficult of times?

Companies (and more importantly their HR managers) need to remember that they are dealing with people and that letting someone go, no only impacts the life of the employee but also the employee’s family. Therefore, how people are fired is often just as important as making the decision to get rid of them in the first place.  This is often forgotten in the rush to move them out of the business and often firing people becomes no more than a process that HR follows.

There are costs associated with firing people.  The obvious is the payout  the employee is entitled to.  However, there are often hidden costs and how you let someone go can impact the size and impact of these costs.

The first is the decreased productivity as people around the business spend time talking about who has gone and how they were treated.  If the process is not clear, these people also spend time looking for other jobs believing they may be next.

The second is the external cost in future recruiting.  People talk and disgruntled ex-employees talk alot.  People get to know how a company treats its employees and they often think twice before signing up to work for that company, thus increasing the future cost of employment.

Therefore, there are some simple things a company can do to make the process easier all round.

• Have an open and honest discussion with the employee and to make sure that they understand what is happening and why it is happening.
• If mulitple employees are being let go, do it all at once – dont spread it out – and communicate clearly.
• Treat them with respect during the process rather than just walk them out the door.  They are not criminals.

Over the years i have had people resign – it is part of business life.  More often than not the resignation is in the best interests of both parties. 

However there are sometimes when you receive a resignation and you try to talk the person into staying in the business.  After much reflection, this is probably not the best move.  You should accept the resignation and move on.

People resign because they either have a new job (read better offer) or they have had enough with the current environment and they want to move on.  Either way, resignation without fore-warning means that there is a break down in communication between the individual and the management.  This can be because the manager is not open to understanding the needs of the employee or because the employee doesnt feel comfortable talking about their issues with the manager.

If you talk the employee out of resigning and they stay, the relationship between the manager and the employee maybe tarnished.  This is unlikely to be good for the business longterm.  Therefore, if an employee does resign, you are better off accepting it.

A better approach is to have an open and ongoing dialogue with all employees such that they feel like they can talk to you about the problems and then you are able to address the issue before it becomes a case of resignation.

A month ago i decided that we needed to let 3 people go from our Arts Hub business. Now i made this decision because in tough times, i needed to rebalance the business and i wanted to move people from non-revenue generating roles to revenue generating role (sales) and the people i had were not sales people. The approach we took was to discuss the change with the 3 people concerned and to give them 2 weeks notice and then to give the an additional 2 weeks pay. They were not long time employees (around a year) but i thought they deserved a little extra. We also asked if they would like to leave immediately or if they would like to work out the time. They all decided they wanted to work out the time.

However, not everything went smoothly. One of the employees decided that the reason the changes were being made was because we were closing down part of the business and therefore proceeded to inform the customers that we were doing this. Unfortunately this was not true and he didnt follow the established procedure of getting sign off before sending out communications.

Once we found out what he had been doing, we immediately let him go and patched up he misunderstanding with the affected customers.

So what did i learn?

• Once you have made a decision, move fast.  There is no reason to delay the inevitable.
• Have an open discussion with the affected employees – there should be no secrets and most people are understanding when you outline what is happening
• When letting people go, make sure that you look after them to the best of you ability – either pay them a little extra or help them find a new role through outplacement services – they are people and they deserve to be treated with respect
• Once you have informed someone of the changes, you should probably have them leave immediately.
• If you choose to keep people around for a period of time – watch them like a hawk.
• Once they leave, make sure that you review their emails to see what has happened and ensure that they have no further access to the business
• FInally – treat people with respect!

Letting people go is hard … but if you have to do it, do it right!

By Alain Fontaine, Luxembourg

I can’t avoid thinking of the Peter Principle. Check out this Wikipedia article if you don’t know it:

http://en.wikipedia.org/wiki/Peter_Principle

And definitely get yourself the book! I consider this book as one of the must-reads for any leader.

I also think that if you have a sufficient number of worker bees and aspirants, there will be no place for politicians. Although politicians might not be kicked from top-down, by the leader, they will have no support from the base (bottom-up) and starve anyway.

Finally, you can create very dangerous mutations of the above styles. Let me introduce the:

Worker-Bee-Politician : someone who THINKS he’s a good worker-bee and actually believes that his career success is due to his good work, whereas it’s only due to his real politician-style way of doing things.

His body would actually show real signs of overwork and his brain would think they come from actual work done for the company, whereas nothing of it is true. He lives in a completely imaginary world, believing his co-workers admire him for the tough job he does, whereas everyone sees his real face, except himself. But he doesn’t care, because in the leader position he thinks he is, he just kicks everyone else out of this bubble some obscure portion of his brain created.

He cannot understand at all why top management seems to be unhappy with him, because he’s so confident in what he does that he would even accuse top management to be unaware of the real challenges. The Worker-Bee-Politician is often a true one-man-show who magically avoids most control and supervision, and is able to create a parallel world in a real company. That is where the true danger comes from.

Now what do i mean “beer test”?  Well the beer test is simple – would i want to go and have a drink with this person.  The real question is can i get on with this person over a long period of time and is this someone who fits with the culture of the business.  Now i have seen this work well (much to my liver’s regret). 

I think a team that can play hard, enjoy each other’s company and work hard can overcome any obstacle they come across.  I also think that being able to relax with people and take time out with them (over lunch, dinner, or a drink) allows you to get to know them better and allows you to solve problems that often don’t get solved in a more traditional business environment.  Business doesnt have to be about endless meetings, suits and stale offices.

Now the challenge i always had was do i change my style to adopt to the various cultures or do i maintain, as much as possible, my approach to doing business and help move the operating cultures in each of the countries to a more common culture.  I made the choice that i would, where possible, adopt the second approach as i felt it was more important that we had a unique REA Group culture rather than half a dozen different cultures.

“How did you make this happen”, i hear you ask.  Well first and foremost i lived the cultural values that i have written about before http://myceolife.com/2008/06/what-makes-great-culture/. 

Some of the things we did were:

Every time i visited one of the offices, i ensured that i dressed casually (rather than suit and tie) to give the team confidence that it was ok for them to dress the same.  In many of the European and Asian countries the staff take big clues as to what is acceptable from the senior management therefore you have to be very careful what you did.

When i was in the office i would go out of my way to meet with everyone and say hi.  I tried to remember something about them so that i came across as relaxed and approachable.  In Italy for example, they were very used to the CEO being in their own office and really only talking to the team on a transaction basis.  I purposely sat with the teams often sitting in different places each time i was in the office and i made it a point to have a laugh with the team.

Another thing i did was to have team meetings when i visited an office.  The reason for this is that i wanted the local team to know what was happening globally and i wanted them to have a chance to ask me questions – any questions at all.

Finally, i always went for a drink and dinner with the team when i was travelling and i made sure that every one was asked along – not just the local management team.  Having equality in a business is very important to me as it gives people the confidence to speak their mind and to contribute to the successful growth of the business.

In any job there are always competing priorities.  It doesn’t matter whether you are in sales, marketing, finance, HR, what ever, there are always 100 things you can do and only time to do 5 of them.  What differentiates the effective people from the rest of us is that they decide what they are not going to do and this decision is based on the goal that they are striving for. 

Therefore, in the example of the guy i chatted with yesterday, it became clear that the best long term option for the growth of his business would be through focusing on delivering property portals to his target countries.  This would mean that he would have to stop the web development and translation businesses that his is currently doing.  The down side would be a loss in some revenues however the up side is the ability to really focus on what matters in the long term.

In building the REA Group, i always had a belief that it was one person, one role, one focus!  It is only by adopting this approach that people become truly effective and stand head and shoulders above their peers. 

So what does this mean for you?  Simple, work out what truly matters for you and then make sure that every task is aligned to that target – if it is not, don’t do it.  If you have too much on your plate, spend time working out what you are not going to do and then set expectations of those around you.

If the business is listed, then employees can of course buy shares on the market.  Management can make this process easier by implementing a discounted share purchase plan.  At the REA Group, we implemented a plan whereby employees could sacrifice a percentage of their salary to buy shares at a 15% discount to market.  The company pays the difference and purchases the shares on the market for the employee.

Another approach is share performance rights.  We implemented this for senior management at the REA Group.  The share performance rights work as follows.  At the beginning of a period, each employee is allocated a number of share performance right.  For example they may be given $100,000 worth of share performance rights at the cost of $5 each (usually the weighted average of the period just before allocation).  This would be 20,000 share performance rights.  Now usually these have a vesting period of say 3 years – therefore the 20,000 share performance rights would vest in 3 years time.  Now as they are performance related, they are usually tied to the long term performance of the business – the 3 year plan.  At REA they were tied to the 3 year revenue and EBIT targets.  Therefore if you hit the targets, then you get the performance rights and if you under or over achieved, then they were prorated up or down.

Yet another approach is to allocate options to employees with a vesting period.  The number of options allocated could also be tied to the performance of the business. 

Now i have a couple of thoughts on this. 

Firstly, in uncertain times, share performance rights are probably preferable over options as they will always have a value.  Options may not have a value if the share price is lower than the strike price.

Secondly, i wouldn’t tie the number of share performance rights or options allocated to the performance of the business as the value of them is already tied to the performance of the business.  If the business is going well, they will be worth more and if the business is not tracking well, they will be worth less.  Having the amount allocated tied to performance is almost double dipping.  In addition, as the number of rights / options are tied to performance against a long term plan, you may have management making sub-optimal decisions, especially if long term investment or divestiture is required but it would affect the performance against the long term plan.  Either they wont make these recommendations to the board or the business spends too much time adjusting the long term plan to keep it fair.   

Thirdly, when you have rights or options that are tired to performance, it is important that the employee has control over the levers otherwise the whole reason for having them wont work.

Finally, i think any employee ownership should be at all levels of the business, not just the management.  It is important that you dont create class structures within a busness – especially if you want a great culture to grow.  To this extent, we are in the process of implementing an employee share ownership scheme at Artshub – another business i am involved in.

Now the problem with employee surveys is that not all employees believe they are anonymous and therefore dont tell you what they really think or they just don’t complete them.  Therefore you need to look at what people are doing to get a better grip on the true feelings within a team.

The first measure i would look at is absenteeism.  This is simple to measure and can provide very quick feedback on the happiness of the people in the business.  I was talking to a senior person at a business recently who said they had recently noticed a sharp increase in the number of people who are taking sick leave.  Managers need to watch this.

Secondly i would look at outstanding leave or accrued leave.  A happy business tends to have high levels of outstanding leave as employees often dont take it as they are wrapped up in their jobs.  In an unhappy work place, employees with always take their leave.

Thirdly, turn over of staff is a traditionally clear way to track an unhappy culture.  However how do you know BEFORE HAND that people want to leave?  Well in today’s world that is simple – just join linkedin and facebook and see what happens.  Now i have been on linked in for ages and have hundreds of contacts.  These contacts tend to be people that you have or are working with.  Now when someone is thinking of moving on, they ask people to recommend them.  The result is that by looking at the number of “recommendation requests” you can get a feeling for what the true culture is in a business.  Now the problem is most senior people in organisations are Baby Boomers or Gen X and they dont embrace social networking sites.  This is where they are missing a great chance to track the actions, rather than words, of those they work with.

OK … i am now off to answer all those recommendations requests