60% of Australian small businesses will fail within the first three years. When polled, 44% of failed Australian businesses suffered from ‘poor strategic management’ and 40% ‘fell victim to inadequate cash flow.’ Many of these businesses failed not because of a lack of opportunity but because they were not able to properly define their market and execute related strategies. In fact, small businesses have been opening more often throughout Australia due to favourable economic conditions; though all the components for success may be there, the focus and the market research is not.
Since 2002, Norwest Recruitment has operated with a simple goal: connecting businesses to the talent they need to grow and thrive. With over 20 business awards — and a ranking of 47th on the BRW Fast 100 — Norwest Recruitment has been a clear success in the competitive market of permanent and temporary employee recruitment. Erica Westbury, CEO of Norwest Recruitment, has achieved this success not only by identifying the commercial and residential growth within the North West but by also committing fully to the opportunities it represented.
Embrace the challenge
In Australia, recruitment services is not a growing industry. In fact, it experienced a downsizing of -0.4% between 2012 and 2017. This is significant, as nearly all sectors experienced growth. Since 2002, the unemployment rate in Australia has been generally falling, with a peak in 2009 and again in 2015. With this information in hand, it might be easy to think that a recruitment agency wouldn’t be able to succeed.
But it was a thorough understanding of the local market that led Erica to her conclusions. Erica realised that the recruitment agencies that already existed in Norwest Business Park weren’t offering premium-level professional services. Recruitment services were being ignored because they offered both poor customer service and a substandard talent pool. Recruitment services had developed a bad reputation.
By understanding the challenges facing the recruitment industry — one of poor reputation and a flooded workforce — Erica was able to position Norwest Recruitment in an area of the market that was not yet filled. By offering premium temporary and professional talent, she was able to sidestep issues related to low unemployment rates and a stagnant market. Norwest Recruitment became a resource through which HR departments could find the best professional talent. And this was something businesses would always need, even when the market was flooded.
Do it better
When asked about competition tech entrepreneur, Elon Musk, once said, ‘If other people are putting in 40-hour work weeks and you’re putting in 100-hour work weeks, then even if you’re doing the same thing, you know that you will achieve in four months what takes them a year to achieve.’
Businesses need to view their competition as a benchmark and should always be attempting to improve upon their work product. For Norwest Recruitment, it wasn’t just about providing a better talent pool. It was also about providing a better experience, refining processes, and reducing overhead. Businesses today need to be able to stay ahead of their technology, pivot when the market changes, and understand their customer’s needs. Often, a business will even be called upon to anticipate market and customer changes long before the change occurs.
Erica knew that in order to break into the market of recruitment and employment, she had to be able to do it better. There are hundreds of options available for companies that simply want access to a talent pool, but it was better customer service that many HR departments were looking for. By improving upon customer service and putting clients first, Erica was already a step ahead in the game.
The risk in decision-making
As a CEO, you’re faced with difficult decisions every day. Making challenging decisions can be the difference between success or failure, it could even change the entire course of your business. It is easy to fall into the habit of choosing the safest decision to achieve expected results and avoid the risk of being wrong. This may decrease risk but it does not improve results.
It is essential, as a business owner, to remain committed to your choice and be aware that no matter what option you choose, your efforts to support the success is far more important than the cost of being ‘wrong’. Erica’s decision to build a business in a saturated market was associated with great risk. The focus was not on whether this was the right decision to make – rather Erica did everything she could to ensure that her decision turned out right. The success of this is reflected in the 15 business awards won by Norwest Recruitment, including the 2014 Hills Local Business Awards, the 2011 Fairfield City Local Business Award, and the NPAWorldwide Australia/New Zealand Top Revenue Achieved Award.
Learn from other business owners
Business owners must never stop learning. Not only is there a wealth of knowledge out there available from other business owners, but the market itself may change with the times. Business owners need to stay on top of new technology, need to refine their leadership skills and learn new management techniques. They must understand modern accounting standards and have the strategy skills necessary to grow and expand in often challenging marketplaces.
Through TEC, Erica was able to reach out to other business owners, entrepreneurs, and professionals. She was able to listen to experienced and accomplished TEC speakers and connect to a like-minded community that could offer her support and resources. Through this professional community connection, Erica was further able to build her knowledge and confidence as a leader. It’s time you belong to a peer network and learn from the best. Get in touch with TEC today.
More than 75% of the CEOs of Fortune 500 companies were promoted from inside of the organisation. Whether they were promoted on the basis of a family dynasty, through merit, or a combination of both, CEOs have an average of 16 years of experience within their organisation. In fact, approximately one-third of these CEOs are ‘lifers’ — individuals who have worked from the bottom up within their company.
Regardless of industry, people are a company’s most valuable asset and investment. The best CEOs don’t just have prior experience with their companies — they continue to grow, learn, and self-analyse within them. These CEOs will be true leaders; they will be able to inspire loyalty and consistently acquire the best work from their employees.
Bronwyn Condon, managing partner of Marsh & Partners, has worked with the firm since her graduation from college. As managing partner of the accounting firm, she has focused both on developing a strong team and fostering individual relationships with her employees. By focusing on employee development, mentorship, and opportunities for growth, she has been able to build a company culture of trust and loyalty, and she has been able to deliver the best in talent to her firm’s clientele.
Analyse your turnover
Australia has seen increasingly high staff turnover rates in the last few years. In fact, staff turnover rose 29% year-over-year in 2016 alone. Modern employees have more options, which is leading to more job-hopping and more job-hunting. Not only is high staff turnover inefficient and expensive, but it can also disrupt the continuity of service that customers have come to expect. Employers need to be able to procure and retain the top talent: otherwise they will only find themselves caught in a ceaseless treadmill of employee training.
Every time a business needs to replace an employee, it costs approximately six to nine months of that employee’s salary. A significant portion of this is wrapped up in training, during which time the new employee will need to adapt and grow into the role. But that isn’t the only cost of high turnover. Companies with high turnover rates also lose their best employees — the employees who are most likely to build value for the business.
Business leaders need to be willing to analyse their turnover rates and identify areas in which the business may not be performing to its full potential. A significant portion of employee turnover is due to management; when management styles conflict when an employee’s goals, the employee will often leave. Marsh & Partners has devoted itself to the hiring of individuals who fit into their people-centric business model. To that end, they have focused on hiring individuals who are proactive self-starters and who can align with the company’s culture.
Support each staff member
Every staff member is unique. They have their own career goals and personal desires. It isn’t only the responsibility of the employee to support the business; it is also the responsibility of the business to support the employee. Employees will leave when they feel that their career is at a standstill, when they aren’t able to devote enough time to their personal lives, or when they feel ignored or unrecognised by their management. It is your job as a leader to resolve these issues to avoid losing talents.
To that end, Bronwyn was able to create a comprehensive mentorship program at Marsh & Partners to ensure that the goals of her employees aligned with the goals of the business. By helping her employees reach their own personal goals, she ensured that they were able to dedicate enough time to producing the best.
Employees will put much more into their work when they feel valued — and building this type of relationship with an employee starts with empathy and self-analysis. Mentorship programs cut both ways, by giving newer employees access to expertise and guidance whilst ensuring that senior employees remain connected and engaged.
Find a peer network
True leadership requires constant improvement. Just as new staff members may need senior mentorship, business leaders often need expert feedback in order to continue to grow. Connecting to a peer advisory network gives a leader the opportunity to see things from a different point of view. Peer networks can offer key insights into the strategies of other industries and can offer vital third-party, neutral analysis. By being exposed to different management styles and business strategies, a leader will be able to develop beyond the confines of their own company.
Through TEC, Bronwyn was able to further her development as a leader and partner in Marsh & Partners. One-to-Ones with Bronwyn’s TEC mentor fulfilled a valuable need for her own mentorship, through which her concerns and issues could be voiced to an experienced third party. Through this partnership, Bronwyn was able to work through many solutions for her business, make better decisions and personally develop her own leadership skills. Self-analysis is incredibly important for all leaders. No one is infallible, and every leader serves as an example for their employees.
Through TEC, leaders can begin transforming themselves and, in so doing, transforming their businesses for better results. Contact TEC today to begin your own journey.
This is a great time of year for you to either come up with or review you professional objectives or personal goals and how they fit with some of the grander strategic goals for the business. It’s a chance for you work out which of your priorities are really critical for yourself and for the organisation.
Planning for an organisation’s future involves not just creating a strategy but also managing the human resources necessary to actually implement it. However, you also need to take responsibility for yourself.
Sit, reflect and be still
When asked what the first thing he will do when he leaves office, Barack Obama simply said he wanted to be still and reflect, and I think that’s something we need to do as well. From time to time, we should give ourselves the chance to reflect and think about priority goals for us and our businesses.
That includes – although it may sound cliched – thinking about things like what we need to do to stay innovative, what could disrupt us and how could we disrupt our own industry? Consider the steps you could take to prepare for these concerns and work out what you would have to do to start achieving them.
Coach your direct reports
It’s all well and good for you to be across your strategy, but communicating that to your direct reports so it can cascade throughout the rest of the organisation is an ongoing discussion, not a one-off meeting or presentation.
Each month, you should sit down with these people for a coaching session where you’re not just telling them what to do, but actually providing guidance, listening to their concerns and helping them meet their goals. It’s an approach that links personal and professional goals, helping your team understand the options open to them and which ones are worth focusing on moving forward.
Understand that there’s a deficit of trust in the world
Without getting too political, a few events over the past year heavily publicised an issue that’s affecting people at all levels: There’s a shortage of trust between people and their leaders.
I think the thing that’s really going to separate regular organisations from great ones over the next year or two will be the sense of trust they can cultivate. Employees and customers have lost trust in leaders on all fronts, from those in their place of work through to politicians and media leaders as well.
Each company will have to investigate its own unique concerns, but in general business leaders should be asking how they can ensure their employees trust them and what they need to do to grow and maintain that. The days of people listening to you purely because you are the boss are over, so you’ve really got to work to overcome that trust deficit that’s out in the world at the moment.
What did you overlook last year?
Creating, communicating and implementing a strategy demands a significant personal investment. Not only have you got to manage your own personal productivity, you need to be on top of how the rest of the organisation is engaging with your strategic plans.
Consequently, it’s easy to let thing fall by the wayside. One of the first things that’s often neglected is communication because it seems like it’s just easier to do everything yourself. That’s an unwinnable game, because you just can’t take on that amount of work, you have to delegate to people you know can dissipate the message throughout the organisation.
The more you overload yourself and forget to communicate, the quicker it all spirals down to impact the rest of the people you rely on, consequently eroding that trust that’s so difficult to create in the first place.
By: TEC Chair, CEO mentor and coach Jerry Kleeman
We all know how the traditional career path played out. People took time getting an education to boost their employment prospects and then spent years – if not decades – building their career through jobs in their chosen industry. The idea was to build up a sustainable pension and retire comfortably, not long after their 65th birthday.
One look at the way younger generations are approaching the world reveals that this is no longer the case, as people are happy to jump between different roles and have more than one career over their working life. But these opportunities aren’t just unique to people the workforce. In fact, the idea that people can now create and live from a portfolio of work, rather than a continuous string of jobs, is perfectly suited to leaders and other executives who are looking to change their working lifestyles.
How will a portfolio of work change the way people make money?
The concept of jobs is now out of date, according to strategist and author Heather McGowan. She stated that the new world of work is comprised of income generation as opposed to just work.
The lines between education, career and retirement are now blurring. Overlapping fields are replacing set stages of a person’s life. As people focus on lifelong learning and jobs as we know them the idea of a developing a career through one job has become an outdated concept.
A portfolio of income generation, therefore, is usually made up of short-term employment opportunities and the ability to monetise assets. This last point is made possible with services such as Uber and Airbnb, both of which give private individuals the ability to earn money from their vehicles and property, respectively.
It’s not just people who are changing
The rise in short-term engagements and the need to create an income portfolio is brought on by the fact that the nature of jobs is also changing. Thomas Friedman found that it’s not a simple change either, as different roles are moving in unique directions, forcing people to adapt accordingly.
According to ideas from Friedman’s ‘Next New World Summit,’ jobs are moving in three directions. Some are moving up, meaning they demand higher levels of education and technical ability. A selection are moving down, becoming obsolete as technology takes over or they simply become irrelevant. Finally, others are moving across, fragmenting into more nuanced rolls or falling solely into the realm of short-term appointments. This where income generation portfolios begin to make sense for executives and business leaders.
What does this mean for management professionals?
So far, the idea of income generation sounds more targeted towards younger generations. However, it’s actually something that’s just as relevant to senior executives, especially those who want to move from full-time hours to more flexible arrangements.
These people have a wealth of experience and qualifications which they can draw from – skills which make them the perfect fit for businesses that need management expertise for short periods of time. Alternatively, people between jobs who want to build up their portfolio in the meantime are able to take on short-term assignments as they see fit.
The most important thing to remember, however, is to not equate this lifestyle with contracting. There are similarities, but interim management possesses its own unique qualities.
Defining interim management: Is it your next lifestyle?
While traditional management roles are associated with longevity, some business challenges only need short- to mid-term solutions. In other cases, especially for smaller entities, they simply may not have the budget to permanently appoint certain managers or executives.
If a business is rolling out a major new initiative and their current leadership team is lacking certain skills, interim managers are a cost-effective way to meet these challenges, especially if executives are already stretched.
In many cases, these people will be overqualified, boasting experience in roles as CIOs, CEOs and CFOs, and will be able to hit the ground running while delivering outcomes. They aren’t consultants, and shouldn’t be treated as such, because they’re there to do a job, deliver on outcomes and provide some mentoring along the way.
The major difference between interim managers and contractors is that they aren’t just there to do the job as per a brief. It’s about integrating with a team and pulling everything together as only someone with their experience will be able to do, while also guiding others.
Interim managers can also be brought in while a company goes through a hiring process for permanent member of the executive team. This means the initial role isn’t neglected in the meantime – new hires can join the team seamlessly.
When did you last survey your staff? How about your customers? When did you last review their experiences with your organisation?
If you can’t remember when you sought reviews from these stakeholders, it’s important to ask yourself why. Are you afraid of how a set of honest reviews might read?
The concept of giving feedback constructively is nothing new for leaders, and in fact remains an essential part of their role. While many leaders are working on their ability in this regard, how many are learning to be on the other side of the fence?
For leaders, knowing what to do with group feedback – especially if it’s not as positive as they were expecting – is an important skill, and one that fear may be getting in the way of.
It’s a problem I’ve encountered in the past. One of the organisations that I have worked with appointed a new CEO and as you might expect, over the next two years they made a large number of changes: changes the business needed I might add.
Early on in his appointment, the CEO held meetings with the staff and customers – both in group and one-on-one situations – and formulated his plans. Once they were in place the listening seemed to stop and during one of our discussions he expressed the view that he was receiving so many suggestions from all quarters – his board, consultants, staff, contractors and customers that he said “You just have to decide who to listen to and stick with that”.
Is that the best approach? Yes it is if your judgment is correct and nothing changes. But we live in a world where there are changes confronting us endlessly, so it’s not an approach leaders can rely on in every case.
In fact, it is wise to lift our heads from time to time and ask ‘Is this working’?
‘Feedback is the breakfast of champions.’
People like to be right. Our ego can stop us from accepting our mistakes, and our self-esteem may not be able to handle being wrong.
It is sometimes valuable to have a peer group of CEOs on hand to challenge our thinking, or help us correct our course. That is where a TEC group is valuable, as it consists of a coterie of peers who are prepared to challenge and confront our thinking with the best of intentions.
But that is not the only way.
Evaluations can be found all across the Internet these days: hotels, restaurants, Uber! There is even a US site for students called Rate My Professor, where people are free to anonymously reflect on college staff performance.
Employee feedback surveys need not be a long-winded and cumbersome process. They can be slick, quick and easy for employees to complete and leaders to analyse.
A well-managed process can improve engagement, productivity and profitability. Employees are more likely to speak their mind if the surveys are conducted anonymously. People know that open and honest feedback to the boss can be career limiting!
‘Examine what is said and not who speaks.’
Anonymity encourages honesty but it can also encourage people to vent disingenuous grudges that reduce the value of the discourse. The positive is that at least the vehicle is allowing people to express their frustrations. A more public airing can multiply grievances and increase levels of disengagement within a business or stop people from contributing altogether. Sure, this may preserve a leader’s ego, but does it benefit the business?
Customer feedback is easy to obtain using low-cost services like Survey Monkey. Establishing a regular process will enable you to see trends and identify new ideas of value to customers. A routine will help you to give your process a focus.
Great leaders will utilise every piece of information to strengthen the performance of themselves and their followers. Genuine constructive criticism is one of the most valuable ways in which a business, an employee or a leader for that matter can improve their performance.
‘Negative feedback can make us bitter or better.’
Leaders in a business have to encourage feedback, whether it’s likely to be positive or negative. They can’t just listen to one person and ignore everyone else, as suggested in the example I mentioned earlier. They’ve got to draw information from a large number of sources, especially if they want to keep up with the changing business environment.
Businesses are living, breathing organisms, and they need constantly improve and develop. The way to make the right decisions, in this regard, is to encourage feedback from those who are working in the business or those who are using its products and services.
When faced with negative feedback, leaders need to pick through the data to ensure it’s actually valuable. Are people just having a rant? Or are they actually communicating about something that’s worth taking a look at?
Leaders can’t afford to dismiss everything as a rant, but they also cannot act upon every bit of feedback. The key is to spot trends in the data. Are there a range of common concerns that might need a bit extra investigation?
Many people in leadership are experts at giving feedback to their teams. However, it’s important they are just as adept when they’re the ones under review.
Are you a servant leader or a superhero? A bit of both perhaps? If so, which gives you more fulfillment as a leader? And which role is better for the long term sustainability of your organisation?
I often come across senior executives frustrated by what they perceive to be a controlling CEO. At the same time, some of the business leaders I work with are reluctant to let go because they do not yet see the right ‘Strategic’ talent, usually without considering whether they might be part of the problem.
The end of Superhero leadership
In ‘Good to Great’ Jim Collins profiled ‘Level 5 leadership’ which is characterised the absence of the trappings of status and power. In ‘The Misguided Mix-up of Celebrity and Leadership’ he found to his surprise that there were more Level 5 leaders than he expected. They just didn’t often get to the top of the organisation. He observed: ‘Then it dawned on me: Our problem is not a shortage of Level 5 leaders. They exist all around us…
Our problem lies in the fact that our culture has fallen in love with the idea of the celebrity CEO.’
He goes on to say ‘Our problem lies in the fact that our culture has fallen in love with the idea of the celebrity CEO. Charismatic egotists who swoop in to save companies grace the covers of major magazines because they are much more interesting to read and write about than people like Darwin Smith and David Maxwell. This fuels the mistaken belief held by many directors that a high-profile, larger-than-life leader is required to make a company great. We keep putting people into positions of power who lack the inclination to become Level 5 leaders, and that is one key reason why so few companies ever make a sustained and verifiable shift from good to great.’
This has been taken even further by The Shingo Institute, established to guide leaders in creating sustainable, principle based cultures of excellence. The Shingo Principles include two cultural enablers that provide the foundation for excellence, capturing the essence of a servant leader: ‘Lead with Humility’ and ‘Respect every Individual’
One of TEC’s perennial speakers, Colin Chodos recently shared his thoughts around the Harvard Service Profit Chain model with one of my groups. Profits come from satisfied customers who get great service provided by engaged employees led by servant leaders. He challenged my members in how they engaged their teams. As I listened to this discussion I came to the same conclusion that Collins came to some 15 years ago. Level 5 leadership is within many of my members, but often they struggle with the challenges of the day to day to live this consistently.
The Myth of the Servant Leader
So why is it so hard to put Level 5 leadership, especially the concept of service, into practice? Certainly the people I work with have got beyond being status conscious, but still many struggle with how they need to change. As Marshall Goldsmith Says ‘What Got You Here Won’t Get You There’.
The very fact that they’ve been successful is at the core of this issue. Whether a successful entrepreneur or a professional and successful CEO there is usually a sub-conscious dependency culture, reinforced by suggestion.
Suggestion is addictive. You feel good, the other person feels good. The short term results are often better. But what of the long term?
This is even more acute when dealing with potential successors. Succession planning is one of the hardest issues any founder faces. As baby boomer entrepreneurs seek exits and handovers this is becoming an epidemic.
At the core of the issue is the belief by incumbents that a servant leader has to let everything go. This is a myth, its not an ‘either-or’.
Defining ‘Founders Purpose’ or ‘the Legacy’ and setting fundamental distinctive values remain the leader’s role. These are the ‘whys’ of an organisation. It’s with the what’s and the how’s where the servant leader stands back. This is empowerment but not abdication.
Start the shift towards being a Servant Leader
1. Get honest feedback
A coach is good but peer groups such as TEC / Vistage CEO groups is even better. A recent book The Power of Peers describes this process. Use a 360 tool, with a focus on the conversations. I use a profiling tool called VoicePrint which analyses how you use conversations especially in 1on1 discussion. Practice asking questions, developing a more coaching style. Two great books are Susan Scott’s ‘Fierce Conversations‘ and Greg Bustin’s ‘That’s a Great Question‘
2. Be transparent
Use visual management tools. An empowered organisation has to be aligned and engaged. Visual management at all levels of the organisation enables both and creates the context for the conversations. Encourage accountability to all – not just upwards. Transparency promotes dialogue with all parts of the organisation.
3. Get out of your comfort zone by meeting your people
Management by Walking Around (MBWA) was popularized by Peters and Waterman – Kraig Kramers called it Walk the 4 Corners (W4C). In Lean it is Gemba Walks. All these are informal ways of engaging with people on the front line and middle management (don’t forget them Chodos reminded us). However, this is not a “Regal Tour” – conversations should be meaningful about the business not about the football results.
4. Lead by example
Lead with your vulnerability. That’s what we do in TEC. Uncomfortable, but incredibly powerful. This means asking for help, sharing the issue. Share with people around you that you are trying to change. It’s not a secret and people will notice the difference, so get them to give feedback on how you are doing. Share your values. Publicly. Discuss what they mean to you and explore what behaviours you would expect to see.
In a VUCA world no leader can be across everything. We need all the organisation aligned and engaged. A visionary but servant leader rewards both their organisation and themselves.
TEC CEO mentor and coach Jon Lindsay
Good companies and effective leaders have realised they need to do things differently. The current economy means that businesses have to work smarter and find new ways to achieve more, without increasing overheads.
Against this backdrop, talent management has emerged as one of the key areas where business owners can improve their performance. In fact, a recent survey from software provider SABA found that 69 per cent of Australian companies are looking to talent management to attract and retain the right people. A further 75 per cent are concerned with having the right skills in place as part of a succession plan.
It isn’t just the economy that is driving this change either. New technologies, disruptive business models and a competitive business landscape all mean that all organisations are searching for tactics to become more efficient and cost-effective in a way they haven’t had to in the past.
The good news is that organisations are responding, with talent management ranking as the biggest goal for HR departments according to the latest Michael Page Global HR Barometer. However, many still aren’t turning this goal into concrete improvements, with a poorly defined strategy representing one of the biggest issues.
What is the risk of a poorly defined talent management strategy?
The metaphor I use for an organisation here is that it is like a sphere. The centre of gravity needs to be at the front of the sphere so it maintains momentum and moves forward.
That centre of gravity is composed of the leadership team, the owner and any of the other high-level stakeholders who drive the business forward.
In the ideal situation, all these groups are collectively at the front of the sphere and concentrated on moving the business forward and literally building momentum.
However, if that centre of gravity is divided, with the leader at the front and the rest of the team further back, the sphere will be standing still. A company that isn’t moving forward might not be sounding alarm bells to the leadership team, but it means the enterprise will be quickly overtaken by competitors that are building and sustaining this momentum.
Among the signs we see that a company isn’t maintaining its performance is:
- Financial – they won’t be hitting revenue targets.
- Sales – the company isn’t winning new clients at the rate it could be.
- Flat-lining rate of growth – the business isn’t expanding across the board.
Often these are all signs that a small business has reached a hump that it can’t overcome, because they have never taken the time to re-evaluate what they are striving to achieve.
While these might not sound closely related to talent management, the two are actually deeply connected. Each of the above warning signs might be coming from different departments, but when we drill down, the core cause is that the company has never taken the time to define what greatness looks like.
Shaking up the leadership team
When we talk about defining talent management and greatness within an organisation, it’s important to look at the leadership team and work out what they should be focussing on, the outcomes they need to deliver and the behaviours they need to demonstrate. Recent research by PwC states that ‘78% of CEOs intent to make a change to their strategies for managing people.
What will often happen here is that the executive team has settled into a comfortable place. We are all creatures of habit and leadership teams that have been in place for a while will become comfortable with business as usual.
In terms of talent management, this often means that senior leaders are tolerating mediocrity and aren’t holding people accountable to the degree that they need to be.
By Trudy MacDonald, MD of Talent Code and TEC Speaker
Many of our Chairs at The Executive Connection are aware of the challenges that come with being the leader of a family business, with a number specialising in helping these organisations and their owners. After all, those leading a family firm have to juggle a range of additional relationships along with making commercial decision.
For our members in this position, having a mentor who understands the specific challenges that come with family businesses is invaluable. John Broons, one of our Western Australian TEC chairs, has certainly seen how important this specialised advice can be for leaders. After taking over the business his grandfather started, John moved into his own role as a mentor for others who are leading family businesses.
Recently, after speaking at The Family Firm Institute’s Global Conference for 2015, John was awarded his Advanced Certificate in Family Business Advising. He was also recognized with a Fellowship of the Family Firm Institute, This status is FFI’s way of recognizing experience and commitment to the field of family business advising.
We sat down with John to discuss his personal journey; both working as part of a family business and his subsequent role as a mentor, along with the advantages this relationship can bring to a family-run organisation.
Understanding the intricacies of running a family business
John’s own experience with family businesses began straight out of school when he started working in the company started by his grandfather.
‘After joining the family business I was able to sit in on board meetings, understand board documents, read budgets and learn from some very smart people how businesses were run,’ said John.
‘I also saw how different allowances were taken into account because it was a family business and how conversations within the business were shaped by the family.’
This was also when John first had his own mentoring relationship – with his father being one who provided him with an early source of feedback. Since then, there have been a number of businesspeople who have helped John in his leadership roles.
‘Mentors generally turn up when you most need them. Sometimes, you just find the right person to be able to share an issue with or have a conversation. It may not even be a mentor arrangement, it might just be that they are the right person to have a conversation with at this point in time,’ explained John.
As John moved into a leadership position within the company, he also had to navigate the different stakeholders within his family, including his immediate family and their partners. When John assumed sole ownership of the business, he went through a specific engagement process with each individual to ensure they were on board with these changes.
‘In hindsight, there was a process that I went through, but at the time it just felt like the right thing to do,’ said John. ‘That process ended with me not only having sole control of the company, but also maintaining a great relationship with my sisters, their partners, my mother and my stepfather.’
It was only after that transition that John realised how unusual it was for family businesses to change hands amicably, an insight that helped spark his own interest in the dynamics of family firms.
Transitioning from a business leader to a mentoring role
John’s decision to move out of his position as a business leader and into one where he could specialise in mentoring began after he joined TEC in the early 1990s. Through these conversations with other leaders, John decided to sell the business and exit the industry. When he sold the company in 1997, John focussed on a number of entrepreneurial endeavours before becoming a TEC Chair in 2006.
For John, the experience of first working in a family business laid the foundations for his current work as a mentor.
‘It puts me at a great advantage because a large proportion of TEC members are the CEOs or leaders of a family business. If we just focus on the organisational side, we often miss the relationships that do come into the business and that a CEO needs to address.’
Mentoring both leaders and family businesses
In John’s experience, being a mentor is all about helping people realise what they want to get out of life. That means working out where they want to be in 10 year’s time and where they want the family business to be as well.
‘If you aren’t aware of that family stuff as a mentor, it means you won’t be able to ask all the questions that you need to. I find working as a CEO mentor is a great position to help leaders reflect on what they want and also to reflect on how they might choose to lead the family.’
John’s work outside of TEC also involves consulting with both CEOs and family members themselves. Knowing their stories and understanding the different perspectives that exist within the business is key to solving many of the issues that family businesses encounter.
A further benefit that John has observed is that leaders will often face specific problems or decisions that they can’t share with family members or their executive team. That’s where having a mentor can help.
‘For me, mentoring is never about telling people what to do, it’s about helping people come to their own conclusion and their own decision so they can maintain accountability for those choices.’
SMEs represent some of the most inventive companies within Australia, with the size to move quickly and seize business opportunities that larger companies cannot match.
Many people are continuing to start their own businesses as well, at least according to the Australian Bureau of Statistics. The most recent figures on business entry revealed there are more than 2 million actively trading companies in Australia with a business entry rate of 13.7 per cent in the 2013-14 financial year.
While these figures point to strong growth, there are persistent challenges that SMEs are facing in Australia. Here’s a breakdown of three of the biggest:
1) Going digital
While many startups in the tech sector are making their mark through cutting-edge designs, SMEs as a whole are struggling to realise the benefit of these services. The latest Sensis e-business report found that many small companies find it difficult to establish themselves in a digital business environment.
Only 31 per cent of businesses are using social media to reach new customers.
According to the report, only 31 per cent of businesses are using social media to reach new customers, while medium-sized firms are spending three times more than smaller companies on their online presence.
There was some good news for SMEs, though, with 61 per cent of those with a website saying it had improved the effectiveness of their services.
In a small business, the connection between how competent the CEO is and how well the team performs is closely related. Building a sustainable SME requires leaders who have a diverse range of skills, can engage with people at every level and also have a clear vision for their organisation.
For an SME owner, it’s important to be realistic when assessing their skills and finding new ways to grow their abilities. Seeking the advice and support of other leaders who are facing the same challenges can also add further clarity to your own leadership style and vision.
3) Cash flow
Cash flow is a permanent issue for small businesses and can create significant issues for Australian businesses whose invoices aren’t settled on time.
The good news for SMEs is that trade payment times are dropping, with research from Dun & Bradstreet finding that payment times in Australia have dropped to an average of 50.4 days in the first quarter of this year. While this is good news, many smaller businesses will still want to achieve a lower rate than this to ensure they are able to continue meeting ongoing expenses.
These three issues are just some of the biggest issues for Australian SMEs, with every industry affected by unique operating conditions and restraints. However, those organisations that can adapt and respond to these challenges will also be those that are best positioned to continue growing into the future.