May 24

Penny Wise and Pound Foolish

penny wise4 Employee Engagement Strategies You Need To Retain Top Talent

I have a client that recently sold his engineering firm to a buyer who had just moved to Wisconsin. Nearing retirement and being a small firm, my client felt selling and working part-time would be his smartest option. The new buyer was excited about the purchase, as my client had built quite the company and reputation. In addition, in the last five years my client’s firm had attracted some top-end projects and generated some serious revenue.

Yes, my client was the very definition of success and he was now ready to move on the next stage of his life. Reflecting on his business, if you asked him what was his key to success he would tell you it was his employees. He felt he owed a debt of gratitude for not only their loyal service but the level to which they infused the firm with their ideas, strategies and passion for growth. In my opinion, he was short-changing what an amazing leader he had been, and the amazing employee engagement strategies he implemented. After all, it was his vision and commitment that created a culture that attracted (and more importantly retained) such an amazing team.

Ten years ago, we met and began working on a strategy.  A vision to design the type of culture where the best and the brightest would want to work. My client was specific right from the start: he wanted a team that was fully engagedone that would be all in and one that would feel as responsible as he was about the success of their customers and the firm.

That was what he wanted so that was what we designed. We got clear on my client’s strategy, his vision of where he wanted to go and how his team could specifically help him get there. We reinvented his leadership style to give his team more skin in the game, creating opportunities for his associates to share their ideas and take responsibility for firm’s success. And lastly, we made him the type of leader who invested in his team, ensuring they received regular coaching and performance reviews. We placed a heavy emphasis on education and skill development opportunities, often traveling as a team to conferences, and bringing in top-line trainers and speakers.

The result was a firm that produced at the top one-percent in the country of firms his size, a team that was on fire with passion and energy, and a leader who got to focus on doing what he loved because his employees ran the show.  My client’s results were so strong that when he put the firm on the market, the biggest selling point was his team. Yes my client was a great leader. It was clear by the systems, processes, and machine they had built, that a new leader coming in (one who would follow these processes and procedures) could easily keep this machine going or quite possibly take it to the next level.

This is where our buyer comes in. He bought the practice not only for what my client built but because the employees could keep it going. It is important to note that my client knew what he had and he worked hard to keep his employees motivated and engaged. Anyone who looked at his monthly expenses would immediately notice he paid above average in salaries and quite a bit in bonuses. He also had  plenty of “perks” that were tied to exceptional performance or exceeding goals.

My client understood that, to the average person, these might look like unnecessary expenses, but from his point of view, they were his secret sauce. The better the team performed, the more the firm surpassed goals, and the happier his clients were the more he gave his employees. Sure his bonuses and salaries were above average, but so was his bottom line and take home pay.

Unfortunately, the new buyer did not see all that, he did not look beyond the expense line when it came to how much to pay and share with employees. Within one month of owning the firm, he laid one employee off, reduced the hours of another, and suspended the perks until they got back on track with their goal. In other words, he was penny wise and pound foolish. Sure, it looked like he saved money, but what he failed to see was that the more he paid in the bonuses and perks the more the firm made. Not only that, that “expense line” directly correlated to the level of  engaged employees, happier customers, and better bottom line results. The higher that expense the more successful the firm.

Success today is about so much more than looking at reports and managing data. Whether you are buying a company or trying to grow the one you have, you need to understand that your employees are the key to your success. The more power you give them and the more opportunity you give them to succeed, the more successful you are going to be.

In today’s economy, your employees are your competitive advantage. If you want to attract, retain and fully engage them then you need to embrace the fact that you need good employees more than they need you.  When it comes to growing your company and engaging your team do not be penny wise and pound foolish.

4 Employee Engagement Strategies You Need To Retain Top Talent

  1. Understand Key Talent. When you take a long hard look at why and how your company is growing you need to understand it is your top talent that is making it all happen. The only way to grow short of cloning yourself is to get the best and the brightest on your team. If you want to engage top talent you need to begin by understanding how critical they are to your growth and to your success.
  1. Think About The True Costs. Sure the new owner was saving a few bucks by laying off an employee but he missed the underlying costs of letting him go, that is what he did not measure. This employee was the son of his key associate, and my client had given him a summer job every year he was in high school. As he was a senior this was his last year. Yes, my client did this because they needed the help, but also because he knew that by doing something that would benefit his key employee’s son, his key employee would more fully engage.  There are costs to every decision you make, and before you work to save a few bucks think about what the costs are in terms of employee engagement, morale and overall productivity.
  1. Balance Revenue & Expenses. And speaking of costs, when it comes to employee engagement you always need to think in terms of balancing your expenses and your revenues. Yes, employees are an expense and one of your biggest, but they are also serious revenue generators. The more engaged they are (and yes they may cost you in terms of bonuses and perks) the more they will generate you in revenue. There is a balance when it comes to retaining top talent.
  1. Penny Wise, Pound Foolish. Last but not least do not be penny wise and pound foolish. If you want to build the type of organization my client built then invest in your employees. You need to invest more than even paying bonuses or perks, invest in listening to their ideas, invest in their careers and make sure that the more your company produces the more you work to share the wealth. Never look at your employees as just an expense, doing so puts you on the path to being penny wise and pound foolish, and it will cost you top talent.

So that is the moral of the story, and unfortunately, it is not a story my client’s new buyer was interested in listening to. Without these four employee engagement strategies in place, it did not take much time for this amazing team of employees to stop caring and to begin looking for new opportunities. And with the team went the happy clients, the revenue generating machine, and the potential growth and strong future of this firm. Sure the new buyer spent less on expenses than my client, but by focusing on the pennies he lost the pounds.

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Motivational Keynote Speaker & Business Growth Expert, Meridith Elliott Powell works
with clients to help them instill ownership at every level to ensure profits at every turn. Meridith is the author of several books, including her latest, “Own It: Redefining Responsibility: Stories of Power, Freedom & Purpose”. When not keynoting and leading workshops, she looks for inspiration cycling, golfing or hiking her favorite trail.

Meridith Elliott Powell

Voted one of the Top 15 Business Growth Experts to watch by Currency Fair, highly engaging corporate motivational keynote speaker Meridith Elliott Powell delivers a cutting-edge message, rooted in real-life examples and real-world knowledge. Meridith’s presentations are full of powerful content, highly interactive, and fun. She helps her clients learn the leadership development, sales and business growth strategies to turn uncertainty to competitive advantage.

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