How do We Help the Less Fortunate?

I am always concerned about the right way to help those less fortunate. The conundrum centers around the old adage of giving fish verse teaching to fish. First of all, there is the perception of wealthy. A couple of interesting data points on that issue:

Wealth is not liquid. It is generally determined by the markets desire to own verses scarcity. I diamond has little intrinsic value outside of its ability as a tool. The real value is determined by the disposable income of the buyer and the scarcity of the object. The same is true of stocks and bonds, or art. You cannot redistribute this type of wealth because it loses its value once you eliminate the buyers ability to buy. The same might be true of a large ocean transport. They can cost tens to hundreds of millions to build. But if we assume no one has the cash to buy it (we are redistributing wealth and cash is wealth) then the wealth value drops to almost nothing. Wealth isn't so much redistributed as evaporated.

What is wealth (top 1%) and who are they? The top 1% includes anyone with net assets of $800,000 or more.(a) There are about 47 million people in the world who meet this classification. There are eighteen million in the United State. Switzerland has the highest density. There are a couple of things to take under consideration. First, it is assets, not income. Young professionals may have a household income of over $200,000 per year, but very few assets. Older people, especially those who have saved wisely for retirement, may have little income, but a lot of assets. For retirement planning it takes about two million dollars in assets to generate $80,000 a year in income. The second considerations is cost of living. A  millionaire in Cape town will live much better than a millionaire in Paris.... By the way, to classify in the top 10%, your assets only have to be greater than $77,000.

So we can conclude that redistribution of wealth would be both hard to identify and hard to implement.

Let's say we find a way to redistribute some wealth without demotivating innovation. We find that fine balance that takes cash from the rich who have excess, but not from the middle class that just needs it to assure their futures. Also, we can't take too much via businesses, because businesses don't print cash, they get it from their customers. Taking too much from businesses will only cause inflation of prices as the business passes it on. Once we have the money, what do we do with it?

Second there is the methodology for helping. Well the "give a man a fish" approach won't work. We all know that. We have seen it over and over. Our entitlement system is living proof. A small per cent will learn to fish while they eat their first fish, but most will procrastinate as long as there is another fish. I have thought and written about the impact of advanced technology on the lower class. It's a train wreck waiting to happen. Most technology advancements displace low level jobs because those jobs are simple and repetitive. They are the exact jobs that the lower class is prepared to work.

Here, I think, is the hard lesson. It is a not so quick an answer. We have to elevate the lower class to have both a positive attitude toward and training in technology jobs. How do you elevate someone's attitude? Our attitude is more positive toward something that we are more comfortable with and understand. By increasing our exposure to different aspects of technology at a very young age, it loses its mystic.   The UK has made it mandatory to teach children to code as early as age five. The idea is to get them comfortable with technology early enough to stimulate interest. They make a game out of it so it doesn't seem all techy and scientific. By the time they graduate it will be as common to them and reading and writing.I think the key is mandatory, because people will not do it of their own volition. I mean if they would, they would already be doing it, right.

Zack Simms is a Columbia School drop out that now teaches programming to over 26 million students at a time. Seriously, he really does. He found that most of his peers didn't have the fundamental computer skills to effectively work in industry, himself included. He first got a friend to help write a program to help him learn programming. This was so successful that other people wanted to use it. CodeAcademy  now has 26 million students from over 100 countries, learning six different program languages. CodeAcademy is only three years old.

At the Davos Conference they talked about 8.4 million jobs left unfilled in technology because of a lack of skills. Technology jobs run the gamut of aptitude. Some are creative like digital art. Some are more hands on like hardware maintenance. Others require planning, programming, installing. Maybe it requires only an high level of technology understanding as in customer service or sales. You don't have to be a geek or a nerd. You can be yourself.

The way to redistribute wealth is to find a way for the lower class to create their own wealth. We might have to give them fish for a while, but I would suggest that we simultaneously nurture them into fishing for themselves. Life is much more enjoyable when a person feels independent and self reliant. Waiting for the government to determine your fish allocation, knowing your life depends on it, is a form of slavery. But knowing you have the skills to catch fish in any pond is freedom.

As more and more simple jobs like lawn care, cleaning, ground transportation, Fast Food Restaurants give way to technology, the lower class has to find a new way of making a living. Building and maintaining the very machines that took these jobs is the best answer. Start them young and when the time is right they will forge their own path.

(a) Wealth report by the charity Oxfam

Sustainability is the Key to Success

There are three key areas that most business owner under-value when it comes to driving sustainability in their business. It is safe to say that many small business owners never even think about sustainability in relationship to operational issues. But, sustainability is the key to success.

Three areas that a lack of sustainability will kill a business

Labor

Many managers think that high turnover is an issue of bad hiring practices. Generally, that is not always true. High turnover is attributed more to mismanagement after they are hired than making a bad decision during the hiring process. What does high turnover cost you?

Your employee never achieves optimum productivity. The longer someone does something the more productive they become doing it. They stop thinking about what they need to do next and start thinking about how to do it better. When they leave, you lose that productivity. You also lose some of your productivity as you go through the hiring process to replace them and the training and mentoring process to make the new employee productive. During the hiring process you are down two employees not just one.

Here is another important point to remember. People do business with people they like and trust. When there is no continuity in your customer facing employees this customer/client-employee bond either doesn’t mature or becomes broken. The emotional tie between your customers and your business is weakened. Referral business is the cheapest and most profitable lead generation any company can have. A lack of continuity can adversely affect referrals.

So what can you do from a management perspective to keep employees? First, understand that motivators and demotivators are not linked. The elimination of a demotivator does necessarily motivate. Providing a motivation does not always overcome a demotivating characteristic. You can give a person a promotion with more responsibility, which they crave, and they will still leave you because they don’t like the corporate culture. Removing excessive overtime might remove a demotivator, but it won’t motivate anyone to work harder. Understand what works and what doesn’t work. Create motivators while removing demotivators. Don’t assume that work is called work because it is work. Life can be better than that.

Everyone is different; learn what works for each one of them. People are not robots that need to be treated uniformly. Don’t let the lawyers convince you that everyone should be treated like a clone. Be fair with everyone, but create programs that reward people in ways that are unique to their needs. This takes knowing them, not a pleasant task for some managers. This also takes time to build programs that are more flexible. This might require too much thinking for some people.

Lead Generation

The second area that businesses waste a lot of time and money because of a lack of sustainability is lead generation. In this world of multiple electronic channels, which many seem nebulous at best, there is a tendency to try anything once. It takes time to fine-tune a new lead generation process. Owners need to take the time to fully understand the details of what they are trying to achieve before they start. They need to fine-turn their idea of a prospect. They need to fine-tune their idea of an offering. They may even have to fine-tune their perception of the buying process. Marketing is changing. People don’t buy the same way they did before. They have access to much more information. They have less geographic constraints to whom they do business with.

Plan on going through several iterations before you see results. Using a start-stop approach will only burn cash, confuse your employees and produce limited results as best. I don’t know how many times I have heard an owner say “We tried that and it didn’t work for us.” Did they have a plan for sustainability before they started, or were they just hoping to find something that might work?

Cash is King

Spend money only when you know, or reasonably expect, it will make money. Everything you do must have a tangible return on investment. Even branding strategies must have a payback somewhere out there, or why do it? Track what you spend against what you get back. The only way to sustain a program is if it generates as much income as expense. Otherwise, it will die a slow death as the cash runs out. Don’t throw money at something just to see if it might work. There is no such thing as discretionary income to a business, it’s all critical to the operation. You can’t bet money you can afford to lose, there isn’t any.

The key is to fully fund a program before you implement. Most businesses plan on using cash created by the program to fund the program. That is a recipe for disaster. Use the cash generated by the program to fund another program. Then you will see growth.

Think about sustainability. Think about how you will use what you are planning to do it replenish the resources you use to accomplish it. Ideally, it should pay you back more than what you use.

Hire Slow, Fire Fast

This is an adage we all know. Typically we hire faster than we would like because each employee represents work that is piling up. We fire slowly, partly because it is unpleasant and partly because we just somehow expect it to fix itself. In some cases I would even suggest we fire slowly because we don’t realize there is a problem until we’ve had to deal with it for some time. My background is sales and marketing, but throughout my career I have managed many operational types as well. To me, operational employees are easier to evaluate because they typically are in the middle of the business cycle. They are given work to do and there is an expectation of the quality and quantity of effort. Problem employees produce sloppy, incomplete or no work.

Sales people are a different kettle of fish. When they come on board there is a natural expectation that it will take time for them to come up to speed. In many cases they have to build a pipeline. If the sales cycle is six months, it should take on average six months to close their first deal. Most sales people don’t start completely from scratch, but there is a very good possibility that their territory have been vacant for some period of time and is therefore more or less dormant. So how long do you give a new sales person before you start the “are you the right person” discussion?

My suggestion is day one. Each business should have a documented and repeatable sales methodology. That methodology has certain milestones. There are leads and suspects and prospect and qualified prospects and proposals and contracts. There should be prospecting scripts and data gathering outlines and proposal templates. There are a myriad of tools available to start evaluating the progress of a new sales person the very first day. Each new sales person should have a 90 – 120 day plan that outlines expectation. The expectations should be targeted toward results, not activity.

Here’s the hard part, you’ve got to pay attention. You can’t have your best sales person training the newbie. That creates two problems. If you follow a program for the first 90 – 120 days you will quickly find out if the new sales person can perform certain critical aspects of the sales methodology. You can compare their performance against a standard at each phase of development. This developmental approach is better for the company and the employee. If your sales methodology works for the sales team in general it will work for the newbie. They perform better within the sales culture of the company, thus making more money and so do you.

If they cannot master a critical component of the sales methodology and you’ve tried every mentoring approach you have, then it’s time to have the “are you the right person” discussion. I personally believe that if you are having the “are you the right person” discussion you, as the hiring manage, screwed up somewhere. Sometimes we don’t like to admit that, so we keep pushing a square peg into a round hole. We all make mistakes. Good managers recognize them before they affect results and correct them. Other managers make excuses or cover them up.

Here is the really good news for you…. If you have a program and you’re following it, then the new sales person knows where they stand at all times. The “are you the right person” discussion might be brought up by them. They see the goals, they see they’re not making them, they understand they have a problem. The discussion is not a shock. My guess is that if you have a decent hiring process and a decent development process, then this discussion will very seldom ever take place.

That’s the goal anyway….