Managing poor performance

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It’s a firm belief that when anyone starts a new role they come to work with the intention of doing a great job.  They’re keen to make an impression, to make a difference, and to enjoy themselves.  After all life is too short, right?  If the average person spends 40,000 hours of their life working, they’d better do something they like.

Nobody likes to fire someone but, more importantly, nobody likes to be fired.  

So, why do many business owners loathe the fact that they have to ‘manage performance’ or ‘open the door of opportunities’ or ‘free up the careers’ of some team members?

It’s quite simple; somewhere between induction and the time when performance starts to slip, the enthusiasm to put in a great day’s work is gone.  The fire in the belly goes out.  If we can discover why this happened and prevent it from happening again, then we’ll spend much less time managing poor performance.

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As a leader, we must be committed to acting above the line (by taking ownership, accountability and responsibility for the poor performance).

Now, answer these questions in relation to your interactions with this poor performer:

  1. Do you demonstrate above the line behaviour and a positive, can-do attitude 100% of the time?
  2. Does your business have a concise Core Purpose statement (why your business exists for your clients) that your team member believes in and can see how they are contributing to?
  3. Have you clearly articulated your vision and goals for the business?
  4. Have you given the team member regular opportunities to align their personal and career goals with your business goals?  We must ensure their personal purpose in life aligns with your business’s purpose.
  5. Have you set clear expectations as to the five most important KPI’s or targets that the team member needs to achieve?  It is important to define a great day’s work for them.
  6. Does the team member understand and agree with these targets you’ve set for them?
  7. Have you created a process to ensure that the team member can see how they’re tracking to reach these targets?
  8. Most importantly, when the performance is lacking do you talk about it with the team member? Or, do you whinge behind their back to everyone else and generally live in denial (below the line)?

Of course there will be times when external influences affect performance – this is when people need your support.  Or, perhaps you made a poor recruitment decision – if you follow the 8 steps you will come to the right answer together with the team member.

Remember – a poor leader can take a great team and destroy it, causing the best team members to leave and the remainder to become disengaged or, worse, toxic.

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Is your business ready for single touch payroll?

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In Breaking news this week…….Single Touch Payroll legislation has passed through Parliament, so our Blog today is a must read for employers of less than 20 employees.

Single Touch Payroll (STP) legislation passed through Parliament this week for employers of all size.  This legislation has applied to businesses employing more than 20 employees since 1 July 2018 and now, with legislation passed through parliament this week, from 1 July 2019 all employers will be required to comply with the Single Touch Payroll requirements.  The ATO website says the following in relation to Single Touch Payroll:

Single Touch Payroll (STP) changes the way employers report their employees’ tax and super information to us.

Using payroll or accounting software that offers STP, employers send their employees’ tax and super information to us each time they run their payroll and pay their employees.

The information is sent to us either directly from the software or through a third party, such as a sending service provider. Software providers can tell you more about how they offer STP reporting.

So what does this mean for small business and employers?

If you currently have employees (including companies where the directors are paid by a salary) and you are not using an online or digital payroll service you will need to update the way you pay your employees and run your payroll system.  The introduction of this reporting system has specifically been designed and implemented to increase the data matching capabilities of the ATO in relation to employers meeting their tax and superannuation obligations.  Whilst this may seem like an additional compliance requirement for employers, research conducted by Xero has revealed that once implemented employers using digital reporting estimate they save on average 3.1 hours per week on payroll requirements.

What should all employers do?

  1. Assess your current payroll system
  2. Confirm the current payroll system being used has the capability to meet the STP reporting requirements
  3. If the current payroll system doesn’t meet the STP requirements contact your client manager at Sage Business Group to discuss your payroll and accounting options

The time to act is NOW – as of this week Single Touch Payroll is a legal requirement for ALL employers from 1 July 2019.  A payroll system compliant with the requirements of Single Touch Payroll MUST be implemented ready for the first payment after 1 July 2019 so it’s important to act now to be ready for the new year.

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Setting solid foundations to measure success

Test and measure

Running your own building/construction business can be complicated.  Many builders are still very much ‘on the tools’ while still running the day to day operations, which can lead to long nights and early mornings.  There are several simple actions you can take to ensure success, growth and customer satisfaction.  Here are 7 fundamentals that you should consider when running your business;

  1. Firstly, ensure that you have a documented list of goals, plans and targets that you can clearly measure against your results.
  2. Make sure you have an accurate record keeping system recording your numbers, this way you can make informed and educated decisions about your business.  Poor record keeping is one of the biggest causes of business failure.
  3. Ensure that you are getting paid on time. Manage your credit effectively by creating policies and procedures covering terms and conditions for providing goods and/or services, invoicing and payments and debt recovery.
  4. Create a cash flow forecast.  Your cash flow forecast is one of the most important management tools in your business.  It shows the expected flow of cash in and out of your business.  It highlights potential issues, giving you the time to find ways to either prevent problems or minimise their impact.
  5. Are you seeking new business?  Sometimes it’s easy to get trapped servicing existing customers.  Develop a clear marketing strategy to grow your business even further.
  6. Finding your Niche.  If there is something that you specialise in make sure to let your audience know.  Promoting your business as a specialist in one specific Niche will ensure that you get the phone call when someone needs that service.
  7. Are you hitting your margin goals?  It can be difficult to hit profit goals when times are tough, but if you are constantly lowering your prices at the expense of remaining profitable, you will not be in business much longer.

 

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General advice disclaimer
General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.]

 

 

How SMEs can manage their cash flow during the festive season.

 

 

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If you’re a small business owner, managing cash flow can be one of the many things that keeps you busy day-to-day, and sometimes awake at night.

With Christmas just around the corner, seasonal fluctuations may be about to impact your bottom line, meaning good news for some and bad news for others.

We wanted to share this editorial from smartcompany that focuses on stories of business owners who share your dilemma, along with their tips on managing cash flow and staying afloat as things fluctuate.

To read the full editorial from smartcompany click on the link here

If your business is struggling with cash flow contact Sage Business Group on (03) 9744 7144 to discuss your personal situation with one of our experienced team members.

 

 

 

How Xero helped this brewery keep a transparent culture

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When Ale Industries started out, it was rare to find a brewery that had a taproom slinging a triple-hopped IPA. Today, these are some of the staples of an ever-evolving industry.

Early on, Morgan foresaw a career for himself in brewing. After getting into homebrewing at the age of 18, he knew that he wanted to own a brewery of his own one day. He knew he would need some commercial experience, and at 21 he was finally able to start looking for work.

To put things in perspective, when Morgan was looking for work there were about eight breweries in the San Francisco Bay Area – so jobs were few and far between. Today, there are more than 200. Morgan eventually secured a volunteer position at a local outfit, and over time worked his way up to the coveted position of Brewmaster.

As Brewmaster, Morgan was charged with decommissioning old equipment and bringing in the new – one day, this gave him an idea. He could take that old equipment and get his own brewery off the ground. After some understandable resistance, the owner came around to the idea and in 2009, Ale Industries’ first beer was brewed.

Morgan says, in the years since, the change the industry has gone through has been huge.

“When we first started, Facebook wasn’t around – everyone was on Myspace,” Morgan remembers. “Social media marketing wasn’t a concept. If you wanted to get your name out there you went to beer festivals, got out and about talking to people, or took out print ads.

“The Internet 2.0 was really in its infancy. Companies had websites, but they were more like landing pages. Spreading the word is completely different today. That’s just one aspect of the business that has changed.”

The other is how we keep track of our financial situation.  Enter Xero Accounting Software.  According to Morgan, using Xero on mobile puts the power of accounting right into the hands of their salespeople or ‘foot soldiers’. They can easily pull up Xero when they’re out visiting customers, place an order or even check on whether they have an outstanding invoice or whether the account is within terms.

This cuts down time chasing up accounts payable and accounts receivable – things that would otherwise get buried, Morgan says. They have also created report templates that enable salespeople to see, in real time, how they’re doing in terms of the goals set for them.

If you would like to learn more about how Xero Accounting Software can help you reach your business goals then register for our FREE Xero Workshops.  Click here to find out more.

Let’s get to the core of the problem

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Everyone comes to work to do a great job right? – initially anyway.  So why do businesses have poor performers?  Likewise, why do team members find it difficult to deal with conflict in the workplace; that difficult client or demanding boss?

To get answers to these questions we need to look beneath the surface.  Go beyond actions and behaviour and look to the drivers of performance: Core Values.

Why do values influence behaviour?

The Identity Iceberg demonstrates the impact our values have on actions and behaviour.  What’s visible above the surface – our Actions and Behaviours – are the tip of the iceberg.  They’re what we see and experience.  They’re driven by what’s beneath the surface.  

Immediately beneath the surface are our Habits – good and bad.  Consider how hard it is to change a habit.  These habits are driven by our Beliefs. 

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For example, we might believe that a certain team member is disengaged in the business because they’re often late, sick or the first to leave the office at night.  As a result of our beliefs, we create habits like overlooking them for new opportunities or ignoring their positive actions to focus on their bad behaviours.  We find it very difficult to change these beliefs.

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As we move toward the bottom of the iceberg…

Our Values are the next layer; they drive our beliefs.  In the above example, if we value diligence, we are likely to believe that someone who is late to work or leaves exactly on time does not share our value.  Our diligence value is what drives our belief that this person is not performing.  The reality, however, may simply be that this team member is not feeling valued, is not being inspired by you as a leader, and has not been given an opportunity to align their personal goals with your business goals.

Our values are subconsciously fostered as we grow up; they’re instilled by our parents, mentors and experiences.  As a result of being developed over our lifetime, our values are impossible to change.  They’re in our hearts, out of sight but nonetheless a significant driver of our beliefs, habits and, ultimately, our actions and behaviours. 

At the bottom of the iceberg is our Identity – who we are defines our values.

Core Values are 4-5 principles that guide a business.

Core Values are most often derived by the owners of a business.  They represent how the owners want to operate their business, becoming ‘decision-making filters’ or ‘culture guidelines’ for the team and owners.

Where there are up to two owners with a team of less than 20, it can be very powerful to involve the entire team in the process of deriving Core Values. However, ultimately it is up to the owners to determine the extent to which they involve the team in setting Core Values. 

Learn more about your business, register now for our FREE 7 ways to grow your business workshop by clicking on this link.

 When addressing poor performance we must reference Core Values

Going back to our hypothetical poorly performing team member, we must clarify what Core Values we believe the team member is not living into.  We can then discuss their performance with specific reference to them.  

For example, we might say ‘I’ve noticed you’re often late for work and I’m concerned that you’re not living into our diligence Core Value.  Is there something going on that is getting in the way?’  You’ve immediately opened the door for an explanation.  As long as your team members believe and buy into your Core Values you should get an honest answer from them.  You can agree how you’re going to work more effectively together in the future.

Learn more about your business, register for our FREE 7 ways to grow your business workshop by clicking on this link.

Your Core Values will help you deal with conflict

They are the decision-making filters and culture guidelines, so when there is conflict, you should be able to identify one or two Core Values that you feel are being ignored.  Discuss them with the team members involved.

There is no hierarchy in Core Values

Most importantly, remember that just as you can hold a team member to account for not living into a Core Value, so too can a team member call you out.  If the team is not challenging you on the Core Values as much as you are challenging them, then your Core Values simply aren’t working.  You are then due for a Core Values refresher – a time to revisit, review, re-define and re-commit.

A parting thought

Even if there’s a penalty for holding onto one of your Core Values, you should never give it up.  For example, if you believe your biggest client is not living into your Core Values and you can’t convince them to change, then you must let them go, even though you’ll suffer a financial loss.

The positive effect on your team and culture will outweigh the loss.

‘In matters of style, swim with the current; in matters of principle, stand like a rock.’ – Thomas Jefferson

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The Dangers of Discounting

A common misconception is that, when sales are falling, a great strategy to avoid the sales decrease is to offer a discount.  The reality is actually the opposite; you can often be more profitable by holding your price and accepting the reduction in sales volume.

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Consider the example below: If sales are currently at 10,000 units per annum at $100 and your costs are $60 per unit then your gross profit is $400,000.  If you offer a discount and this means sales remain constant at 10,000, you’ll only achieve $900,000 in sales so $300,000 gross profit.

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If instead you accept the 10% drop in sales but hold your price at $100 per unit you’ll still only make $900,000 in sales but you’ll only have to pay for 9,000 units.  So your gross profit will be $360,000.  In other words a $40,000 reduction in gross profit compared to a $100,000 reduction if you offer a discount.

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If we look at this another way and see how much sales need to increase by to maintain our original gross profit of $400,000 if we offer a 10% discount:

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Instead of having to sell 10,000 units per annum we now have to sell 13,333 – a third more!

Discounting is simply not the answer – it’s a race to the bottom.  Look at all other alternatives starting with what you can do to delight your clients so they’ll keep coming back.

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