It’s a feeling in the air; it’s not dread ... yet. Just a foreboding sense that 2019 might be a tough year. For some, it stems from the market turmoil of late 2018. For others, it’s the uncertainty of the international trade landscape. Whatever the reason, business leaders are starting to take a hard look at costs.
In lean years, our instinct is to hunker down. We cut extravagances and bring in new cost controls. For many businesses, those savings are the only way to survive a downturn. And in those years, things such as skills training for your staff, including your managers, can feel like an obvious place to cut. But be careful it doesn’t cost you more than it saves.
A major expense many businesses don’t realize they’re paying is voluntary turnover: losing good people. The compound effects of lost productivity, lower morale and hiring costs add up fast. For entry-level staff, the most conservative estimates say it costs between 20 per cent and 30 per cent of an employee’s annual salary when they leave. For mid-level and senior departures, which can do more damage and take longer to replace, the number can go as high as 400 per cent.
Even among employees who haven’t quit yet, the general rule is that half are thinking about it. Few business owners would say they can afford to have half their payroll go to disengaged employees, but for many that’s the reality. And engagement is not a vanity metric or a “soft” concern. According to Gallup, employee engagement is linked with measures as varied as profitability, quality, absenteeism, theft and safety incidents. Hardly the things a business wants to gamble with during a down year.
The data back up anecdotal reports: people don’t leave companies, they leave bosses. And the reverse is true, too. If you want an engaged, thriving work force, managers matter a lot. Great managers help their teams move faster, collaborate better and grow. They keep their people longer, and they get better work out of them, too.
We work with small businesses of between five and 500 people. More than 80 per cent of leaders we meet have never received prior training on how to manage. They’re in the job and being paid to do it, but no one has ever told them how. They often move into management as the only way to progress in their career. Some don’t even want the job, but they recognize that someone has to do it. They’re doing the best they can but learning on the job is hard when none of your colleagues are experts, either.
How do you do career planning for your team when no one ever did it for you? How do you give hard feedback, run a good meeting or set a clear goal without role models? Every leader struggles through it in their own way. And, while they struggle, good people leave.
The exciting news is that this stuff is learnable. People aren’t born great managers. It’s a skill set, similar to learning to run a restaurant kitchen, or balance the books or build an app. What’s more, there are great supports out there for small businesses who want to get better. Government programs such as the Canada-Ontario Job Grant can offset training costs, often covering 50 per cent or more. And if you are still growing, these programs offer extra support for training new hires.
It’s too early to tell what kind of economy we’ll have this year. But engaged teams outperform in every economic reality. And when the seas do get rough, engaged teams have the agility, resilience and focus to weather it.
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