Category Archives: John F Dini

Winning the Talent Wars

John F DiniBy John F. Dini

If you haven’t heard the term “Talent Wars” yet, you have now. They are heating up, and most small businesses aren’t very well equipped to compete in them.

“Talent Wars” refers to a growing shortage in the U.S. labor market for properly trained and educated employees. Starting prior to the Great Recession, there has been a mismatch between people seeking jobs and those who hire them.

Statistics show that employers are currently advertising to fill 51 million open positions, an all-time record. Many business owners complain bitterly about the lack of talent in the hiring pool—especially in sales, technical jobs and trades. There are several factors causing this disconnect between employers and prospective employees. You should be aware of them if you intend to compete in the Talent Wars.

The first factor is the shrinking number of people in the prime age group for experienced employees. Those reaching their 65th birthday outnumber the folks hitting their 45th birthday by 4,000 people a day. This overlap of the post-WWII Baby Boom with the baby bust of the late 60’s and 70’s can’t be changed; and it will continue for the next ten years.

One strategy to counter the middle-experience gap is to look further up and down the age bracket. Over the next few years you will find yourself reconsidering fixed ideas about what is an ideal age for these positions. Boomers are generally healthier than preceding generations, and many plan to work much longer. A “new” hire in her late fifties can be up to speed in far less time, and still be a productive member of the team for ten or fifteen years.

The second major issue with finding qualified people is training. Our higher education system today is driven more by low-interest government guaranteed loans and far less by the value of a degree. Employers can no longer look at a college education as de facto evidence of qualifications, but it can still provide some guidance. How long did it take the applicant to graduate? (Less than 50% make it in 4 years.) What courses did he or she take? Hopefully they were something more substantial than “Bruce Springsteen’s Theology,” (an actual for-credit course at a major university.) A well-rounded liberal arts education still has value, and timely completion still indicates a goal oriented person. Both, however, require more investigation that merely checking the sheepskin.

Finally, business owners have to face increasing competition from Corporate America for talent. After years of downsizing, outsourcing and technology upgrades to replace people, large organizations are now filling the slots left by the wave of retiring Boomers. According to a poll of 587 corporate executives in a study titled “Talent Wars – The Struggle for Tomorrow’s Workforce” published in The Economist, the top five concerns were:

  1. Aging population
  2. Shift of personal values (e.g. stronger focus on work/life balance)
  3. Lack of investment by organizations in training and developing employees
  4. Increasing gaps between what universities provide and what industries need
  5. Low or declining standards of education

The issues they identified aren’t surprising. What the owners of small and mid-sized businesses need to realize, however, is that this study was done eight years ago. In that time corporations have already reacted. Job offerings for desirable hire now include signing bonuses, guaranteed wage increases and creative benefits packages.

Smaller employers are finally becoming aware of the crisis, and they simply can’t win this battle on the benefits front. Wages are a much higher percentage of their expenses, and they typically aren’t deep enough at any position to easily swap bodies when one isn’t available. They have to compete in the Talent Wars with the weapons they have always used against giant competitors: speed, creativity and culture.

There are tactics available to smaller employers that cost little beyond some time and energy, and may actually reduce your employment expenses.

Treat employees as real people: Most small companies say things like “We are proud of our family atmosphere.” The culture of your business is still your biggest advantage. Employee satisfaction surveys consistently rate the importance of social interaction in the workplace far higher than wages.

Tailor jobs and benefits to individual employees: Use behavioral tools to show that you are truly concerned about an employee’s job satisfaction. Some companies have a flexible self-improvement benefit; a few hundred dollars annually for each employee to use as he or she chooses for education, hobby lessons or a gym membership. Consider carefully whether it is really a problem if an employee schedules around family needs, like dropping the kids off at school in the morning.

Maintain current technology: Most of us get frustrated if a website doesn’t load in less than five seconds. Don’t make your employees deal with outdated equipment or software. The cost of a second monitor or upgraded workstation is less than most employees’ weekly salaries.

Consider outsourcing: Many smaller companies hire a skilled person, and then “fill in” his or her 40 hour week with lower-level tasks. Is your controller entering invoices? Does your sales manager produce the customer newsletter? The luxury of “We do that ourselves” is impractical when you are overpaying for the function, and you can’t afford to pay for full-time talent if it is really only a part-time job.

Invest in skills: Owners often worry that they are training people to get better jobs elsewhere. Let employees know that you are investing in them as recognition for their ability, and have them sign agreements that forgive training costs over time. Once they are more qualified, adjust wages to reflect their new value. Gratitude is a short-lived motivation for staying in a job.

Pay market rates: Everyone has lost an employee to “an offer we just couldn’t match,” but if it is happening regularly you may be out of touch with the wage scale. Remember, there are 2.5 jobs being advertised for every person who is looking for one. Those with ability don’t have a problem finding work. You may not match the top of the market, but you need to be in the ballpark.

Market internally: Employees can develop a “grass is greener” attitude when they take for granted all the good things that their current employer offers. Make a list of all the tangible and intangible benefits that your company provides, and schedule regular reminders of them for your workers.

The Talent Wars are here, and they will intensify in the years to come. Finding and retaining the right people will depend on your ability to fight back with the inherent advantages of a small business: speed, creativity and culture.

John F. Dini is a coach, consultant, speaker and author of Hunting in a Farmer’s World, Celebrating the Mind of an Entrepreneur (winner of the New York Book Festival’s “Best Business Book”), 11 Things You Absolutely Need to Know About Selling Your Business, and Beating the Boomer Bust. Recognized as one of the nation’s leading experts on business ownership, John has delivered over 10,000 hours of face-to-face, personal advice to entrepreneurs. For more information on John F. Dini, please visit www.johnfdini.com.

Hunting in a Farmer’s World

John F DiniBy John F. Dini

Everyone in business is either a Hunter or a Farmer. The working style that fits you best isn’t really a matter of choice, nor is it determined by your job description. It is ingrained by eons of cultural evolution.

The working styles of a hunter and farmer are markedly different. Hunters are linear. It is their nature to focus on the kill. A hunter moves towards a goals, and on reaching it begins to immediately look for another objective to accomplish. A farmer’s work is cyclical, tracking the seasons from planting to harvest. Their evolutionary traits apply to an office environment as well as the outdoors.

Ten thousand years ago we were all hunters. Until humans developed agriculture, hunting was the only way we survived. Those whose job it was to hunt for the tribe knew that failure wasn’t an option. They persevered through fatigue and bad weather until they had accomplished the objective—bringing home food for everyone.

As mankind started farming and domesticating animals, nomadic tribes were able to settle in one place, build permanent living quarters and begin developing societies. Skilled workers could specialize in pottery or tool-making, and tribes began trading goods with each other. Hunting kept people alive, but farming built civilizations. As villages grew into cities, the majority of their populations became involved in growing, transporting and distributing agricultural products. Hunting was relegated to a sport.

The cyclical nature of farming, tilling, sowing, tending and harvesting have morphed into the business cycle of planning, budgeting, implementation and measuring the results. Just as the populations of cities focused on farming, the majority of employees in any business are dedicated to production, along with managing and tracking the production of others. Hunting is left to a small minority; the entrepreneurs, salespeople, executives and creative talent whose jobs are to look ahead and focus on the next objective.

For business owners and leaders, the challenge is to support the linear attitudes of a hunter in a business environment that concentrates on the cyclical tasks of farming. Computerization has given managers exponentially more data to track and measure, but management is by its nature farming, and management books promote farming methodologies. Balanced scorecards, six sigma quality and ISO 9000 are valuable tools, but for the typical hunter, they pose a problem…they are boring.

Thousands of business hunters spend millions of hours each year trying to master the intricacies of process and procedure without understanding why they are doomed to fail. They start to implement an initiative, but then become drawn to the “next big thing,” or simply lose interest in the effort and let things slide. They aren’t excited by potential for incremental improvement, but rather by the newness of the latest management fad. They enjoy building new things, but don’t fare as well in managing them. Their inability to follow through makes them think of themselves as “bad” business people.

The real problem is letting dynamic, creative problem solvers waste time and energy trying to adopt a style that doesn’t suit them. How much more productive could your business be if everyone, including you, worked only on things they enjoyed?

The stereotypical example is that of a top salesperson who is promoted to sales manager. The salesperson is a hunter. She enjoys working independently and “bringing the meat” of a closed deal. It isn’t hard to understand why moving her into a manager’s role is counterproductive. She has no inclination to oversee the work of others, prepare reports, or think about improving the sales process. She wants to hunt, and managing is the farthest thing from hunting.

Of course, the opposite is also true. Take the case of an excellent controller who has advanced to Chief Financial Officer. As a controller, he was focused on detail and deadlines. Measuring and analyzing were his core competencies. Faced with the prospective-looking duties of the CFO role, forecasting, projecting, and seeking new financial opportunities; he is lost. The mere fact that both positions involve financial skills doesn’t make them interchangeable.

Most job descriptions involve both some hunting and some farming. One job recruiter once remarked that “When job descriptions require strength in both styles; you begin seeking a ‘flying mermaid’ to fill the position.” That’s someone who is willing to do detailed and repetitive work all morning, such as balancing accounts and data entry, then shift to an aggressive sales job in the afternoon. Even if you could find someone willing to take on a flying mermaid job, the odds of achieving success in both roles are nil.

Farmers far outnumber hunters in most organizations. Regardless of the owner’s natural style, however, it’s a mistake to seek out similar people for management responsibility. We all want to interact with people who understand us, but duplicated personality traits come with two pitfalls.

The first is when the two of you agree on a course of action, it may be because it’s the best decision, or merely because you just have the same point of view. Including someone who sees things differently than you do in your decision-making team creates better debate and more options. Two hunters together may skip critical details, while two farmers could be putting too much emphasis on avoiding risk.

The second pitfall is that the managerial duties you tend to shun personally also don’t receive much attention from your key manager. Two farmers might focus on process over marketing initiatives, or two hunters who spend their time driving sales without looking at production efficiencies.

Hunters have always needed farmers. They keep things together when the hunter is off chasing the next objective, and make incremental improvements through the business cycle. Farmers depend on hunters to create new opportunities and develop a long-term vision. Both are necessary, and neither is nearly as effective without the other.

John F. Dini is a coach, consultant, speaker and author of Hunting in a Farmer’s World, Celebrating the Mind of an Entrepreneur (winner of the New York Book Festival’s “Best Business Book”), 11 Things You Absolutely Need to Know About Selling Your Business, and Beating the Boomer Bust. Recognized as one of the nation’s leading experts on business ownership, John has delivered over 10,000 hours of face-to-face, personal advice to entrepreneurs. For more information on John F. Dini, please visit www.johnfdini.com.

Beating the Boomer Bust

John F DiniBy John F. Dini

More than 60% of U.S. business owners are over 50 years old, and many of them are looking toward retirement and the process of attracting and vetting potential buyers to take the reins. The differences in yesterday’s and today’s business landscapes are stark—as Boomers were raised in a highly competitive environment, many face the problem of having built companies that won’t attract a new generation of buyers. Three major trends impact the salability of a business. Understanding these trends can help owners transition successfully in a challenging market, and ultimately identify the buyer who will carry their company’s torch going forward.

Why Do Boomers Work So Hard?

Baby Boomers are 2 ½ times more likely to own a business than the generations before or following. Between 1975 (when the first Boomers turned 30), and 1986 the formation of new businesses in America jumped from 300,000 to 700,000 annually. Faced with fierce competition on the pathway to success, many Boomers chose to chase the brass ring by going into business for themselves. New business start-ups have never again reached that level. The result is that nearly two-thirds of all businesses with fewer than 500 employees are in the hands of people who are preparing to retire.

The impact of the Baby Boomers at each stage of life created a one-time surge in many statistics. They tripled the number of college graduates, and brought over 50 million women into the workforce. Between 1970 and 1980 the population of the United States increased by 11%, but the employment base grew by an astonishing 29%. Replacing such a massive portion of the population in the business sector is no easy feat.

The Perfect Storm

There are three major trends that challenge a small business owner preparing to exit. Like the movie “The Perfect Storm,” these three trends; demographic, psychographic and sociographic, are combining to create a Tsunami that will change the entire landscape of independent business ownership.

Demographically, the generation following the Boomers (Gen X) is much smaller. From a supply and demand perspective, there simply aren’t as many available buyers as the number of potential retirees seeking them.

The psychographic profile of the buyer generation is unfavorable. What business owner hasn’t complained about the work ethic of the younger generation? Raised in a forty year period of economic growth (the longest sustained period of expansion in our history) Generation X and their successors (The Millennials) are more likely to choose family first, and perceive jobs and employers as merely the means to a personal end.

They aren’t wrong. The parents of the Boomers’ understood the difference between work and personal life. One started when the other ended. In their drive for success, the Baby Boomers mixed the two and created the term “work/life balance”. Younger generations are actually returning to an older set of values.

Sociographic trends favor alternative careers over business ownership. Corporate America is well aware of the issues and attitudes of the younger generations. They have already made many adjustments. Telecommuting, sabbaticals, family leave, and flex time are benefits designed to attract younger workers who have a different set of priorities. Few small businesses have the depth or breadth to allow skilled employees to come and go according to their individual priorities.

Young entrepreneurs have little interest in the service-oriented brick-and-mortar companies that dominate small business. They seek a level of freedom that doesn’t require being on call, schedules driven by customer convenience, or a 55 hour work week. Combined with the sheer lack of prospective buyers, a reduction in the number of small businesses becomes more than likely, it is inevitable.

Yet, many small business owners are depending on their company to fund a comfortable retirement. Their plan goes something like this: “I will work really hard until I am tired, and then I will find some energetic younger person just like me who is willing to commit everything for this great opportunity.”

Beating the Odds

Fortunately, if you are a successful business owner, you’ve already proven your competitive instincts and abilities. With some planning and foresight, you can still beat the Boomer Bust and achieve your retirement objectives. There are two pathways to succeeding in a crowded sales marketplace.

Build to Sell: Your first option is to build a business that is attractive to your younger buyers. It allows for personal flexibility. It can’t require a huge down payment, since these generations were raised in a “buy-now-pay-later” world, where they are carrying substantial debt from the day they graduate college, and have little opportunity to amass liquidity.

Your technology doesn’t have to be cutting edge, but it needs to be current. Nothing turns off the tech-savvy young buyer faster than a company that is limping along on outdated software or (heaven forbid) paper. Of course, the other attributes of an attractive acquisition; growing margins, a distributed customer base and predictable revenues, are a given.

Hire Your Buyer: The second option is to hire your buyer. The stereotypes of different generations aren’t universal. Certainly we all know Boomer slackers, as well as young people who are ambitious and hard-working. Lacking capital, many of those younger go-getters would like to own a business but have difficulty seeing how they can make it possible. Identifying such a buyer in your own organization, or even reaching outside and recruiting one, is a viable option if your target date for exiting is a few years away.

Creating your own successor requires a commitment to planning and development, but the financial aspects are fairly simple. A few years of selling equity in small amounts can let your successor build a minority stake. Then he or she can obtain third-party financing for the balance of the purchase so you can maintain control through the process, and take the proceeds with you when you leave.

Remember “The more you work in your business, the less it is worth.” Everything you do to reduce your business’s dependence on your personal talents, to reduce the time commitment of running it, and to make it easier for any successor (whether internal or external) to take over the reins, also increases its value to any buyer.

You can’t change the factors that create the most competitive selling environment in history. Understanding what the future looks like, and realizing that your buyer is unlikely to be someone “just like me” is a critical first step in the process.

John F. Dini is a coach, consultant and author of the award-winning book Hunting in a Farmer’s World, Celebrating the Mind of an Entrepreneur and Beating the Boomer Bust. Widely recognized as one of the nation’s leading experts on business ownership, John has delivered over 10,000 hours of face-to-face, personal advice to entrepreneurs. For more information on John F. Dini, please visit www.johnfdini.com.