As a business owner, you face Business Risk on a daily basis. Here are three business risks that you must address. If you don’t manage them ahead of time, you will have to chase solutions later. It’s painful, but much easier to plan for these before they strike.
- Employee Risk
- Risk of Change
- Succession Risk
There are really two issues involved here. The first is Retention, and the second is Engagement. There is a certain amount of churn among employees in any industry. As unemployment rates drop, there are fewer skilled employees to select your next employee from. So, companies are more aggressive at reaching out to the actively employed to fill their vacancies.
Studies have shown that people change jobs more for intrinsic (internal) motivation than because they were offered more money. So how do you keep your employees?
- Provide them with a defined development path. As the workforce becomes younger, it is more difficult to show employees that they have an easy path to upper management. Give them a clear understanding of their options. This may settle issues of what their next move could be and how soon it will happen.
- Communication on a regular basis is a key to happy employees. Yes, it takes time out of your schedule. But warm fuzzies, appreciation of the work that they’re doing, and words of encouragement are important. Holding performance reviews once a year is not enough. Monthly conversations are much more effective.
Employees that feel engaged are far more productive. They have a commitment to the company and its future.
- Let them have a voice in their future. Don’t just tell them what their next step is, talk to them about what they would like to do, and what other things they want to learn. Make them aware of other opportunities beyond the department they are currently in.
- Provide them with more responsibilities. If there isn’t an upcoming opportunity for promotion, let them gain new experiences. As they learn new things, they become more valuable to the company overall. Bringing them in on new projects will improve employee engagement, a key to keeping them productive and involved. They will be less likely to leave if they are enjoying what they are doing and feel that they are contributing.
Risk of Change
Change is all around you. Your customers are fickle, the market is a challenge, and the economy is uncertain.
- Stay in touch with the changes in the marketplace. Carefully evaluate the sales and competitiveness of your product lines. Are sales increasing or dropping? How can you impact on the results? Decide what changes you need to make to stay relevant to your customers.
- Examine different scenarios upfront to determine successful alternatives to challenges that you might face. By planning some options for yourself before things become critical, you have time to calmly look at alternatives, and develop some options.
- Look at market research. How satisfied are your customers? If you look at solutions, rather than just scores, you are better able to react to changes.
- Become solution oriented instead of focusing on problem identification. Find ways of solving your problems, rather than just raising a red flag of distress.
- Find ways of continuing to provide value. If you provide value, you’re better able to manage change in the market.
There is always a concern about who is going to run the company when the president retires. But the bigger question is how you transfer the knowledge that they gained over those 30 years of working at the company.
- Understand where the institutional knowledge exists in your company. Who is the leader with the true understanding of the vision and mission of the company? Work to pass a full understanding of what makes your company unique to middle management and line employees.
- Who are the people that truly understand the products and services that make your company unique? Who are the creative ones? Develop others in the company to share that product curiosity and have them join the meetings where those discussions are held.
- How do you separate delegation of responsibilities from knowledge transfer? Just having someone do the job doesn’t guarantee that they will provide that consistency in how the job is being done. Giving them the insight into the why’s and wherefores is just as important as having them take over the role.
Of the many risks that business owners face, the issues of Employment, Changes and Succession create some of the issues that are not only hardest to address, but most important for the company’s future. By planning carefully, you can create opportunities that minimize those risks.