In the book “Good to Great,” Jim Collins discussed having the right people in the right seats. This is true, but only part of the equation to move a company from good to great.
His statement made a presumption about the following and therein was the problem. Collins presumed the right people in the right seats were in the right environment where they were able to use the right talents to make the right decisions to ensure the right results in the right time frame.
Today much is being written about a company’s environment or culture. No matter how many right the people are in the organization if the culture of the organization is toxic or not supportive of its employees, forward progress is not possible.
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Workforce engagement research by Gallup each year suggests there continues to be numerous poor cultures by the lack of employee engagement. This research continues to show that anywhere from one out of three or one out of four employees are actively engaged on the job. What this means is two out of three or three out of four employees are not actively engaged.
If we translate this lack of engagement into dollars and cents without any paid benefits, anywhere from 66 percent to 75 percent of paid salaries are not giving a positive return on investment. People can be a drain on the productivity, progress and profits of any business.
Additionally, the people pool is constricting, according to other research. Finding employees today regardless of age with critical soft skills (people skills) is becoming more and more difficult as shared in a Wall Street Journal article by Kate Davidson in August 2016. Davidson interviewed several small business owners who shared their own experiences about the difficulty in finding people with soft skills and the impact of soft skills on their businesses, their bottom line.
Business leaders shared in a McKinsey 2013 research study that soft skills are far more crucial than hard or technical skills. This report also revealed that only 25 percent of the students from engineering colleges are directly employable. The lack of soft skills can be a contributing factor to high unemployment by college graduates.
Even across the pond, a report from the United Kingdom actually monetized the impact of soft skills to the UK’s economy. This research suggested in 2015 the monetary impact to the UK’s economy was $107 billion in gross value or about 6.5 percent of the UK’s economy as a whole. The report projected by 2020 the annual contribution of soft skills to the economy would be $133 billion and to more than $155 billion by 2025, according to Development Economics prepared for McDonald’s UK 2015.
Yes, having the right people in the right seats is essential provided they have the right talents along with making the right decisions for the right results. The cost of employee churn (turnover) can no longer be ignored for any small business that desires sustainable and long term business growth.
Next week: How to find the right people – recruiting.
Leanne Hoagland-Smith is an author, speaker and executive coach. Her weekly column explores issues that impact the bottom line of firms with fewer than 100 employees. She can be reached at 219-508-2859.