Balancing The Scales of Work and Life

Do you know what it means when someone asks about your work and life balance? On its face it simply means the relation of time and resources spent on your professional life as it pertains to your personal life, how much focus does your work pull from your family or vice versa. Having a healthy balance between these two competing priorities has been shown to result in better job satisfaction and performance. 

ERG Motivational Theory

To understand why, we need to learn about a human psychological theory known as ERG theory. ERG theory was developed by Clayton Alderfer as a refinement of Maslow’s Hierarchy of Needs. To quickly summarize ERG theory, it divides basic human needs into three linear categories, existence on the bottom, relatedness in the middle, and growth at the top. Each of these categories includes several needs, existence includes safety and survival needs, relatedness includes social interactions and relationships, and growth includes the need for personal development and esteem. Alderfer had stated that if one of these three categories isn’t being met then a person will invest more time and resources on an inferior tier, a regression into a category where they can control the fulfillment of their needs. 

Application of ERG in a Professional Setting

Now, if I can take some creative liberty with ERG theory and assign some very general descriptors to each group, you will start to see how this relates to work/life balance and performance. Existence will be labeled as “salary,” relatedness will be labeled as “family,” and growth will be labeled as “performance.” For a person to ever reach the performance tier, they must have satisfied the needs in their salary and family tiers. As an example, if an associate is not achieving their performance goals, or isn’t receiving enough support from work, they will likely become demotivated and regress into the family tier to seek comfort (relatedness). If an associate does not have their social needs met, they cannot possibly advance into the highest tier, or at least not in a sustainable manner. Instead, without that support system from your social team of friends and family, you regress into the lowest tier, and focus on things you can control, like your salary. Maybe that means you work extra overtime, dive deeper into your work, further alienating your family. This is not a formula for long-term success.

Existence is Futile

Earning enough money to survive is the most basic need and the foundation of many motivational theories, but associates solely motivated by money lack the ability to achieve growth. This is often the underlying factor in time theft cases where an associate’s obsession over maximizing income drove them to falsify time records. If you are fortunate enough to where you can live comfortably without having to focus so intensely on your income then you are more likely to shift focus to the next tier.

Family Comes First

To satisfy the second tier an associate must be able to achieve social needs outside of the workplace, whether be it friends, family, or being part of a community, this is a need that cannot be overlooked. True balance of work and life is found between the existence and relatedness tiers of the ERG theory. Once this balance is achieved an associate can turn their focus towards improving their mind, their body, and/or their soul. Through this growth an associate can realize self-actualization and hold themselves in high esteem, influencing great job satisfaction and resulting in superior performance. 

My Personal Experience Through the ERG Lens

Not even 10 years ago, I was stuck in the bottom tier, only focused on coming into work and getting a paycheck. My financial situation was so dire I was woefully demotivated and only focused on maximizing my ability to generate income. For years I worked 70+ hour weeks and was able to put a lot of money away in savings. One day I decided I didn’t want to live like this any longer and that I was more valuable to the world than just a paycheck. I moved over 100 miles away into a different state and bought a house with all the money I had saved. From there everything started to improve, I met someone who changed the course of my life. She encouraged me to never settle for my current state, it was her that motivated me to go back to school and finish my bachelor’s degree. I changed jobs a couple times trying to find the right fit, a company that understood the value of its people and was committed to investing in them. We got married and started a family. Now, I was beginning to meet my relatedness needs, spending less time at work and more time with family and friends. It took a little while to find that balance, but like any relationship there is give and take, some weeks I was away for work, others I got to work from home. Being present when both of my children took their first steps is something, I could never put a price on. Having satisfied the second tier, I am more focused on growth now than I ever was. I am currently taking graduate classes to acquire my MBA and always learning how to be the best father I can be.  

How Can You Achieve Growth for Your Associates?

As a business owner your team is the most important part of your product or service, if you haven’t realized that yet you should consider this; without your associates there would be no one to develop, test, manufacture, market, or sell your product and no one to provide service to your customers. There is a common saying in business of “customer first,” and while the customer is very important, their satisfaction should never come at the expense of your associates. In fact, customer satisfaction is ONLY obtainable through the satisfaction of your associates, happy associates do better work and make customers happy. 

People are an organization’s greatest strength

Invest in Your Team

Come up with as many ways as possible to invest in your associates. Provide them all the training they need to do their jobs correctly and efficiently, DO NOT HESITATE. Delaying training for associates is one of the largest mistakes a business can make. Encourage your associates to seek growth, offer tuition reimbursement, and help them acquire professional certifications and licenses. To quote Richard Branson, “train them well enough so they can leave, treat them well enough so that they stay.”

Promote from Within

This is incredibly important, an organization that has properly mapped out succession planning and is able to advance associates from within the organization is able to minimize recruiting and on-boarding costs as well as training expenses. Associates who are promoted from within are already familiar with the basic operation of the business and do not need remedial level training on the way things operate. This also sends a great message to the rest of the team that with enough ambition and hard work you can move up in the organization. 

Embrace Flexible Scheduling and Remote Work

With the outbreak of SARS-CoV-2 we have seen that most companies can continue to operate with a workforce operating from a remote location. If it can be done it should be encouraged to allow associates to work from home, the environment is less distracting and more conducive to error free work, completed in a timely fashion. Going a step further, get creative with breaking away from the 8-10-hour day schedule. Instead of asking associates to work a fixed schedule, let them define their schedule with the understanding that they must complete all their work. As a business owner do you want your associates showing up to the office when there is little to no work to be done? Or would you rather they enjoy the downtime with their families and friends so they can recover for when business picks back up?

Listen to Everyone

This is the last point but arguably the most important. Never think that you know everything, no matter how long you have been running your business there is someone out there with a great idea of how to do it better than you. You want those people on your team helping you improve your operations and your business. The worst thing you can do is shut down those associates and cause them to take their ideas elsewhere and potentially become a fierce competitor. If for nothing else, showing your associates that you value their insight and opinions will foster loyalty and respect. 

Leadership Through Autonomous Empowerment

Leadership and Management. These two terms get tossed around and interchanged pretty frequently. While they are both traits and skills possessed by the leaders in our organizations they have different meanings and applications. Leadership is setting the example, motivating your team, and coaching associates for personal success. Management is controlling and directing your team to achieve a specific goal within a set timeframe. Leadership focuses on growth, management focuses on results. A good leader must be able to navigate both.

We won’t delve into the idiosyncrasies of management today, we will discuss a leadership method that I have successfully applied to teams that I have worked with, something that I like to refer to as autonomous empowerment. 

Full Autonomy

Autonomy is defined as freedom from external control or influence, or simply independence. Some managers tremble at the idea of allowing their employees to conduct business unchecked and that is where the first breakdown of leadership occurs, a lack of trust. Your associates are deserving of your trust. If they are not then they should not be employed by your company. Allowing untrustworthy people to remain under your employ is one of the largest mistakes a leader can make, while you may think you couldn’t possibly live without the production they bring to your operation, the damage they cause that you do not know about is unmeasurable and far outweighs the benefit. 

So if you only have associates you trust, why can’t you trust them to do their job without your interference or interjection? This might be hard to hear, but maybe you are the problem? You will never retain a talented workforce if you cannot learn to trust openly and fully. Good associates want to do a good job, give them the leeway to show you how well they can perform. 

How do we get to full autonomy? For associates who conditioned to being dependent you will be most successful if you ease into it. Don’t just hand them the keys and say “you’re on your own, show me what you can do!” You still need to support your team. Start with easy tasks that don’t have a major impact on the business, any task that takes time but adds no value is a good place to start. Let them decide how important those task are, maybe you will find out you won’t have to shut your doors if your associates don’t check and respond to emails every 10 minutes. 

Another way to look at autonomy is the antithesis of micro-management. I once worked as a field technician supervisor and had the most technicians of any supervisor in the company. I had placed great emphasis on the importance of job satisfaction and enjoyment of work for my team. I provided my team with full autonomy as it related to the initial communication and appointment scheduling with our customers. The way I saw it, these technicians created more meaningful relationships with the customers than some guy in an office (me) ever could. I went as far to say that as long as they put in a 50+ hour week they didn’t have to tell me if they were coming in late or leaving early, all I cared about was that we took care of the customer. They did exactly that, rarely did I have to follow up on a service request that was aging, and when I did there was typically a good reason for it. 

How is this leadership? It sounds like you are just delegating your responsibilities to your sub-ordinates. Essentially yes, it makes your life as the leader much more manageable, especially when you have a very large team. You are coaching your associates to embrace independence, think for themselves, take control of their job, and grow professionally. When given enough autonomy the future leaders of your organization will emerge.

Empowerment

Now if you were uneasy with the thought of autonomy you are going to hate empowerment! Defined as authority or power given to someone to do something, this takes autonomy to the next level. With empowerment you are giving your associates the go ahead to make business decisions on behalf of the organization, decisions for which you will ultimately be held responsible. Scary stuff. Well, there needs to be parameters around the decision-making power you delegate to your associates. The easiest way to do this is to refer them to the corporate culture, does the decision you are about to make fall in-line with the core values of the organization?

An example of this from the same group of technicians I referenced above would be when I told them they could offer invoice discounts to a customer on-the-spot if they felt a relationship was in jeopardy. While we were in the business of making money, you can’t do that without customers, and unhappy customers tend to tell others about their unpleasant experience. Now I qualified this by providing a parameter of up to $500 in discounts, and left it up to the technician to gauge if less would appease the customer, if they needed the full $500, or if they needed to bring me in for a larger discussion. The most common discount we provided was a $250 discount for travel charges. Being able to offer that discount on the spot immediately changes the conversation. We hear you, you aren’t satisfied, how can we make this right for you?

Obviously any decisions that involved safety or legal matters always needed to be cleared with management, but there are so many examples of inconsequential decisions that can be made by those on the front lines interfacing with your customers. Empowerment gives your associates additional tools to grow relationships with your customers and provide a better service or product. 

Bringing it all together

Your associates are the most important resources and assets your organization has. It cost a lot of money to recruit them, more money to train them, and each year you need to incentivize them in a way that keeps them from leaving your organization. Richard Branson, founder of Virgin Group once said “train people well enough so they can leave, treat them well enough so they won’t want to.” As a business owner or leader you owe it to your associates and followers to challenge them to be great. You don’t want associates who are complacent or only working for the paycheck. Here is a checklist of how to develop autonomous empowerment amongst your team.

1. Define the job tasks and responsibilities clearly

2. Assure multiple lines of communication are available and encourage their usage

3. Always be soliciting feedback and never take it personally

4. Ask how you can make their lives easier

5. Reinforce corporate culture and core values

6. Trust them and don’t look over their shoulder

7. Focus on the importance of team building

8. Praise associates for taking risks

9. Coach associates that failure is just an opportunity for growth

10. When an associate fails, you as a leader own the scrutiny and fallout

11. When an associate succeeds, they deserve all the praise

12. When the team succeeds, they deserve all the praise

Leading is Selfless

Nobody said being a leader was going to be fun, the real joy is watching your followers achieve their personal and business goals and knowing you had some influence in their journey. Your followers look up to you, but that doesn’t mean you’re above them. If anything, they are above you and it is your duty to serve and support them. 

Provide autonomy, empower the team, enjoy the ride.

Bookkeeping: Empower Your Business to Become Self-Sufficient

Many owners of small to medium sized businesses tend to direct their attention on daily operations and allow themselves to get ‘caught in the weeds’ of running a business. Instead, an owner should be focusing on growing their customer base, visiting existing customers to solicit feedback and concerns, and most importantly planning for tomorrow. How can you plan for tomorrow when you only have enough time to worry about today?

We cannot solve the time management issue for you, the business owner. You must relinquish control and allow your team to steer the ship. Yes, that means you have to trust that they have your best interests as their number one priority. Easy to say, hard to achieve. Here are some steps on how you can configure your finance & operations so that you only need a weekly update to feel comfortable on its performance. 

Step 1: Configure 

Record Revenue and COGS (Cost of Goods Sold) transactions on a daily basis where it can be categorized by customer, parent customer, product/service type, associate/team, geographical region, or any other number or relevant sub-categories. The goal is to be able to extrapolate your revenue/COGS sources to understand which segments of your business are most profitable and which are the least. As an example, if you had a customer contract coming up for renewal, before you entered into negotiations you would want to know the impact that customer’s business had on your bottom line. Revenue should be any payment or expected payment for services rendered or products sold, where as COGS would consist of any cost required to perform services or sell products, and should be split between variable costs and fixed costs. Revenue less variable costs is known as Contribution Profit Margin, whereas revenue less COGS is known as Gross Profit Margin, both important in understanding the performance of your revenue generating associates and teams. Most other expenses fall under Operating Expenses and do not directly impact the revenue generation for your business. Correctly categorizing and configuring these expenses and General Ledger accounts is vital to achieving a clear picture of your financial performance. 

Step 2: Accuracy

Accounting software is only as helpful as the data that is being input into the system. It is incredibly important that every associate in the business understands that even the smallest mistake can have resounding and costly affects on your business performance. Each associate must be thoroughly trained for their position with mandatory annual refreshers to assure they have a tenuous grasp on your CRM (Customer Relationship Management) or ERP (Enterprise Resource Planning) software. It is very easy for associates under pressure to omit information or rush through a customer interaction, as the business owner it is your job to make sure your team understands there is always enough time to do it right the first time. 

Step 3: Benchmark

Look at your performance over the past month, quarter, year, and last 3 years. Comparing your recent performance to prior periods is a great way to observe growth and efficiency improvements. This is typically the best way to quickly catch a problem before it grows out of control. If you know that historically your variable costs have never accounted for more than 40% of your revenue, yet last month they were at 60% this is a red-flag to investigate further. Hopefully it is simply a data entry or accounting error, but if it is something more that can be used to make quick business decisions to mitigate any further losses. 

Step 4: Projections

Using your benchmark financial data, recent financial performance, and anticipated revenue and/or expense growth create a revenue forecast and expense budget for the upcoming fiscal year. Set achievable goals for growth and reasonable expense reductions for efficiency improvements. Use your projections as a template for your performance, compare your actual results to the plan to see how well you performed but also the accuracy of your forecasting. Understand that performance that far exceeds the plan and benchmark values isn’t likely to be repeated in the coming period and that future projections should not be based solely on the prior year’s actual performance. It is more realistic to augment your projections for the coming year based off of the prior years projected figures. 

Step 5: Create a Team of Trusted Professionals

As a business owner sometimes you may feel as if you are alone in this game. Our management consulting firm is only one piece of the larger picture, you should develop relationships with tax accountants, IT/cyber-security professionals, a business law-firm, non-competing industry experts, external industry experts, business mentors, just to name a few. Then make sure you hire people with the knowledge, skills, and abilities that you can trust to run your business for you. 

Step 6: Support, Be Visible, Be Hands-Off

This final step is arguably the most important for your success as well as your freedom from the daily grind. You must support the leadership team that is running your business. If they do not have your full support your associates will see that and your leadership team will lose any authority and respect they once had. Any disagreements you have with decisions they made should be discussed in private. You should remain visible in your organization but refrain from ‘helping’ with operations in any way. The best way you can help is by redirecting your associates to their supervisor. Make it clear that they can always come to you for help, but your first question should be “what did your supervisor have to say about this?” You have a great team and you care deeply about your business, empower your associates to be autonomous and monitor your business performance from the weekly operations reports, monthly consolidated financial statements, and quarterly/annual reports from your leadership team. 

What Is Cost of Capital and Why Should You Care?

Raising capital for your business is always a daunting task. Do you ask friends, family, and/or a bank for a loan, do you raise public equity capital through a stock exchange, or do you sell off private equity in your business to an investor or part owner? While each of these options creates capital to be used to grow your business each one comes with varying costs and it is important to understand the implications of each.

Private Equity is essentially selling a portion of your business for a stake in your company and a claim to a share of annual net income. Before you ever consider this option you should hire a professional financial consultant to help you determine the minimum, fair, and maximum market value of your organization. Once you understand your total value you are in a better position to negotiate for a certain percentage of your business. As an example if your business is valued at $1M and an investor offers you $50,000 for a 10% stake he has offered 5% value for 10% ownership. This method of capital typically comes at the highest costs, at 10% stake you would be required to payout 10% of all net profits to this investor indefinitely. 

Public equity is when a business lists itself on a stock exchange and holds an IPO to allow the public to buy stake in the organization. Depending on the valuation of your business and the demand for your shares this can raise a substantial amount of capital for less than private equity but your company will be under more scrutiny to follow SEC and GAAP standards and any negative PR can have devastating effects on your share price. This is not a typical option for small startup businesses.

Debt equity is the most common form of capital for businesses across all industries, partly because it is the most easily understood. Most consumers have had a mortgage, car loan, or credit card, these are all examples of personal debt. Business loans aren’t much different, except when it comes to repayment. While payments towards your principal balance are cash-out flows from your financing cash flow, interest on the loan is recordable as interest expense and lowers your tax liability during the repayment period. Basically the loan interest is tax deductible. For this reason debt equity is not only the most common but on average the most inexpensive method for raising capital. To secure a business loan your company will need a comprehensive business plan with at a minimum 2-years of financial data. A business consultant can help with a portion of the business plan, the entire document, or review a plan that you already have.

Why does this matter? Well the right combination of debt-to-equity is important from a strategic perspective. Setting a capital cost structure and understanding the balance will help your organization make sound business decisions moving forward. Knowing the cost of your capital will allow you to accurately measure your ROI and evaluate the profit margins on revenue you otherwise would not have generated had it not been for the capital acquired.

How A Business Plan Is Integral to Success

When a new and exciting business idea comes along the thought of taking on the arduous task of creating a business plan can be kind of a buzzkill. However, taking the time to create a business plan is critical as it is considered a living document and will change and grow alongside your company. The business plan will hold you accountable as it forces you to take a close look at every aspect of your business. Some of the ways a business plan can help you succeed is: it will require you to gauge the viability of your vision, it is required to secure any necessary funding, and require you to best determine how to market to potential customers and investors to generate sales.

When writing up a business plan it is important to consider how viable your business will be in today’s market. Is there a market for it at all? Completing a market analysis can ensure your product or service will have a fighting chance. In completing the analysis and research, you will have a better grasp on the industry as well as the target market. Competitive research is also necessary in this step. Researching competitors can help you identify ways to set your company apart and attract potential customers or allow you to replicate what your competitors do well.

Another imperative step in drafting a business plan is determining your sales and marketing approach. In today’s technological world there are many ways to market a product or service. Much like your business plan, you will need to adapt and grow your marketing methods periodically to better suit the needs of your company and your clientele. First, ask yourself: How will you attract customers and generate sales? How will you retain customers once you have their business? Where will you advertise? 

A business plan is mandatory if you are looking to secure funding – a bank or investor will not provide capital if you have not put in the work. Your business plan should outline, in detail, what the funding is for and how it will be utilized over the course of five years. This may include things such as materials, salaries, operating expenses, and accounts receivable.

These are just a few components of a successful business plan. If you’re a potential, new, or seasoned business owner and you are looking for assistance in creating or revamping a business plan, Forward Business Consulting is here to help every step of the way. Check out our contact page to get in touch with a consultant today!