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How you look at your payroll reveals a tremendous amount about you and your company.
I work with quite a few business owners in my coaching/consulting business and lately it's almost all been focused on what I now call the ‘talent war’, based on the great book The Talent War. I highly recommend reading it as you get some insight into how Special Operations views recruiting for their highly specialized and elite teams.
Most of you reading this blog, realistically, don’t have the same kind of table stakes that those warriors have when making decisions about who to hire, onboard and keep training. That being said, what you do does make a difference in many lives so I thought I would share some of my observations after 30 years of working with business owners.
- If you view your employees as an expense first and a method to grow profit and enterprise value second…you are missing a tremendous opportunity.
- Hiring for the ‘average’ of compensation is rarely balanced by having ‘average’ expectations for employee performance. Think and reflect about that. I can’t tell you how many boards and meetings I have sat in on and watched leadership teams delude themselves into thinking that above average people will like/accept average comp.
- How you hire, onboard and keep training your team is a tremendous indication of your culture, and often the measurement is in your profits and sustainability.
- Paying people well doesn’t guarantee that they will stay, but it sure helps. Also, well compensated employees will only leave for better opportunities and will not leave unhappy or ungrateful (important for culture).
For smaller companies, this becomes even more critical. Smaller groups of people mean that culture can get damanged/enhanced much faster and with more critical results than with larger companies.
My advice: nothing is more important than your team's talent.
Of course, if you have a bad product/service at a bad price that is already a killer problem. I am speaking to those of you leading companies with good stuff. Your key is, if you want to be a real business owner, to have your team happy and feeling significant about the work. That doesn’t mean that the work won’t be hard, challenging and that there won’t be problems from time to time.
Some things I am encouraging you to think about as next steps:
- Try to detail just how much it will cost you in time and treasure to replace your current staff. In many cases, that is much more expensive than paying your team better.
- Imagine what kind of team you could have, at a higher payroll, that would drive even better results. This isn’t always a linear chain. Often, better people at better comp drive even better results.
- Remember, you are the person that is gaining the value from growing the sale price of your business. Often, this seems to be overlooked by business owners when evaluating payroll. However, if you aren’t running a business that is designed to be ready to sell (best in class profit and best in class multiple at exit), then this might seem crazy to you.
- Finding talent is much easier when you are paying above average. Just because you are paying more doesn’t mean you need to settle for less.
Remember this: if you truly want to be a business owner you need to be able to NOT be at work and still drive best in class results.
Related: Why Referrals Are Even More Valuable Than Ever in the Age of AI