I Quit. You Need To Go.

As good to great author Jim Collins once wrote, a company should limit its growth based on its ability to attract enough of the right people. Other than finances, if there is one thing that causes business owners more stress, time, and worry, it's managing employees. Specifically, finding and sustaining valued employees, employees quitting, and having to let employees go. Today, I'd like to share with you some of the valuable lessons I have learned over the years about hiring and firing employees. I'm Howard Mann, and this is the Business Brickyard Podcast.

People leaving your company because they quit or you let them go is the least discussed and most disruptive aspect of owning a business. So let's discuss it. Regardless of the scenario, replacing someone eats up an enormous amount of time and energy. If you're not involved in the hiring, it will eat up a lot of time and energy for the member of your team that has to find someone great. But as always, time is also money.

Consider these numbers based on a number of studies done by HR and payroll companies. Take a 50 person company with an average salary of $68,000 a year. If they lose and hire 10 people each year, which is not a strange assumption, the total cost to the business is over $350,000. If you're curious of what it's costing your company, just Google employee turnover calculator, plug in the number of employees you have, your average salary, and how many people come and go every year, and be shocked by the result. So how can this be improved?

I don't have all the answers on this, but there are five lessons I have learned over the past thirty years of running businesses and helping others run theirs a bit better that I'd like to share with you. Lesson number one. People will leave. Solve for it. You can read all the books you want about having a great office culture and building a workplace where nobody would ever want to quit, but people will still leave or you will need to let someone go.

When they do, you need to cover their work and begin the process of finding a replacement. That process, no matter who you are, is a drag. Posting the job, reading resumes, scheduling interviews, and getting a new person up to speed can take months. Paying a headhunter is also very expensive. Do it a few times a year, and much of your year will be stuck in some part of the hiring process.

Why not start with the given that people will leave and make prospecting for talent as important as prospecting for clients and customers? Instead of just posting a job when there's an opening and therefore playing defense instead of offense, try posting for the type of people you would like to add to your business whether you have an opening or not. Literally create a pipeline for hiring great talent and make it like leads in your CRM software are on a spreadsheet you check regularly. Set a goal to always have 10 to 15 people that would be great additions to your business when you will have a spot. Schedule to meet three to five people every month.

By the way, this approach will pay off for you in many more ways beyond hiring great talent. Lesson number two. Always raise your average. I got this advice long ago. Every new hire should raise the average of your entire team.

If they do not, you should not make the hire. I know it's tempting to just get someone hired so you can get back to work. But remember, the level of your team will track directly to the level of your business. Therefore, you must view each new hire as an opportunity to improve your business. Will this person be significantly better than the person they're replacing?

Should be the only question you need to be asking. If the answer is no, I suggest you deal with the short term pain the job vacancy creates and hold out for someone that will add value to your business. Or, bonus tip, consider if the job needs to be replaced or if you could hire someone with different skills to match where you want your business to go. Even if the person leaving was a rock star employee, still look to raise your average. Something great happens when you can look at someone leaving as an opportunity instead of a hit and pain to the business.

Lesson number three: Do not try to engineer an exit. Consider two scenarios that may sound all too familiar. Number one. You have someone that's not a great fit for your business, but you don't want to fire them. So you may stop giving them raises and wait for them to find another job, somehow thinking you'll avoid a severance payment and your stress over having to fire them.

Two. Someone threatens to leave unless you give them a big bump in pay. So you give in, you pay them, and you tell yourself that you'll replace them when it suits you best. I have tried both of these approaches many times and they never end well. Ultimately, the employee's gonna leave when it's at least convenient for you and you end up with a letter from an employment lawyer.

If you can just rip off the band aid with candor and empathy, you will find that will lead to a better result. If you cannot give them the increase, then explain it to them. If they have to leave, then let them leave. See lesson one, people will leave. If they are worth more money, be proactive about rewarding them.

If they're not, then you now have an opportunity to raise your average. Let them go with the dignity they deserve and do all you can to help them find a new spot where they can raise the average for someone else. Another bonus tip, Stay connected to the people that leave and prove that your desire to help them was just not words. If they are leaving you with integrity, do right by them and it will come back to you tenfold. Lesson number four: Annual performance reviews are a relic.

How often do members of your team leave their annual performance review happy with what they've heard and the bonus in our increase you offered? When anything builds up for a year, there can only be a letdown. Now, this does not mean that I think you should be giving out increases so often that your payroll gets ahead of your revenue. But again, I think you need to change the game and stop following cold corporate models. If you remember my podcast about the thirty six month year, then everyone in the company should be aligned with your thirty six month goal.

I have found that most people just want to know the path they have at your company, what they can hope to achieve during their time with you, and how it will help them fulfill the dreams they have for their life. Therefore, your employer reviews have to live at the intersection of the biggest dreams you have for the business and the biggest dreams they want to achieve for themselves. Stop thinking you need to spend an hour telling someone about all the areas where they're failing and where they are weak. You hated it when your teachers told you that at school, or at least mine did. I promise you it's not any better as an adult.

Drop these relics left over from academia that were designed for different times. Try something a little different. Instead of telling them all the areas where they need to improve, just make a short list of what they're the very best at. Then work with them on automating or delegating everything else. Nope.

Not tomorrow. But creating a path where someone leaves a review knowing how they are going to spend more and more time doing what they love and less time struggling against where they are weak is a very strong move. Lesson number five. Your employees are not entrepreneurs. Stop expecting them to be okay with the wild ride of you being one.

Remember, as an entrepreneur, you are fine not knowing what the future brings and changing direction without much notice. Your employees? Not so much. I cannot tell you how often I explain this to my clients. Your employees are not entrepreneurs.

If they were, they would be running their own business. Stop expecting them to behave like entrepreneurs and stop expecting them to be comfortable with your fly by the seat of your pants approach to running a business. A little empathy to how your entire team thinks and feels will go a long way here. While you thrive on uncertainty, your employees thrive on knowing exactly where the business is heading, their specific role in this plan, and how their careers will keep rising all along the way. Without them understanding these specifics, you are leaving yourself open to a competitor coming along and filling the void your employee feels with a specific vision of their career at their company.

If you are creating this void in the minds of your employees, then do not be so shocked when they come and tell you they took an offer with your competitor. Their decision to leave is usually the result of all that has not been done or said for many months and years before. Now, each of these topics could be their own podcast. But in the meantime, what I hope to get across is that the current reactionary approach we take to staff disruption is sapping time and energy and money from our businesses, and it stresses us out. We feel defeated when someone leaves.

We rush the hiring process and we worry about the mood it creates in the business. Be clear with everyone about how you think about people leaving. Be clear about what you reward the team for. Get ahead of the process so someone leaving feels like an opportunity to improve your business. Keep those that leave, as long as they leave with integrity, in your orbit.

Oh, and if you're worried about what anyone outside your company thinks about people leaving, you know, your competitors that like to gossip and waste their time thinking about you, then remember that line from my book, your competitors do not pay your bills and they never will. Until next time. Hey there. Just a few quick notes before you get back to work. My goal is to make this podcast as useful as it can be for entrepreneurs who are not fulfilled by the businesses that they own.

Your feedback, questions, and comments are not just welcome, they're encouraged. So please feel free to email me at h@howardMann.com. Also, be sure to jump over to howard Mann dot com and join my mailing list. When you do, you will get a PDF of my book, Your Business Brickyard, for free and will be first in line when I launch new coaching groups and special events. You can also follow me, Howard Mann, on all of the various social channels.

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